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Startups have begun to take over the business world; the best startups in Mexico have begun to have a recognizable boom and success, but why is this happening? We will begin by deciphering what a startup is and then talk about the best startups in Mexico, in the world and which ones are considered business unicorns, thus opening the doors to thousands of entrepreneurs.

Index:

What is a startup?

A young technological company that is starting to develop, although not all the companies that are created are startups. Startups offer products or services that do not exist in the market or that the founders believe are offered in an innovative way. They are usually small and initially financed and run by a handful of founders or by a single person. Finally, when a startup goes public (with an initial public offering (IPO), thus becoming a publicly-traded and owned entit) it leaves the startup status..

The worldwide boom

Startups are becoming the world’s change engines due to the speed of constant change caused by technological advances. This speed is impossible to follow by large companies that are unable to adapt in a fast way to the required pace. The startups that are willing to risk and fail and try again are the ones that have the ability to adapt as if it were an evolutionary cycle.

Every time technology takes a leap, it opens up new possibilities for innovation and value creation. In recent years, we have seen technological advances greater and more innovative than those we have experienced in all of contemporary history. New products, services, solutions, innovations and new technologies will inevitably fill that space, perpetuating this cycle.

Its startup mission is to collaborate and create value in unproven ways, fail quickly, learn, try again, and repeat the cycle.

Startups boom in Mexico

Mexico and Latin America are investment destinations with many advantages over other markets: their potential for financing, the possibilities for growth and expansion, their geographical location, the size of the market and its inevitable demographic growth naturally generate the creation of high-impact startups.

The phenomenon of startups manifests in Mexico due to several reasons. Mexico is a country of entrepreneurs and popular with young people with more than half of its citizens under 30 years of age. A growing number of college students are graduating as scientists, engineers, designers, marketers, and in business.

Mexico’s creative class has expanded rapidly and the new generations are full of people who are not afraid to take risks. In a stagnant job market, this creates an ideal base for entrepreneurship. Not only are there many incubators, accelerators and international funds investing in Mexico, family businesses dedicate part of their money to venture capital, participate as investors in emerging funds or create their own. The number of investors has grown in the main cities and in the smaller cities the knowledge of the startup market for people with money is spread through seminars where they teach them to diversify from traditional property markets and other risk-averse markets .

There are various opportunities in Mexico to undertake like finance, health, software, technology, and many more sectors are branches in constant growth both in the world and in Mexico. However, there are three branches that together make up more than 54% of entrepreneurship ideas and are:

  • Software: Mexico decided to bet on technology and digital life, currently the country leads in fintech (financial technology ) in Latin America, making more room in software and finance.
  • Green technology: Any brand that does something for the benefit of nature and therefore our future existence, basically has the support of the rest assured. Although it is not totally easy to create a strong business, there are endless companies that will invest in a biorespectable idea
  • Food and entertainment: It is a very rich country culturally speaking, and food business requires a lot of work. So, it is not a surprise that 100% of entrepreneurial businesses have opted for this type of business.

The average profile of the Mexican entrepreneur is 35 years old with higher education in business or engineering careers, as a study carried out by 100 Negocios says, in 97% of cases the entrepreneur is male, but the number of women entrepreneurs is on the rise.

Unicorn businesses: Definition

Companies that manage to generate a value of 1,000 million dollars during their market launch stage, even without having opened their offer on the stock market. Most of them are startups that are less than 10 years old, but have taken advantage of new technologies to provide products or services that differentiate them from their competition.

These unicorn companies, once they are incorporated and start operations, usually achieve that amount of 1,000 million dollars in their growth stage. It is important to clarify that once a startup formally enters the stock market, it automatically loses its “unicorn” status.

This term was first used in 2013 by Aileen Lee. In his article “Welcome to the unicorn club: learning from billion-dollar startups”. The US investor assured that these companies have a “magical” factor that leads them to reach such a valuation in the market.

Mexico and its unicorns companies

The unicorn companies that have been successful in this country are the following:

  • Bitso. Daniel Vogel, Ben Peters and Pablo González founded Bitso in 2015. This cryptocurrency trading platform has achieved a valuation of 2,200 million dollars. The company has been growing its operations now in Argentina and Brazil and in El Salvador.
  • Clara. It offers business management solutions por business that offers company credit cards to its employees. Clara has more than 2,000 business clients and more than 10,000 cards placed in the market.
  • Clip. Babatz founded the company in 2012, after leaving Paypal, where he was in charge of opening the business in Mexico and learned to create payment receiving products. Clip offers terminals for payment with credit and debit cards and has already crossed borders with operations in the USA and Argentina.
  • Incode.  The Silicon Valley-based company founded by Mexican Ricardo Amper is an identity verification and authentication platform based on artificial intelligence (AI).
  • Kavak. It was the first Mexican unicorn. It is a car sales company founded by Carlos García Ottati, Roger Laughlin and Loreanne García Ottati. In October 2020, four years after its foundation, it reached a valuation of 1,150 million dollars.
  • Konfío. The credit startup for micro, small and medium-sized companies founded by David Arana entered the unicorn club in September, after two rounds of capital for 235 million dollars.
  • Merama. Based in Mexico and Brazil, Merama boosts eCommerce businesses in Latin America, and is the latest to join the select group of unicorns after closing an investment of 60 million dollars led by Softbank and Advent International.

Promising startups in Mexico

Beyond the ability of Mexican companies to capture venture capital and grow quickly, in the last year many have become true examples of resilience by adapting to such a changing environment and showing how to recover from adversity.

LinkedIn published a study with the most promising startups that meet the requirements of being private companies and having a maximum of 7 years of existence, 50 employees or more, and headquarters in Mexico. Those are:

  • Bitso
  • Cacao Paycard
  • Cargamos
  • Clara
  • Credijusto
  • Homie.mx
  • Justo
  • Kavak
  • Minu
  • UnDosTres

 

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