Mexico huge VC opportunity – rapid digitalization of the emerging middle class

As a Venture Capitalist in Mexico (also investing in Latin America) I continue to be very excited about the opportunity I see in front of me. Mexico has seen an incredible growth of its entrepreneurial and venture capital ecosystem in the last 5 years. Today, we have more than 120 active venture capital fund managers in Mexico, from accelerators/seed to late stage venture. These funds have invested in close to 1,000 startups/companies over this 5-year period, representing more than $1.8 billion dollars invested, and growing at 56% year over year, an unprecedented pace of growth. Well-known startups include Clip, Konfio, Cornershop, Kubo Financiero, Kueski among many more.

Funding round for VC-backed startups have been increasing in size, attracting US and global funds. The first exits from companies created during this period are starting to happen, generating attractive returns for GPs and their investors, and validating the venture capital model in Mexico. We expect to see a significant increase in exits in the following 3-5 years, as many of these companies mature, achieving critical scale and becoming attractive options for strategic buyers or the capital markets.

The underlying trend for this development is the rapid growth of the emerging middle class in Mexico and its fast adoption of digital technologies. Mexico has a population of 132 million inhabitants, of which 75-80 million are online. This represents an annual growth of 37% in the last 5 years. The digitalization of the consumers is also pushing the rapid adoption of digital technologies by corporations and SMBs.

These digital consumers have been adopting and consuming digital products and services at an accelerated pace, from media, to e-commerce, to financial services. The financial sector has seen spectacular growth in the number of fintech companies with around 400 active startups, making Mexico the largest fintech ecosystem in Latin America. Mexico has been one of the few countries in the world to adopt a clear regulatory framework for fintech, providing regulation for the hundreds of fintech startups operating in the country.

Talented entrepreneurs from Mexico and abroad are identifying these untapped opportunities to target the digitally-enabled consumer population as well as the large corporate and SMBs pools. This, in turn, generates significant opportunities for venture capital managers and investors. Local and global capital is, and will continue to be, attracted to this huge Mexican opportunity.

This entry was posted in Actualidad, Ecosistema, English, Inversiones, Mexico, Venture capital and tagged , , , . Bookmark the permalink.

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