Venture capital, Channel investors

Is Mexico City The Next Silicon Valley?

Author: Ty Trumbull
Author: Ty Trumbull

Techflier recently published an article, 13 Reasons Why Mexico City Is The Next Silicon Valley. I live in Mexico City and certainly have some first-hand perspectives to share.

The article describes a number of the city’s and country’s finest traits. From its location, where it’s well situated to access markets in diverse parts of the globe, to its business-friendly regulations and strong manufacturing tradition.

I’ve talked about the entrepreneurial spirit that exists here, so I’m no stranger to the notion that Mexico City is a capital on the rise. Last year, the New York Times listed Mexico City as the number one place in the world to visit. Indeed, there are many aspects of this city specifically and the country as a whole that make it ideally situated to become the next global technology center.

Punta De Lanza

As Techflier points out in its article, Mexico City is strategically located to bridge North and South America. But further to that point, Mexico City is largely seen as the cultural capital of Latin America. If something becomes popular here it will almost undoubtedly spread to the rest of the country and from there to the rest of Latin America. One person I spoke with called Mexico City a punta de lanza, or spearhead because it is so often at the forefront of the culture.

The list also mentions Mexico City’s large population and fast pace as a good testing ground for new technologies. Well, I’ll see your cutting edge innovations and raise you the fidget spinner. The small toy with alleged benefits for people with ADHD, autism, and anxiety became ubiquitous in 2017 (though it was invented in the early 90s). But before I had heard word-one of the plastic stress relievers I saw them pop up on every corner puesto in the city. Now, maybe this speaks more to my lack of knowledge about children's’ toy trends than Mexico City’s proclivities toward cutting-edge technology, but it at least demonstrates the city’s willingness to rapidly adopt new trends. An ideal situation for any firm looking to test out new devices and innovations.

Dealing With Instability

There has been a push from the government to invest in new innovation and technology startups. This is undeniably a good thing, both for the economy and the country’s citizens. But where I think this analysis falls short is a pretty important issue: Mexico lacks stability. There are constant allegations of governments rigging elections, drug cartels run entire swaths of the country, and the local police are largely ineffective and allegedly prone to bribery.

Silicon Valley became successful in large part because of the stability of the United States. Strong regulations made investments more reliable and a healthy labor movement led to the adoption of welfare capitalism in the region. These, combined with a history of innovation and adoption dating back to the first clicks of the telegraph in the mid-1800s all contributed to the rise of Silicon Valley. In Mexico, this lack of stability could be the very thing that might scare away investors.

Still, there is already strong evidence of technological growth. The city of Guadalajara has propped itself up as the “creative digital city,” which is at least creating a positive environment for development.

If the country can rein in its more troubling aspects there is great potential in this city just waiting to be unleashed.