Many aspiring entrepreneurs are tripped up by a common fear that sidelines their businesses before they even get started: a fear of sharing their idea. While it’s natural to want to protect your “billion dollar idea” so that you can maintain control and build the business of your dreams, if the fear of someone stealing your idea prevents you from seeking out advice, feedback, and mentorship it can easily prevent your success. Watch this week’s video to find out why this fear is so damaging and how to prevent it from crippling your company before it even launches.
After visiting Endeavor Mexico, Josh Ford put me in touch with Scott Wofford, a consultant and project leader at Ashoka who is developing a map of the entrepreneurial ecosystem in Mexico City including development organizations, funding organizations, universities, etc. JACK POT – this is just the kind of information that I am interested in.
Unfortunately, Scott’s report isn’t yet released publicly so I can’t share any lovely links, but Scott was kind enough to grab lunch with me and give me another take on what’s happening in the world of entrepreneurship in Mexico City and where the city’s ecosystem is headed in the near future.
One of the key differences he identifies between the ecosystem in Mexico and that in the United States are that there is more classism for aspiring entrepreneurs to contend with in Mexico and that
“classism impacts many things about being an entrepreneur including raising capital and being part of the right networks.”
Additionally, because of the social stratification, there is more need-based entrepreneurship in Mexico than in the United States. Many people become business owners because it is the only option they have to support themselves or their families, however, these are not the entrepreneurs that have the resources or desire to grow those enterprises into fully functioning, scalable companies.
At the same time, there’s a lack of investment capital – specifically venture capital, in Mexico. Scott believes this lack of venture capital has a few causes: venture capitalists have trouble finding a pipeline; lots of monopolies prevent industries from taking off through a startup because those monopolies have a choke hold and since the startups cannot make it “really big” they are less attractive to investors; and Mexico is missing the qualified talent to manage a successful fund.
Scott also identifies more entrenched corruption in Mexico as something that differentiates the ecosystem there from that in the United States. Because of this corruption, Mexico doesn’t fare well on the ease-of-doing-business index and it can be difficult for entrepreneurs without the right connections to get the proper permits and licenses to begin doing business or to expand an existing business.
On the positive side, however, because the social divisions are so defined,
“Once you’re in, you’re in,” Scott says. “Some of the success stories go through all of the programs – Ashoka, Endeavor, etc. even though they don’t necessarily need the help.”
This is a theme that came up in other interviews in Mexico City as well – because the ecosystem is still at its early stages, it’s a small community in which everyone knows everyone.
Mexico also maintains a strong family structure as a deeply entrenched part of its culture so friends and family “rounds” of investment are more common. Additionally, Mexico has a growing middle class and good macro-economic growth that, combined with its proximity to the U.S., position it well to bring established U.S. models and apply them in Mexico – usually for less risk.
So where does Scott see the Mexican entrepreneurial ecosystem in 5 – 10 years?
“Right now, 80%-90% of entrepreneurs who’ve been invested in or accelerated by one of the big programs will increase 25%-30% per year but only a few will be big success cases in terms of ROI.” In 5 – 10 years, “I think that there will be a couple of big success cases where entrepreneurs become pretty famous.”
Do you have experience in the Mexico City startup scene? If so, please let me know your thoughts on what Scott had to say in the comments sections below. Our next interview will be with Jackie Hyland of Angel Ventures Mexico.
Many an entrepreneur dreams of raising money from a prominent venture capital firm or angel investor, but this type of funding is hard to come by. If your company is suitable for an equity investment and you’ve been lucky enough to land an audience with some investors, it’s important that you don’t blow your pitch if you want to make a good impression and get the funding you need.
Today’s video gives you some quick tips to make sure that your pitch impresses your potential investors so that you can get money you need to build your dream startup.
After speaking with Jorge Madrigal of Aventura in my last Startup Nomad post I was really excited about Mexico City’s potential as a startup hub. I wanted to speak to someone connected to an international organization to get a comparison between the entrepreneurial ecosystem in Mexico City and ecosystems in other cities, so I headed over to Endeavor Mexico to talk to Joshua Ford.
Josh is an Analyst of Entrepreneur Services & Selection, so he’s on the front lines interfacing with entrepreneurs who would like to become a part of Endeavor’s program and he gets to help decide who’s ready to get going with the program, who needs a little bit more work before entering the program, and who just isn’t a good fit for what Endeavor offers. He was kind enough to show me around the Endeavor offices in Mexico City (very Google-esque) and to let me grill him about what he sees happening in Mexico City’s world of entrepreneurship.
