Mexico

Mexico City

"This highly concentrated market is becoming home to a new wave of entrepreneurs looking for opportunities outside the costly, competitive confines of Silicon Valley."

Insights by Stanford Business
#2 Latin American Ecosystem in Talent & Experience
#2 Latin American Ecosystem in Funding
#4 Latin American Ecosystem in Performance

Highlights

With over 21 million residents, a rich history, top-tier schools, and a vibrant tech and cultural scene, Mexico City draws talented individuals from all over Mexico and the world. This pool of young, educated talent has led to the development of both a thriving startup ecosystem and a nearshoring boom of U.S. and Canadian companies looking to hire in Mexico’s capital city. The city was selected by Bloomberg to receive subsidies to accelerate its digital transformation, including funds to hire new innovation specialists and set up world-class training initiatives.


Mexico City’s educational institutions and startup support organizations are working to further foster the city’s entrepreneurial ecosystem. The National Centre for the Support of Small and Medium Businesses (CENAPYME) offers training, consulting, and incubation services. Several universities host technological development laboratories. The International Finance Corporation, in partnership with the Government of Japan, has launched an initiative called Mexican Companies for Equity (Empresas Mexicanas por la Equidad, or EM-X). The peer-learning platform will share information and best practices to promote gender inclusion, and is expected to benefit over 450,000 employees.


Notable recent funding news out of the Mexico City ecosystem includes Latin American pre-owned car marketplace Kavak’s $700 million Series E in September 2021, which put the company’s valuation at $8.7 billion, and Fintech Konfio’s $110 million Series E the same month.

Ecosystem by the Numbers

EARLY-STAGE FUNDING
(2019H2-2021)
$916 m
GLOBAL AVG. 2023
$687 m
ECOSYSTEM VALUE
(2019H2-2021)
$22 bn
GLOBAL AVG. 2023
$28.6 bn
MEDIAN SEED ROUND (2019H2-2021)
$500 k
GLOBAL AVG. 2023
$671 k
MEDIAN SERIES A ROUND (2019H2-2021)
$9.5 m
GLOBAL AVG. 2023
$4.7 m
SOFT. ENGINEER SALARY (2021)
$19 k
GLOBAL AVG. 2023
$46 k
530 m
GLOBAL AVG. 2023
11.3 bn
32
GLOBAL AVG. 2023
101
Amount ($)
Count (#)

Exits

(2017-2021)
EARLY-STAGE FUNDING GROWTH TIER (2018/19 VS. 2020/21)
6
Calculated on a scale of
1 (lowest) to 10 (highest)
TOTAL VC FUNDING (2017-2021)
$4.3 bn
GLOBAL AVG. 2023
$4.5 bn
TIME TO EXIT (2017-2021)
7.5 years
GLOBAL AVG. 2023
9.4 years

Sub-sector Strengths

Fintech

The Bank of Mexico plans to put its own digital currency into circulation by 2024, and most Mexican Fintechs are concentrated in Mexico City. Fintech Mexico offers collaboration space to promote Fintech innovation in Mexico. FINNOSUMMIT, the largest collaboration platform in Fintech and Insurtech in Latin America, is held in Mexico City, Miami, and Bogotá. The 2022 Mexico City edition will be held in June. Bitso, the largest cryptocurrency platform in Latin America, raised a $250 million Series C in May 2021. Corporate credit card startup Clara raised a $70 million Series B in December 2021.

Reasons to Move Your Startup to Mexico City

Advantageous Trade Deals

Mexico benefits from a network of free trade agreements, including the U.S.-Mexico-Canada Agreement (USMCA) and the Pacific Alliance, an economic community that includes Chile, Colombia, and Peru. The USMCA, which came into force in 2020, contains a number of the provisions of the North American Free Trade Agreement that it replaced, including granting U.S. and Canadian investors most-favoured-nation treatment when setting up operations or acquiring companies in Mexico.

Cost-Effective Tech Talent

The Mexican government opened 120 tuition-free specialist technology universities between 2006 and 2012. Every year, over 130,000 engineers graduate in Mexico. With its talent pool of over 700,000 developers, Mexico offers startups a deep pool of software engineering talent within Latin America, and the average salary of a remote software developer from Mexico is far less than the cost of a developer in the U.S. This means that by nearshoring software development to Mexico, companies can save approximately 67% in labor costs.

Strategic Location

Foreign investors are attracted to Mexico’s strategic location bordering the U.S., as well as its major ports serving both the Atlantic and Pacific oceans. Most of Mexico can be reached in under five hours by plane with non-stop flights to the country’s major tech hubs from major U.S. cities.

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