Entrepreneurs the world over dream of becoming the next Zuckerberg or creating the next Uber, but one incubator in Mexico City is helping local startups keep their feet firmly on the ground, while offering a one-stop shop to help them develop their ideas.
“Entrepreneurs have to understand that their solutions need to solve real-world problems,” said Mario Romero (pictured), Director at Startup Mexico (SUM). “We’re not looking to find the next big thing, but find something more valuable, both for entrepreneurs and for society. We’re trying to communicate to entrepreneurs that it’s entirely possible to innovate outside of Silicon Valley with great success, something we have proved over the last couple of years.”
Founded in 2014, Startup Mexico is a modern mega-complex that houses everything an early-stage startup needs in order to thrive. Located in the developing neighborhood of Torre Blanca, the facility is funded through a mix of private sponsorship and government grants, although the plan is to hone in on more private investments. Some notable sponsors include Best Buy, Microsoft BizSpark, Banorte, and Softlayer, an IBM company.
The Mexico City campus is the biggest of three in Mexico; the others are in Merida and Leon. Each campus is focused strongly on SUM’s incubator program, which is the core of the business. According to Romero, the CDMX campus attracts 150 membership-paying entrepreneurs every day, and around 2,000 unique visitors a month. “One of our initial missions was to develop Startup Mexico into an international brand, and, so far, we have been succeeding,” explained Romero. “Our collaborations with governments and other incubators outside of Mexico have led to international startups coming here to take advantage of what we have built.”
Touring the Complex
Nearshore Americas visited Startup Mexico for a tour, which started in front of a regular looking payphone. When Romero dialed a number and a heavy deadlock clunked open, I suddenly realized we were looking at a secret door. “In today’s world, the technology exists to create things like this, so our ethos is to offer a space where the next great entrepreneurs can flourish,” he said, as we walked through.
Within the massive building is an open co-working space for members, a large auditorium for events, a digital media studio, an Innovation Lounge for collaborating on ideas, a cafeteria, pool table, mini golf, table tennis, an artificial beach, and a laboratory for building prototypes, complete with 3D printers, lathes, and other tools.
Upstairs, Startup Mexico has developed an area specifically for service providers, such as programmers, HR specialists, lawyers, and accountants. Each of these companies specialize in startups, so have a constant stream of customers right downstairs. Established companies such as PwC and Angel Ventures also have offices within SUM, and are able to design their spaces according to their own personal tastes.
On the roof, SUM has built an urban garden, where they grow tomatoes, lettuce, carrots, and other greens that are then sold in the same building. “The whole idea is to understand that there are challenges that the world faces in terms of food prices and sustainability,” said Romero. “This shows that if you put your heads and your hearts into it, you can feed 150 hungry entrepreneurs.”
The challenges that SUM faces center mostly on the regional business culture, with potential investors and partners agreeing to work with the incubator, but then hesitating when it comes to signing an actual contract. The location of the campus can also be an issue sometimes, as traffic and infrastructure in Mexico City makes it a chore to get there.
Romero is positive that the area of Torre Blanca is about to undergo huge changes, as the U.S. embassy is due to relocate there in the next couple of years. “One of the top business schools in Mexico is also a couple of blocks away, so all three of us will be in the same corridor, which bodes well for the future of SUM.”
SUM is part of the Startup Federation, an invitation-only association including 25 of the world’s largest entrepreneur hubs, including 1871 in Chicago, 1776 in Washington, and Capital Factory in Austin, as well as Betahaus in Berlin and others in places like Russia, London, Israel, and Japan. “One of the many things we are creating are rich connections with these types of organizations so that Mexican entrepreneurs can take advantage of them,” said Romero. Startup Mexico has also helped 20 Latin American startups to soft land in Mexico, all of which are well-established, selling their products and growing at a decent pace.
Another of SUM’s partners is Parallel 18 in Puerto Rico, a program that gives US$40,000 to startups, equity free, to go to work in Puerto Rico and develop their ideas. “Besides the money and the gorgeous beaches, the cool thing about that is you are creating your startup in the U.S., but with a Latin American culture,” said Romero. “The bad thing is that Puerto Rico has a very small population, so it’s not as attractive a market as Mexico.”
During the selection process for SUM’s incubator program, the company uses a bespoke evaluation platform with a specific algorithm that automatically assesses ideas pitched by entrepreneurs. The evaluation has around 70 questions and uses specific keywords to determine if the idea is allegedly good or not. The algorithm studies things like whether they have a patent pending, whether certain information about the market has been considered, or whether the founding team has the right elements for success.
Startup Mexico’s incubator program was recently named among the top three incubators in Latin America and number one in Mexico due to its high activity and results. Of the 6,500 entrepreneurs that have applied for incubation, only 181 have been selected and supported, less than 2.5%. This selection method has led to a 97% success rate, with those startups continuing to operate today. “The remaining 3% say they are on standby, but their halt in growth has been more personal than just about their ideas,” said Romero. “Either the founders got into a fight, or one of them left, or they decided to take another job. This is why that 3% has stopped growing.”
Many of SUM’s startups are now scaling up in other markets, such as Chile, London, and the U.S., one of which is called Hoop, a ring that can diagnose STDs with a blood sample and then send the results to you or your doctor over the internet. Another, called Hola Gus, has already received US$1 million in funding and lets you order anything you want through WhatsApp, like a personal butler.
Startup Mexico Expansion
SUM intends to open two more campuses in Mexico, one in Queretaro and one in Morelia. The company is also looking to create a stronger bridge between both Mexican and Latin American startups and the rest of the world. “If you come from Latin America and you have a great project, instead of going directly to Silicon Valley, you need to take a pit stop in Mexico, understand the market here, and see the opportunities for yourself, because not everything happens in Silicon Valley,” said Romero. “After that, look at other parts of the world and begin to scale up globally, so we want to facilitate that for entrepreneurs in the region.”
The next step, Romero says, is to build a campus in the U.S. in order to receive all these Latin American startups north of the border, so look out for a Startup Latam campus coming stateside in the next few years.