“Siliconexico” Mexico’s Tech Industry05.23.16
A $35 million dollar investment has Silicon Valley paying attention to the potential of Mexico’s tech industry. Kueski, the recipient of the mega influx, is a Guadalajara based online lending startup. Kueski co-founder and CEO Adalberto Flores said, “This is the biggest capital infusion any Mexican fin-tech startup has ever received.” Sources say that investment amount could jump, climbing as high as $100 million.
“There is a new breed of young, aggressive people who have traveled the world and now want to launch startups in Mexico,” Flores continued.
Dan Restrepo, who spent six years as the principal advisor to President Barack Obama on issues related to Latin America, the Caribbean, and Canada holds vast on how industry within the country operates said, “Mexico is starting to make that transition from just being a place that people build things to a place where people design and build things.”
Restrepo underscored the importance of the shift by adding, “That’s the move that South Korea pulled off. That’s the move that Japan pulled off. That’s the move of the economies that have truly emerged — that is what they do. They go from just being a platform for people to come do stuff more cheaply to a place where there is also significant intellectual value added.”
According to the Washington Post, there are nearly 300 start-ups in Guadalajara alone and much of the $120 million invested has come from venture capital in the United States. Mexico’s innovation ministry reported that Jalisco has several thousand start-ups and nationally recognized companies alike. Exporting nearly $21 billion in tech products and services annually, those companies include Intel, IBM, Oracle, HP, Dell, and many more.
“All the products made in Jalisco can be delivered anywhere in the U.S. in less than 24 hours,” says Jalisco’s governor, Aristóteles Sandoval.
“We have a port two hours away; the time zone is almost the same.” In Sandoval’s opinion this makes Mexico more cost-effective than India, what, for decades, has been know as the “go-to” for IT outsourcing.
Sitting atop a hill on 25 acres overlooking Jalisco, is Intel’s $220 million 220,000 square foot headquarters. Jesus Palmomino, the general manager of the company’s only research lab in Latin America, proudly reports, “Twenty five patents made here in 12 months! This is where the future is being built.”
Palomino, originally from Puebla, arrived in Guadalajara 26 years ago to spearhead a project between IBM and the Mexican government to set up a PC design center.
What has emerged, he says, is a result of the groundwork that partnership helped lay.
“Doing business here is almost like doing business in the U.S.,” says Anurag Kumar, chief executive and co-founder of iTexico, a Texas software development company with more than 100 of its 121 employees based in Guadalajara.
At $5 million a year in revenue, iTexico was named one of Inc’s fastest-growing companies in 2015 and received an entrepreneurship award from the Mexican government. The company’s roster has more than 100 global players including McDonalds and IBM and partnerships with Microsoft and Appcelerator.
“I’ve seen this movie before, I know how it ends,” Kumar says. “I saw it in Delhi, in Bangalore. There’s no reason there can’t be larger companies in Mexico. Mexico has advantages we haven’t found anywhere else. You don’t get the feeling of optimism in India that you find here. I see it in Mexico. I really do.”