Wrapping up my time in Mexico, I spoke with Marcus Dantus, the CEO of Startup Mexico , former Director of Wayra Mexico and Startup Labs Latin America, and serial entrepreneur. He was very candid about the state of Mexico’s entrepreneurial ecosystem and shared some insights that I had not heard from other interviewees.
As Marcus was educated in the U.S., I asked him about the seeming idolization of the U.S.’s entrepreneurial ecosystem and he had an interesting take:
“I think Israel has the best ecosystem in the world, [not the U.S.]” he told me. “I think that Silicon Valley is the one that started it all and it really remains an inspiration to Latin America. Everyone here aspires to go to Silicon Valley because they assume that there is so much more money there and that everyone becomes millionaires, but they don’t know the odds of that or how hard it is.”
“I believe that Mexico has an even bigger opportunity now than the U.S.,” he continued. “Being in Mexico now, you’re probably going to get money more easily than in the United States. Maybe not all of the way because there are still no exits here,” but at the early stages, yes.
“The main problem in Mexico,” he told me, “is that there is not enough activity in mergers and acquisitions, number 1. It’s a country mainly run by monopolies so they’re not keen on mergers and acquisitions because, why would they, if they have no competition? Another problem is the stock market because in order to reach an initial public offering in Mexico you have to sell millions, hundreds of millions of dollars. There is no alternative market yet….[But], the companies in Mexico that are looking for an exit probably should go to Europe or the U.S. They don’t need to exit in Mexico.”
Part of Marcus’ mission with Startup Mexico is to educate the entrepreneurs that aren’t being served by what’s currently available to them.
“Mexico is one of the most creative countries in the world, in my opinion,” he said. “The problem is that we are not well guided in using that creativity and I think that with a little bit of guidance we can really help come up with some innovative solutions.”
He argued that the key players in the ecosystem were not having the effect that they could have because they were not collaborating in an effective way:
“The problem is that they’re sometimes not on good terms with each other,” he told me.
“If you try to make a national collaborative effort and the main players don’t collaborate with each other, it doesn’t make sense.”
Additionally, he felt that the current model of creating accelerators and incubators was helpful, but only to the standouts and not to the overall ecosystem.
“The companies that don’t make it don’t even get any feedback,” he said. “They just don’t win and that’s it. I think that sucks…[Additionally], they only have one class per year, so if you have a great company but you missed the deadline, you have to wait a whole year.”
That’s not to say he wants to baby the entrepreneurs:
“We really want to make sure that these guys remain hungry because hunger is what drives excellence,” he said.
He feels that more entrepreneurs in Mexico still need to be educated about the process of building a business and raising funds in order for the ecosystem to thrive and he points to this lack of education as one of the reasons that entrepreneurs feel there is a lack of capital.
“That’s a ridiculous statement,” he told me about the idea that there isn’t capital available for entrepreneurs in Mexico. “There’s a lot of money out there, a lot…
…Mexico in 2008 had two funds, two. So in 2008 you could have made that argument. In 2012 we had 14 funds; in 2013 we had 30 funds; and this year, I think, another 30 funds are being created. So there is plenty of money out there…
…The problem is that a lot of the ideas are not ready. Entrepreneurs think that just because they have an idea they should get money.”
He continued on to say that, “the other thing is that the funds used to be larger funds and guys would go to them and ask for seed money. There is a mismatch between the stage of entrepreneurs and investors sometimes…but I think there is enough money.”
That’s why he wants to continue to educate the entrepreneurs that may not make the cut with investors on their first try. “They have to get prepared,” he said, and he believes that they should “at least produce a prototype and prove product market fit and then try for funding.”
Marcus certainly has high hopes for the growth of the entrepreneurial ecosystem in his country, though he does see a bit of a bumpy ride ahead. When I asked where Mexico’s entrepreneurial ecosystem would be in 5-10 years, he said:
“Well, I think that the first thing that the ecosystem will need to do is to recover from what’s hitting us this year or next year. The ecosystem is two and a half years old and companies usually go bankrupt after two and a half years, so I think that we’re going to see a lot of companies fail and I think that’s going to scare a lot of late entrants that don’t understand what’s happening, but I think it’s normal.”
In fact, he thinks it’s a good thing: “There are a lot of funds being created by a lot of people that don’t know what they’re doing. The ecosystem will flush out the people that don’t understand, that don’t know it, that are only doing it because it’s the current opportunity, and we’ll be left with the people that should be here.”
“There will be growth, but a lot depends on who wins the next elections. You have to follow through; it can’t just stop in the next 6 years. I think that Mexico actually has an opportunity to become an efficiency based economy, you know, an innovation based economy, in the next 5 to 10 years. And with that we could jump over 30, 40 countries and become one of the most competitive countries in the world, one of the richest, and I do believe that, but we need to get people to believe that and we need to work towards it.”
His statement that Mexicans must believe in their country’s potential came up a number of times in our conversation, as it had in other interviews I’d conducted. He quoted Andres Oppenheimer saying that,
“The whole world is bullish on Mexico, except Mexicans,” and continued, “I think that that’s a key component. Mexicans, we don’t believe.”
As I always, I will end with Marcus’ advice for aspiring entrepreneurs:
“The first and foremost advice that I would give anybody is to do what you like. To be an entrepreneur, everybody thinks it’s easy but it’s the hardest thing you can do and if on top of it you’re doing something you don’t like, it’s worse. Secondly is to be patient. Money will come, you can’t just do it for the money. The money will come if you’re doing something you like and something you’re good at…..You have to be an optimist. In Mexico you’re going to take hits from every side…You’ve got to be able to improvise, and stay afloat, and be an optimist, and not panic.”