In the burgeoning startups scene in Mexico, the last thing some entrepreneurs want is advertising.
Unlike Silicon Valley firms, which seek to make public relations, the founders of these national emerging firms often reject interviews with the media, avoid public announcements and hide details of their success.
In which position do you put yourself?
“You put yourself in a position where you may be subject to a bailout”, said businessman Ulises Vázquez, referring to the violence and kidnappings that have been fueled by drug cartels and that have terrified society.
“You better want to keep a low profile and thus be able to continue with your freedom”, he added.
Vázquez decided to be discreet at two important moments in his career as an entrepreneur: when he sold a stake in his advertising agency Ergos in 2010, and when the buying company Matomy went public in 2014.
Although understandable, the adoption of a low profile stance is holding back the Mexican technology industry, as it has become increasingly difficult to attract talent and investment, especially from abroad, according to experts.
Last year, the technology sector in Mexico attracted 175 million dollars in venture capital, according to the Association for Private Capital Investment in Latin America.
However, the amount was overshadowed by the 1.3 billion dollars of Brazil, in the nerve center of the region, and the 334 million dollars of Colombia, whose economy is a quarter the size of the Mexican.
Reuters spoke with 24 investors and startup founders, who acknowledged that security concerns were widespread in the community and that they have even pushed some entrepreneurs abroad.
As an example of this concern, most respondents spoke anonymously.
In the absence of publicity, entrepreneurs are struggling to recruit the best, to attract money to companies and to inspire the new generation, said Daniel Green, a partner in the Silicon Valley law firm Gunderson Dettmer and advises startups in several countries from Latin America.
“Certainly this situation slows growth”, he said.
Live under risk
The scenario leaves no doubt, violence is rampant in other parts of Latin America, from Colombia, affected by the cartels, to Brazil, with an extensive list of crimes.
But the problem is especially serious in Mexico in the face of an escalation of violence that began just over a decade ago, when the government sent armed forces to the streets to take strong measures against the cartels, which began to transform and participated in other activities such as extortion.
Bismarck Lepe, CEO of the software company Wizeline, believes that his peers are being too cautious, despite the horrors that Mexico has suffered from violence.
“Communicating more about its success helps the community, helps the company and helps investors”, said Lepe, who divides his time between Silicon Valley and Mexico.
Domingo Guerra, founder of the Appthority cybersecurity startup in California, said he is not normally worried about security when he returns to Mexico, but that he felt uncomfortable after announcing a round of capital raising.
“People were asking me how I was going to spend the money, what was going to be the first thing I would buy,” said Guerra, who is now senior director of the cybersecurity firm Symantec, after acquiring his company in 2018.
In addition, a company that sought to buy a startup assigned one of the founders an ex-military expert in anti-kidnapping maneuvers and, derived from the rhythm of life, chose to move to the United States.
Another who founded his company in the San Francisco area said his American colleagues were frustrated with the silent direction the firm took due to fears for relatives in Mexico.
“There is an unofficial tax to operate and live in Mexico and that tax is to live at risk”, he said.
Alternative solutions to reach the public
Some simply disappeared from the public scene.
Adolfo Babatz, CEO of Clip, was once a fundamental part of the business press in the country.
After having a 2018 with media interviews, Babatz changed the strategy for this year after obtaining a Softbank investment for 20 million dollars, which he did not make public.
SoftBank, which plans to invest 5,000 million dollars in Latin America, declined to comment.
Gabriel León, who recently launched the financial technology company Oyster Financial in Mexico, plans to disseminate the company’s funds in an online database and not in the media.
“We never talk about money. We talk about the product we are building, the opportunity in the market, our competitors. This is what the attention of investors is called”, he said.
Many factors to take into account
Some in the business scene in Mexico say that the political climate has made it an awkward time to promote multi-million dollar agreements, because now, they add, the culture disapproves more of the boastfulness.
The Ministry of Economy of Mexico did not respond to requests from Reuters to discuss concerns about entrepreneurs’ safety.
Sergio Romo, director of Mexican startup of electric skateboards Grin, followed a similar trajectory to Babatz after a $ 45.7 million round of financing last year.
In early 2019, the executive known for moving in the city on his company’s scooters left a meeting with regulators in Mexico City in a van with tinted windows, according to someone who participated in the meeting.
Romo told Reuters that this was unusual and that he still uses scooters, but acknowledged that it was advisable to keep a low profile.
“People outside the world of startups tend to think that the founders who raise a lot of money enrich themselves, but sometimes that is not the case,” he said.
“We are only founders who try to make things happen”, he added.
Before, Romo was very active on Twitter, but now he no longer writes and his previous posts were deleted.
Also published on Medium.