At the end of the first quarter of the year, what is the outlook for private equity investment in a complex year? 

Venture Capital, also known as Capital Emprendedor in Mexico, maintains a favorable scenario in markets such as the Latin American, and of course, Mexico. Undoubtedly, in the last year it has consolidated as a fundamental element for the incursion of more investors, both institutional and local. 

During the first weeks of the year, we have heard about a slowdown in private equity investments and adjustments in the investment strategy of international funds. However, this doesn’t represent a warning sign or means that we should not continue to promote investment in SMEs and startups. These are and will continue to be an essential economic asset for growth in the face of recession.  

If we look at the data, we see growth in Latin America despite the cautious scenario in 2022. Proof of this is the number of  venture capital investments, which increased 2%, according to data from the Transactional Track Record TTR Data.

Although this industry is recent in our country, the increase of private equity investments during the past year is an example of sustainable growth, where Mexico is an important player. For institutional investors, Mexico represents  an expanding and developing market due to the creation of new niches, sectors and the talent of the entrepreneurs and businessmen. 

I share the 7 factors that outline Mexico as a hotspot to attract more investment 

 

1. An encouraging scenario for the Mexican economy. The IMF forecasts that Mexico will grow 1.7% this year. 
2. The emergence of more companies in specialized sectors such as technological innovation, as well as traditional sectors such as consumption and infrastructure. Definitely, both are decisive for economic growth. 
3. As for the entrepreneurial ecosystem, we have an element in our favor: the talent and perseverance of entrepreneurs and businessmen.
4. Also, the increase of more cities such as Mexico, Guadalajara and Monterrey as a platform for development and investment of this industry. 
5. The automotive sector remains attractive to investors. By 2023, new manufacturing centers are expected to settle in Mexico from renowned brands such as Tesla.
6. Another condition that stands out is the traditional market. Ventures in this sector are more noble. They usually have sales from the beginning and this allows constant growth and an opportunity for institutional funds. 
7. In 2022, Mexico ranked second in the region in the number of venture capital transactions. 

We are seeing a continuous development of the private equity sector hand in hand with a maturing entrepreneurial ecosystem in Mexico. The numbers for this industry in the region remain positive. And, although they are not in the historical figures of previous years, we can still see a landscape of resilience in the business ecosystem thanks to entrepreneurial talent and the interest of international funds in markets with potential like ours. 

It is important to emphasize that the private equity industry has a long way to go. The development of more organizations, funds and investors that stimulate this ecosystem will be essential to consolidate the country as a strategic region for national and international players. 

Source: LinkedIn