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STARTUP

Should You Relocate Your Startup to Mexico?

Mexico is fast becoming the next big startup hub.

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BY James Paine - 28 Feb 2018

Should You Relocate Your Startup to Mexico?

PHOTO CREDIT: Getty Images

Forget Silicon Valley. The next big thing in the startup world is the exodus of talent to Mexico, and while this might sound crazy to begin with, it quickly starts to make a lot of sense. After all, there's a lot of competition in the Valley and the cost of living alone is through the roof, which can make it difficult for startups with little-to-no funding to gain a foothold.

That's exactly why more and more people are moving out of the Valley or establishing their companies elsewhere, and thriving startup communities are already popping up in cities as diverse as London, Toronto, Singapore and Tel-Aviv. Mexico could be the next logical destination, and there are a whole heap of reasons for that.

Let's face it, the weather is one of them. It's a popular spring break destination for a reason, and no one is going to complain if they have to work somewhere sunny in a country that's famous for its tequila. But that's not the only reason why it's worth considering Mexico as the home for your hot new startup. Even for an emerging and rapidly growing market, it has a lot going for it.

How Mexico is fostering talent

Mexico has always been towards the forefront of the high-tech manufacturing industry, and startups and established businesses alike have long been turning to the country for its lower labor costs and its tariff-free technology imports. There's as much expertise as there is in America but with a reduced cost of living and a number of other benefits that we'll take a look at throughout the rest of this article.

Just one example of this is the region of Jalisco - and Guadalajara in particular. For example, the city's historic downtown area is being revitalized with a 940-acre business hub for industries as varied as TV and film, advertising, video games, animation and e-learning. Meanwhile, the state is home to a range of high-tech companies including IBM, HP and Oracle, as well as plenty of startups who are taking advantage of the unique scene that Mexico has to offer.

In Silicon Valley, it can seem as though everyone you meet is an entrepreneur. That won't happen in Mexico, but that paradoxically seems to bring people closer together. The communities are more tight-knit with the result that it often feels as though everyone knows everyone. And that's not necessarily a bad thing.

The Mexican Silicon Valley

Jalisco is such a hotbed of talent that people have referred to it as the Mexican Silicon Valley, and one of the primary reasons for that is the fact that the region is investing in its infrastructure at the same time as founders are flocking to it. The region plays host to thousands of startups and its fair share of blue chips while exporting $21 billion in tech every year.

This investment shows in the infrastructure that's in place for ambitious founders. There are meeting rooms and coworking spaces, networking events, conferences, seminars and more. There's even a constant flow of new talent from nearby educational institutions, including the region's twelve universities.

Speaking of talent, it's often easier to make hires in Mexico than it is in Silicon Valley because there's less competition, although it can be difficult to lure people away from the big multinationals once they've settled in. But if you're happy to hire bright young minds and to provide them with on the job training, there aren't many better places to be.

Establishing a new reputation

Modern Mexico is very different to the popular perception that people tend to have, and even though the country still hits the headlines from time to time for some sort of organized crime, that largely takes place away from Jalisco and doesn't portray a realistic depiction of what life is like for the country's many tech founders and entrepreneurs. Many of the key players are actively fighting against this reputation, but most simply ignore it and get on with business.

It's this attitude that resonates with entrepreneurs. Jalisco is going up in the world, but it's not happening by accident. A lot of hard work is going into making the region attractive to entrepreneurs, including by offering government subsidies and reduced energy and labor costs - especially when compared to the cost of doing business in the Valley.

Mexico has been becoming quietly more popular amongst tech companies for the last twenty years or so, particularly amongst manufacturing and industrial tech companies. Some companies are even starting out in Mexico and then moving to the States once the time is right, although many more stay in Jalisco and the surrounding areas out of choice.

Supply and demand

Ultimately, much of the current tech scene in Mexico is being driven by the laws of supply and demand. There are over 100,000 manufacturing and engineering jobs in Guadalajara alone, and while the area can't compete against those in other emerging markets like India and China when it comes to the sheer quantity of its workforce, it does score highly when it comes to quality.

The burgeoning tech scene in Mexico is happening because people want it to happen, whether we're talking about government incentives that are in place to encourage growth or whether we're talking about the bootstrapping founders who want somewhere cheap to live while they get their idea off the ground. It's also the obvious place to go if you're developing a product or service that's aimed at the Latin American market.

It's not necessarily a case of people choosing Mexico as a base for their startup just because they can't afford the outrageous rates in Silicon Valley, though. After all, there are plenty of other international hubs to choose from. What those other hubs don't have, though, is the chance to be one of the defining startups in a rapidly growing community. They're already too well-developed.

When you look to the future, nothing is certain. That said, it's a pretty safe bet to say that any day now we're going to hear about some super successful app or social network coming out of Guadalajara or the surrounding areas. And who knows? Perhaps you'll be the one behind the helm.

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