Startup Mexico’s (SUM) 35,000-square-foot campus in Mexico City has a little bit of everything. Built for startups, it has classrooms, meeting rooms, an auditorium, rest and recreational areas, a cafeteria, a photography room, a 3D printing room, and a media library. It also has a cadre of mentors who provide expertise in finance, law, marketing, business development, and more. By providing these resources, as well as funding, the business incubator and accelerator hopes to find itself at the epicenter of Mexico’s burgeoning startup scene.
CEO Marcus Dantus and COO Guillermo Garza founded SUM in 2014 to develop a uniquely Latin American innovation model. Marcus notes that Mexico offers several advantages, such as geography, close ties to the United States, abundant talent, and the most free trade agreements among any country in the world. “We asked ourselves how we could aid the nascent entrepreneurial ecosystem in Mexico, attract and retain talent, further increase collaboration between academy, industry and government, and how to increase Mexico’s competitiveness,” Dantus says. “We decided that becoming an innovation bridge is what suited us. This is the main reason behind SUM; we are trying to bridge Latin America with the world, and the world with Latin America.”
Dantus notes a political, economic, and cultural shift in Mexico within the last decade that’s given rise to a new class of entrepreneurs who are fueling the explosion in startups. Recent policy reforms designed to make the country more competitive internationally have also benefited startups and encouraged entrepreneurship. Several new government-sponsored institutions are also injecting capital into startups and VC funds. The National Institute of Entrepreneurship (INADEM), for example, distributed some $650 million to an estimated 620,000 companies in 2014.
Venture capital is growing, too. Less than a decade ago, there were fewer than 10 venture capital funds in Mexico. Today there are 60 VCs, along with more than a hundred accelerators and 20 incubators. The Latin American Venture Capital Association estimated that Mexican startups raised around $1 billion from venture capital funds in 2012, compared to $469 million raised in 2011.
The country’s creative class is also expanding. The government has invested heavily in education, doubling the number of colleges and universities in the last decade. The vast majority of these are dedicated to science and engineering. And the mindset among their graduates is changing, Dantus says. “Students, when they graduate today, they’re not just seeking employment. They’re thinking of opening new companies,” he says. “That change is huge, culturally speaking.”
Since it began, SUM has received around 4,500 applications. It graduated 48 companies in 2015, and anticipates another 100 will graduate this year. The startups cover a variety of industries, but many are tech-related. It has created 130 companies so far; 35 are commercializing and 15 have received outside funding.
The Mexican government provided an initial $2 million grant to fund SUM. The company has several revenue streams, including membership, sponsorships, events, and space rental. It is also in negotiations with a potential investor to grow the program to other cities, Dantus says.
“In next five to 10 years, we have the opportunity to change the economy from one of manufacturing, maquiladoras, and low wage jobs to an economy based on innovation and knowledge,” Dantus says. “This is what separates a developed from a non-developed country. That’s going to happen if we stay the course.”
– Jennifer Chung Klam (firstname.lastname@example.org)
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