October 21, 2019

Threat of violence stifles Mexico’s promising startup scene

Faced with fears of extortion and violence, Mexican entrepreneurs tend to avoid publicity. Unfortunately, the trade-off for security is stunted growth in an economy in need of stimulation and stability.

In the US, startup success is all about that buzz, baby; PR is a must-have for new companies trying to get attention from potential investors and consumers. 

In contrast, entrepreneurs in Mexico tend to avoid the public eye. According to Reuters, company founders rarely publicize funding rounds or strong financial performances — one once-active business leader silenced his Twitter accounts and swapped his flashy transport for tinted SUVs.

The reason for lying so low? Fear of attracting criminal attention

In a country long plagued by gang violence and corruption, many worry that news of financial success would put a bull’s-eye on their backs — provoking extortion or even kidnapping. Mexico has seen an uptick in gang extortion and violence since the cartel crackdown began in 2006. 

While some maintain this fear is overblown, most entrepreneurs understandably prefer not to take chances and choose to avoid the spotlight or even move abroad. Some say the current anti-elitist government has generated additional pressure to clam up.

This collective reticence has implications for the country’s economy 

New businesses are huge for economic stimulation and leveling, but it’s difficult to attract talent and funding while keeping a low profile. The Mexican tech sector raised just $175m last year, while Colombia’s raised almost double — even though its economy is about a quarter of the size of Mexico’s.

Entrepreneurs are in a tough spot and forced to weigh security against business success. As one entrepreneur put it, “There’s an unofficial tax for operating and living in Mexico — and that tax is living at risk.”

comments

Daily briefings, straight to your inbox

Business and tech news in 5 minutes or less

Join over 1 million people who read The Hustle

Bulb2

Trends Ideation bootcamp

Learn the science behind building massively successful companies

Course Starts In:

Days
Hours
Minutes
Seconds

Psst

How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?

Join us, it's free.

Look, you came to this site because you saw something cool. But here’s the deal. This site is actually a daily email that covers the important news in business, tech, and culture.

So, if you like what you’re reading, give the email a try.