Has Mexico decoupled?

The recent mega rounds in Mexico, Flink ($12 million), Justo ($65 million) and Valoreo ($50 million), occurred within a few weeks. The size of these rounds marked new highs for Seed and Series A rounds in Mexico.

Let’s face it, this is way beyond the scope of what is happening in Peru. These rounds indicate the gap between Mexico’s startup ecosystem and the rest of Spanish-speaking Latin America may be widending, not shrinking.

What do these rounds mean for startups and early stage investors in Peru?

  • Large rounds may lead to exit opportunities for startups outside Mexico. The size of the rounds is so large that the uses of capital of these rounds may be to expand inorganically by acquiring startups in other Latin American countries.
  • Funds in Mexico will stay focused on Mexico. Mexico is becoming a deeper, more competitive market for venture capital. A lot of money is being invested in Mexico and local funds have enough work on their hands investing locally. It may become harder for both startups outside of Mexico to raise money there and less likely for funds from outside Mexico to enter deals in Mexico startups.
  • Funds in the US will gravitate to Mexico. Top U.S. funds including General Atlantic and Accel participated in the rounds mentioned above. The large size of the rounds in Mexico make it more feasible for venture capital funds in the U.S. to participate.

The growth of startup rounds in Mexico is a positive, natural evolution of the ecosystem. Perhaps the country has graduated to the point where it is a stand-alone venture capital market, similar to Brazil.

As all eyes are focused on Mexico, this opens the door for investors to back outstanding startup founders from the rest of Spanish-speaking Latin America.

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