2021: Mexico’s Year of Unicorns and a Startup Investment Boom

Investors are turning to Mexico and other Latin American countries, where the perfect seedbed for an entrepreneurial boom is developing

During 2021, fintech investment in Mexico took off with unicorns such as Bitso, Konfío and Clara.
December 23, 2021 | 03:58 PM

Mexico City — The emergence of unicorns, newly created companies valued above $1 billion, surged in Mexico this year amid greater interest among investors to participate in the local entrepreneurial scene.

The path forged in late 2020 by Kavak, the Mexican used-car sales platform, was followed in 2021 by the cryptocurrency exchange platform Bitso and fintech companies Clip, Konfío and Clara, as well as the digital identification verification platform Incode.

“There is a general idea that startups can best represent the potential of private initiative, by creating benefits for society, introducing innovation to accelerate the future and bring it to the present,” Gerry Giacomán, cofounder and director general of Clara, told Bloomberg Línea.

PUBLICIDAD

In 2021, the timeline for achieving unicorn value shortened. Kavak, which this year reached a valuation of $8.7 billion, took four years to achieve it, while Clara, which offers cost-management solutions to companies, took just eight months.

But the flow of investment was not only to create unicorns. This year, recently created companies carried out investment rounds, moving from seed funding to Series A in less than six months, as was the case with Valoreo.

Another example was e-commerce platform Merama, which in April carried out a Series A round to raise $165 million, a Series B in September for $225 million and an extension of its Series B in December for $60 million.

Read More: Bloomberg Línea Presents The 100 Entrepreneurs of 2021

PUBLICIDAD

U.S., European and Asian investors with funds to spare are turning their focus to Mexico and other countries in Latin America where, despite the intrinsic risks related to startup capital, they are seeing signs of security and returns.

The risk of investing diminishes as startups evolve from development to implementation. Post-seed capital investments bring security once a product is finalized, and which must be tested by capturing customers.

“These technologies are selling well, the market accepts them and there is an acknowledgement that they are constantly capturing customers, which brings assurance to investors,” according to Daniel Guaida Azar, a partner at Mexican law firm González Calvillo and a specialist in M&A.

For Guaida, the boom in investment this year was due to a perfect storm, partly linked to the pandemic: The restructuring of the supply chain, a change in consumer habits and the need to digitize financial transactions.

This generated opportunities for e-commerce firms such as Gaia, Merama, Jüsto and Valoreo; demand for innovation focused on logistics, services offered by companies such as 99minutos and Cargamos, and a bigger business for fintech companies, which literally exploded this year.

“With the pandemic, the (fintech) sector got a tank of gasoline and exploded”

Daniel Guaida Azar, partner at Mexican law firm González Calvillo

Read More: Kaszek Leads $4M Round in Mexican Insurtech Crabi

PUBLICIDAD

The pandemic also created new trends, such as a willingness among people to become investors through digital platforms. Work flexibility also generated a new kind of demand from digital nomads that is being harnessed by tech property companies, or proptech, such as Kocomo and Flat, and by retailers such as real estate vendor Gaia.

For Clara’s Giacomán, the entrepreneurial boom is also a conjunction of factors, such as entrepreneurs seeking better preparedness and experience either as investors or as creators of startups, the harnessing of talent, even from large, traditional companies, and the trust of investors, as well as arriving at the ideal moment to streamline processes.

“It’s just the beginning of many ingredients coming together in a special way,” Giacomán said.

The investment trend in the sector could continue into next year. From his company, Guaida says he has started to see interest in new investments, mainly linked to the financial sector.

PUBLICIDAD

“The financial sector will be without a doubt one of the most active, as the sector needs to consolidate in certain ways”.

See Also: