Venture capital takes off in Mexico

A Mexican flag.

Steve Chiotakis: We've been hearing a lot lately about drug violence in Mexico. But that's not stopping a lot of wealthy people from investing there.

Marketplace's Jeff Tyler now and why venture capital is taking off south of the border.

Jeff Tyler: Historically, entrepreneurs in Mexico have had a hard time raising venture capital for start-ups. American Paul Ahlstrom saw $1 trillion economy and a big opportunity.

Paul Ahlstrom: It's not every day you get a chance to establish an industry in a country.

Ahlstrom runs the venture capital firm Alta Ventures Mexico. Mexican pension funds have only recently been allowed to invest in private equity. The country hosted its first venture capital conference last May. Ahlstrom says the number of new VC firms is taking off.

Ahlstrom: There are five solid ones that actually have raised capital and are putting money to work. And then there's another five or six that are in process. So I would suspect, at the next conference, we would have 15 funds. Whereas last conference, we had two.

Has the drug cartel violence hurt investments?

Ahlstrom: It is definitely not hurting, and it might be accelerating the internal investment.

In fact, some entrepreneurs are trying to combat crime in the country through economic development. Mauricio Garcia runs the investment fund Ambar Capital. It has funded affordable private high schools and colleges.

Mauricio Garcia: From high school on, there's almost no infrastructure. After secondary school, there are not a lot of big opportunities for people to start working.

Garcia hopes to attract some of the unemployed youth who might otherwise find work with criminal gangs.

Garcia: I'm convinced that at one point they didn't have the money to pay for school, or they finished secondary school and the opportunities that they had in front of them were not attractive at all. Going to grayer areas of the economy was more attractive to them.

Rogelio De Los Santos is a partner in Alta Ventures Mexico. He also believes that venture capital start-ups can improve the country's security situation.

Rogelio de los Santos: We're going to do it by creating jobs. By providing opportunities for all the young people of Mexico.

Investing in Mexico could do more than counter the influence of drug cartels. Mexico is the second largest consumer of American exports. So, investments in Mexican companies could help the economic recovery in the U.S.

In Monterrey, Mexico, I'm Jeff Tyler for Marketplace.

About the author

Jeff Tyler is a reporter for Marketplace’s Los Angeles bureau, where he reports on issues related to immigration and Latin America.
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Is not a hope IS A FACT, micro, small and medium companies called PYMES are the fast route to economy recover and Entrepreneurs are the the ones to create such PYMES, worldwide. Mexico focus on Innovation or at least in technology based Start ups. As an example you can see FONLIN program, TechBA model, among others. Mexico also is the fastest route to US recovery since we are in the same vicinity, share the North America culture and, historically Mexico is the best car industry supplier, with clear intenton to add value no to substract as others did.

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