In the most recent year, 11 Chilean companies chose Mexico as the destination to expand their operations through the Go Global program promoted by the government agency ProChile. These 11 companies are just some of those that have chosen the Mexican market to expand their operations, especially because of their size and the ease of raising financing from private equity funds.
Wareclouds, Vitawallet, Vetromas, Upago, Sanchoai, Misabogados, Miningtag, Hydra, Builder, Biocellix and Be careful These are the 11 startups that in 2021 chose Mexico as their main destination to expand their operations through ProChile. These companies, mostly technology-based, join other startups that have also arrived in Mexico in recent years, such as the cybersecurity company Camel Secure, the contract administration firm Webdox, the digitization of crops Instacrops and the generation of fintech products Xerpa, which even decided to establish its headquarters in Mexico.
ProChile is an agency for the promotion of exportable goods and services in Chile. It is an organization that depends on the Ministry of Foreign Affairs of this South American country and has 47 years promoting the export of goods and services from Chile to different countries of the world with which this country has free trade agreements, such as the one it has with Mexico, which came into force in 1999. ProChile recalls the defunct ProMéxico, a program that also had the function of promoting Mexican companies outside the country and that disappeared in 2019, with the arrival of the Andrés Manuel López Obrador administration.
Mexico is Chile’s eighth trading partner and Chile is Mexico’s twentieth trading partner, but within the Latin American region this South American country is Mexico’s third trading partner, after Brazil and Colombia. In 2020, Mexico exported products for a total of 1,078 million dollars to Chile, especially from the automotive sector, machinery, beer and molybdenum minerals; while Chile exported 989 million dollars to Mexico, mainly from the agro-industrial and livestock sectors, according to the Data México information platform.
Héctor Echeverría, general director of ProChile in Mexico, told The Economist that, in recent years, Chile has made efforts to increase the export of services to different countries of the American continent. To Mexico, the country has exported over 200 million dollars in services, whether financial, educational or health. It is in this context that the Go Global program emerged three years ago, with which ProChile helps startups focused on technology, innovation and development to expand their services to four markets in the region: Peru, Colombia, Mexico and Miami, in the United States .
Through this program, ProChile seeks local partners to help implement the startup process in Mexico, from knowledge of the Mexican market, the demand of Mexican users, to the regulatory processes necessary to start operations in the country.
Market size and capital
For Echeverría, the first attraction that Mexico has for Chilean companies is that the country is the second largest destination in Latin America in both innovation and Venture Capital, only after Brazil. In 2021, venture capital funds have invested 3,956 million dollars in 133 transactions in startups in Mexico, which represents a growth of 275% compared to 2020, according to data from the Transactional Track Report (TTR).
“It is a very advanced market in terms of innovation, where many products are being tested every day and its proximity to the United States and Canada make it very attractive,” said Echeverría.
Vita Wallet is one of the companies that participated in Go Global 2021 and that chose Mexico as the destination for its expansion. It is a digital wallet for cross-border payments among more than 50 destinations, which also works with cryptocurrencies, although its transfer services for this type of virtual assets will not be active in Mexico due to the country’s regulation.
According to Moisés Zambrano, CEO of Vita Wallet, in addition to the fact that Mexico is a highly recipient and sender of cross-border payments, thanks to remittances from the United States; Eight out of 10 Chilean startups choose Mexico as their first country to expand, which opens an opportunity for the company to facilitate payments between Mexico and Chile.
“Mexico is a very large market, it is a market in which many opportunities are opening up due to the fact that people are beginning to digitize. The growth curve of technology companies in the country is very attractive, ”Reyes said in an interview.
Something similar thinks Felipe Pastenes, director and founder of Upago, another of the companies that chose Mexico as their destination country within the Go Global program. Upago is a platform that seeks to eliminate the leakage of income from companies, that is, it allows a complete traceability of the income and invoices receivable of a company, which, otherwise, can lose between 1 and 10% of its leakage income.
For Pastenes, although the Mexican economy is similar to the Chilean one, the market in Mexico is five times larger than the Chilean market; In addition, the Venture Capital market in Mexico is also more developed than in the South American country. “Investment averages in Mexico tend to be much closer to what happens in the US market,” Pastenes said in an interview.
As can be seen, several of the Chilean startups seeking to enter the Mexican market are dedicated to financial technology or fintech. This is due, according to Mijael Feldman, director and founder of Xerpa, to the size of the Mexican market and its level of banking. The country, of almost 130 million people, barely has 40% of these affiliated with some financial institution, very far from Chile, which has more than 90% of its population banked.
Xerpa is dedicated to the development of digital solutions for financial institutions. The startup creates fintech solutions, such as automatic savings programs and financial recommendations for banks such as Santander in Mexico and Scotiabank in Colombia. The platform began its operations in 2016 in Chile; then he spent a year in the United States and finally, he installed his headquarters in Mexico in 2017.
“We came to Mexico because it is a good-sized market, with a great opportunity in personal finance and banking, and also a market with a great opportunity to raise capital from the United States,” said Feldman.
Reference-www.eleconomista.com.mx