LAVCA | The Association for Private Capital Investment in Latin America
  • About
    • About LAVCA
    • Board, Team, & Advisors
    • Media
    • Contact
  • Members
    • Membership Benefits
    • Current Members
    • Member Access
  • Education & Programs
    • About
    • LAVCA Week
    • Calendar & Past Programs
    • LAVCA Education
  • Research & Directories
    • LAVCA Research
    • Industry data
    • LP Survey
    • Directories
  • ESG & Impact
    • Deal Book
    • LAVCA ESG Deal Awards
    • Impact Report
    • ESG Guidelines
  • Articles
    • Featured Articles
    • Industry News
  • VC
  • Member Login
  • Member Access

LAVCA | The Association for Private Capital Investment in Latin America

A non-profit member organization

  • About
    • About LAVCA
    • Board, Team, & Advisors
    • Media
    • Contact
  • Members
    • Membership Benefits
    • Current Members
    • Member Access
  • Education & Programs
    • About
    • LAVCA Week
    • Calendar & Past Programs
    • LAVCA Education
  • Research & Directories
    • LAVCA Research
    • Industry data
    • LP Survey
    • Directories
  • ESG & Impact
    • Deal Book
    • LAVCA ESG Deal Awards
    • Impact Report
    • ESG Guidelines
  • Articles
    • Featured Articles
    • Industry News
  • VC

Mexico Failing Private Equity Test?

1 September 2005

Preview:
Mexico has long been known for its big public companies: Televisa is the world’s biggest broadcaster of Spanish-language programming, and wireless telephone group America Móvil has a reach that criss-crosses Latin America. But Mexico falls short in providing financing for start-up firms.

Article:
September 2005 — Mexico has long been known for its big public companies: Televisa is the world’s biggest broadcaster of Spanish-language programming, and wireless telephone group America Móvil has a reach that criss-crosses Latin America. But, with an illiquid stock market, Mexico falls short in providing financing for start-up firms that could be the region’s Amazon.com or Apple, undermining the country’s economic potential and shunning venture capitalists that are some of the most important providers of funding for small companies.

“Mexico’s problem is not a lack of capital or a lack of ideas, but a lack of local investors willing to take the necessary risks,” says Howard Wallack, the recently appointed director of the Latin American Venture Capital Association (LAVCA). “Mexico needs good business plans with the right people to execute them.”

Mexico’s block to venture capital has mainly been because of over-regulation, too few institutional investors and a lack of government policy supporting private-equity investment. According to Eduardo Mapes of Mexican development bank Nacional Financiera, the majority of successful venture capitalist industries are self-regulating, while fiscal incentives stimulate investments and the rights of minority shareholders are protected.

These are international practices that have yet to channel through to Mexico. The result is that Mexico only receives 0.1% of the $100 billion of private equity invested worldwide annually and only 10% of Latin America’s total venture capital, despite attracting 40% of the region’s foreign investment. Local investors only provide 20% of Mexico’s venture capital.

LAVCA is pushing for change, however, and Congress is debating a bill to create an investment promotion vehicle to enable funds to list on the Mexican bourse, giving three years to meet the standards of public companies and permitting financiers to exit their investments profitably. The government is also considering streamlining funding from development banks into one semi-autonomous fund of funds to disburse public money into private equity. Meanwhile, a new law allows Mexican pension funds, which manage about $45 billion, to invest some of their capital in equity for the first time, not just in government bonds, which could provide a significant boost to Mexico’s venture capital market.

But one of the hardest obstacles to overcome will be Mexico’s lack of entrepreneurial spirit, funds say, as many companies are family run and conservatively managed.

Mexico Failing Private Equity Test? was last modified: March 5th, 2010 by
0
Facebook Twitter Google +

Leave a Comment

You must be logged in to post a comment.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Tech Growth Membership

The 2023 LAVCA Startup Founders Survey is made possible thanks to the support of LAVCA’s Tech Growth Membership, a group of leading tech companies and investors advancing the tech ecosystem in Latin America including AWS, Mercado Libre, Microsoft, Qualcomm Ventures, SVB, Riverwood Capital, Google and Movile.

VC Partner Events

    Tweets

    Missing consumer key - please check your settings in admin > Settings > Twitter Feed Auth

    Submit VC News

    Have private equity or venture capital related news that you would like to share? Submit your press releases and news to [email protected].

    VC Industry News

    • Valor Capital Group and NFX Co-Lead USD9.3m Series A for Brazil’s Praso

      30 August 2023
    • EQT Growth Leads USD85m Series F for Brazil’s Gympass at USD2.2b Valuation

      23 August 2023
    • Tiger Global Leads USD61m Series B for Brazil’s Nomad 

      22 August 2023
    • NASZCA and IDB Invest Lead USD15.5m Series A for Mexico’s Wonder Brands

      17 August 2023
    • Victory Park Capital Provides USD100m Credit Facility for Mexico’s Klar

      15 August 2023
    • General Catalyst Lead USD45m Series B for Brazil’s Tractian

      7 August 2023
    • General Catalyst Leads USD45m Round for Brazil’s Tractian

      7 August 2023
    • ADQ Provides USD100m In Convertible Debt to Brazil’s Loft

      2 August 2023
    • Danish SDG Investment Fund Leads USD31.5m Series C for Mexico’s Bright  

      27 July 2023
    • Colombia’s Foodology Raises USD17m from Andreessen Horowitz, 30N Ventures and Chimera

      19 July 2023

    About LAVCA

     

    LAVCA is the Association for Private Capital Investment in Latin America, a not-for-profit membership organization dedicated to supporting the growth of private capital in Latin America and the Caribbean through research, education, networking and advocacy.

    LAVCA Office

        New York City:
        589 8th Ave, 18th Floor
        New York, NY 10018

    Explore LAVCA.org

    • About LAVCA
    • Board, Team, & Advisors
    • Media
    • Contact Us
    • Membership Benefits
    • Members Only Access
    • Education and Programs
    • Research
    • Policy
    • LAVCA VC
    • Contact Us

    @2020 - LAVCA. All Rights Reserved.


    Back To Top