This article was originally published on Medium
Forget about Sao Paulo or blown out of proportion headline manufacturer ‘Mexican Silicon Valley’ in Guadalajara for the second startup revolution. It was Mexico City’s consolidating entrepreneurial ecosystem as the regional innovation hub that caught the eye of MassChallenge, The Bridge by Coca-Cola, 500 Startups -planning to reopen its accelerator program,- and now NUMA, who will play a leading role in its evolution.
“Mexico has all it takes to succeed as an entrepreneurial ecosystem. However, the city needs something new to pass the tipping point. We believe we can make a difference by bringing know-how and direct access to mentors, investors and startup networks in mature and emerging markets”, said Frédéric Oru, head of international at NUMA.
NUMA aims to ignite and accelerate emerging startup ecosystems around the globe, rather than focusing solely on Bay Area, and European companies, as the second startup revolution is one that will take place on multiple local epicentres. After openings in Moscow, Bangalore, Casablanca, and Barcelona, the French startup accelerator expanded to Mexico City on April 6th through a joint-venture with Venture Institute; founded by Federico Antoni and myself, 5 years ago.
This is NUMA’s second international opening in 2016, and one of the most promising and ambitious ones, as it provides access to the best entrepreneurs in the Latin American region and those interested in serving the Spanish speaking market with its 400 million users. By 2019 the accelerator that boosted Mesagraph -acquired by Twitter in 2014- and DocTrackr will expand its presence to 15 countries with the goal to accelerate 700 startups and implant a digital and entrepreneurship mindset within 250 large companies, by partnering with local startups and people.
Mexico City has a lot of first world problems, which has lead to the success of Uber -with 1.2 million users and 40K drivers- and Amazon, as well as the development of both apps and services among which we might find our next ‘Unicornio.’ But it will take a different mindset and a local background to step away from the Silicon Valley model and address critical issues with the next revolution of smartphones.
The Mexican capital also allows entrepreneurs to go after untapped market opportunities in healthcare, fintech, and delivering essential services through digital tools, as one third of its 22 million inhabitants live in poverty.
The Opportunity to step away from perfect selfie apps
Evolving ecosystems must gear up and be brave about engaging everyday problems through a culture of innovation. The country offers the opportunity to solve smartphone connectivity and financial services access for 42% and 60% of the Mexican population, respectively, according to data from the Mexican Internet Association, at a faster pace that we could ever imagine via smartphone penetration.
As AVC’s Fred Wilson wisely put it, the first 2.5 billion smartphones brought us Instagram and Snapchat, while the next 2.5 billion will be about “stuff that matters a bit more than seeing where you friends had a fun time last night or what it looks like when you faceswap with your sister.”
To that purpose, the development of an engaged local startup culture is fundamental. “The possibilities of seeing big exits of Mexican startups rely on building a strong entrepreneurial community,” Marc Nager, Chief Community Officer at Techstars, told me in a previous interview in 2014, and this is still the case.
According to Endeavor, this is fundamental to creating a thriving tech sector in a country, via a multiplier effect of investments, mentorships, inspiration and previous employment or founding team connections between entrepreneurs.
The Mexican VC industry for startups has tripled its value from US $515 million in 2010 to US $1.48 billion in 2015, according to the Private Equity Mexican Association (AMEXCAP), and has seen a handful of success stories including Carrot, Clip, Cornershop and the exits of Aventones — acquired by Bla Bla Car in 2015, — and SinDelantal.Mx. With a growing number of co-working spaces and the strengthening of a developer community interested in solving social, economic and environmental issues, it is clear the pieces are in motion.
“First we need to create a safe environment so that successful entrepreneurs deploy capital in Mexico. Second, and due to inefficiencies in the financial markets, we must create investment incentives that multiply the investments of successful entrepreneurs in their startup community through Venture Capital funds,” said Fernando Fabre, president of Endeavor.
There’s still a lot of work to be done in order to build a strong entrepreneurial ecosystem in Mexico, but the timing and the opportunity has never been better as new players enter the market with the conviction that we don’t need to go to Silicon Valley to succeed.