According to Josh,
“Mexico is just starting to get to the point where people are starting to think about entrepreneurship,”
and he sees some key differences between entrepreneurship in Mexico and entrepreneurship in the U.S. Firstly, he sees a lack of capital in Mexico. According to him, venture funds are smaller and more hesitant to invest because of “cultural stuff,” while, at the same time, entrepreneurs are hesitant to give equity stakes because they’re more guarded as the practice is not as familiar, there isn’t much understanding of how to value a company, and many entrepreneurs don’t realize that they could/should be looking outside of their network of friends and family for money to start or grow their businesses.
This mentality brings us to another difference that Josh identified between the U.S. and Mexican entrepreneurial ecosystems: Mexico’s lack of an entrepreneurship culture. There aren’t nearly as many pitch competitions, mentorship programs, or academic programs highlighting entrepreneurship as a viable career path and educating Mexicans about how to pursue it. There is also greater social stratification with most entrepreneurs coming from wealthy families because the “life tracks” start at a very early age. Public education in Mexico, according to Josh, is not as good as that in the U.S. so the wealthy in Mexico have an even bigger leg up than those in the States. Plus, since there are so few “rags to riches” stories there are not role models available to encourage entrepreneurship among less-well-off young people. Thus, the potential pool of entrepreneurs is the top 5-10% of the population (economically) instead of the entire population.
Finally, Mexico lacks some of the basic infrastructure to really be a tech, startup, and innovation powerhouse because the availability of things such as high-speed internet varies greatly from place to place within the country.
However, just like Jorge, Josh sees these barriers starting to crumble. In 5-10 years he believes that entrepreneurship will be more of a “known thing” and that young people will be talking about it, which will lead to more mature innovation. He says,
“One of the coolest things is that in emerging markets [like Mexico] there is still tons of opportunity. So far a lot has been taking ideas from the U.S. and Europe and doing them here, but in the future we’ll see more people innovating from zero and creating completely new ideas [in Mexico].”
The growth of entrepreneurship is a cycle, so that next level of innovation will lead to more conversation, awareness, and availability of mentors and role models so that more people will be inspired to pursue entrepreneurship and the growth will continue. In Josh’s opinion the biggest success was having an entrepreneur come through the Endeavor program, succeed, and create a contest to encourage young entrepreneurs.
Josh also expects to see more expansion into the rest of Latin America because Mexico is simply better positioned to enter those markets than the U.S. is. He also predicts that more money will start to flow into Mexico as the violence decreases and more people educated abroad return to Mexico to fill holes in the market.
So what’s his advice for current and aspiring entrepreneurs? Well, he has a lot of it: Firstly,
“There is no substitute for hard work,” he says. “It’s easy to work hard for 2 or 3 months but the typical success takes many, many years.”
He also advises entrepreneurs to be very strategic about who their market is and how they’ll target that market.
“You need to know your market inside and out,” he says. ” There’s no way you’ll be able to capture a market if you don’t know what the market is.”
He suggests you find the niches – whether geographic, class, etc. – and try to figure out how to get ahead of the curve and weather the storm while you educate your customers because you’re ahead of the trend.
“Entrepreneurs really need to look at not only what’s been Mexican forever – what’s already a part of the fiber – but also what could be a part of the fiber and figure how to tell the consumers what they want,” he says.
He also suggests that entrepreneurs move strategically, not necessarily rapidly. “Don’t expand just for the sake of expanding,” he recommends. He also stresses that you need to know your numbers because, “no matter how good your idea is or how excited you are, [investors] want to see your financials.” Therefore, you need to know your finances or, at least, bring on someone who does.
Finally, he says:
“Know your weaknesses AND know your strengths. A lot of times people are so focused on their weaknesses that they let their strengths fall. You want to bring everything up, not let your strengths and weaknesses meet in the middle.”
Do you have experience in the Mexico City startup scene? If so, please let me know your thoughts on what Josh had to say in the comments sections below. Our next interview will be with Scott Wofford of Ashoka.
While some may tell you otherwise, a business plan – whether formal or informal – is vitally important to any entrepreneur as he or she begins to move forward with starting and growing his or her business. This video gives a brief overview explaining the basic components that every entrepreneur should include in the business plan for his/her small business or startup.