The cross-pollination of the US and Mexican startup scene
The cross-pollination of the US and Mexican startup scene
The long-lasting trade relationship between both countries has strongly impacted the recent growth of the Mexican startup ecosystem.
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Quick summary
The US and Mexican tech worlds have been connected since the 1960s
US-connected Mexican founders are at a clear advantage given their networks
American VCs are flocking to LATAM to avoid replicating their relative absence from the Asian startup boom
A long-standing symbiotic relationship
In 1994, the implementation of NAFTA, a free-trade agreement between the US, Mexico, and Canada, opened the floodgates for increased trade and business between the US and Mexico. However, both countries’ tech sectors didn’t wait for NAFTA to start engaging with each other. Indeed, American companies such as Intel, IBM, and HP started venturing down south as early as the 1960s. Many of these companies set up manufacturing plants in Mexico, outsourcing manual work.
“Starting in the 1960s and continuing through the 1980s, a number of foreign companies—including Kodak, Motorola, IBM, Hewlett-Packard, and Siemens—placed some of their manufacturing operations in Guadalajara. This was all about finding cheap labor for manufacturing, and Guadalajara developed a cluster of tech companies that made semiconductors, printers, and photo equipment, among other basic components of the tech industry”. Jaime Reyes, who joined HP’s Guadalajara operation in the 1980s. - Smithsonian
Following the rise of China as the undisputed manufacturing hub a couple of decades later, American companies started outsourcing deeper engineering and tech tasks to their teams down in Mexico. In cooperation with local universities, cities such as Guadalajara and Monterrey became renowned for their excellent, and comparatively cheap, tech talent. Today, Guadalajara in particular is a center of tech excellence, with Oracle, Intel, and IBM all sporting Silicon Valley campuses in the city.
As US immigration rules tighten, Guadalajara is attracting tech talent from around the world looking to work for big tech companies without going through the hassle of US visas. Guadalajara is developing a niche in R&D, with national universities such as the Tecnólogico de Monterrey providing the city with tens of thousands of fresh talent each year.