By TBY | Mexico | Aug 13, 2015
Mexico is wisely mentoring its in-house talent to fuel its economy with innovative thinking.
Mexico’s community of entrepreneurs has grown over recent years. The country has a young population with a median age of 27 years old, and this demographic is in search of new opportunities to climb the economic ladder of one of the world’s largest economies. Thus, universities and public institutions have worked hard on several programs and incubators to spur the creation of startups that will drive innovation and creativity in Mexico.
The Global Entrepreneurship Monitor revealed that entrepreneurial activity increased from 14.8% to 19% between 2013 and 2014. This early-stage entrepreneurial activity, which includes individuals in the process of creating a company and those running a business of under three and a half years old, is taken as a key indicator of the level of new enterprise creation in the economy, and Mexico has performed better thanks to several public and private initiatives.
“The entrepreneur is a key factor in the development of Mexico. They are innovative, resourceful and they strengthen the economy,” said Enrique Jacob Rocha, president of Inadem, a public institution linked to the Secretary of Economy, which aims to help those Mexicans willing to create new companies.
This institute was established in 2013 and last year supported the creation of nearly 6,000 companies that generated 70,000 new jobs. Inadem has several programs to help Mexican entrepreneurs cope with the challenges they face when creating new businesses.
One of the main tools Inadem has at its disposal is the National Entrepreneur´s Fund, which in 2015 totaled about $53 million. The fund is used to assist micro-, small-, and medium-sized enterprises with training, financing, and assistance for young entrepreneurs. The ultimate goal of Inadem is to boost productivity and competitiveness and, in the end, help them to expand abroad and internationalize their products.
“Going abroad is a key factor for these companies because it increases their productivity rate and makes them more competitive,” Mr. Rocha told TBY. His organization promotes this by working alongside other public organizations such as ProMéxico to internationalize Mexican entrepreneurs.
Financing is still the main challenge that entrepreneurs and SMES face in Mexico. In 2013 Mexican banks lent only 26% of GDP. In response, President Enrique Peña Nieto’s government passed fiscal reforms to allow credit to flow more easily into the economy.
While the effects of the reform are still playing out, some private financial institutions have arisen in the recent years in response to demand from young talented Mexicans who are willing to start a business. One such business is Finmex, which bills itself as the “only financial institution” in Mexico that extends credit to entrepreneurs. Finmex has had an astonishing performance between 2012 and 2014 has grown by around 300% and, at the same time, they have been able to help hundreds of people with new and creative ideas. “Two years ago, entrepreneurs in Mexico did not exist to this extent, but today they are gaining momentum and a new movement of entrepreneurs is taking place,” according to the general director of Finmex.
In his view, another challenge to be tackled is education. These young entrepreneurs not only need financing, but also training and mentorship and some of Inadem’s resources target this necessity.
“The Mexican entrepreneur is essentially creative, but still not as knowledgeable as their US counterpart”, claimed Marcus Dantus, CEO of Start Up Mexico (SUM), a campus for startups financed by Inadem and established in Mexico City last year that merges mentors, venture capital funds, and co-working spaces all in nearly 3,500 square meters.
In 2014, SUM received around 1,300 applications from entrepreneurs seeking enrollment in their program. Only 50 made the cut. SUM divides its program in two parts: incubation and acceleration in a process that lasts over a year, during which time the entrepreneurs are guided by tutors and their performance is assessed by venture capital funds.
Dantus explained to TBY that they do not only mentor young entrepreneurs, they also provide their participants with financial and fiscal training in order to institutionalize and professionalize the companies. In 2015, SUM hopes to launch about 100 innovative firms into the Mexican economy. Their timing could not be better, and Dantus pointed out that “Mexico is on the brink of becoming an innovation-based economy and that in itself could bring about great opportunities for entrepreneurs, investors, and Mexicans in general.”