Mexican start-ups seek positive social change
- 26 November 2012
- From the section Business
When Jorge Tellez left his native city of Monterrey, it was a good place to live. After six years in the US, he returned to Mexico in 2010. By then, the country's drug violence had brought about dramatic changes.
Nonetheless, Mr Tellez decided it was his duty to return. As an international development worker, he had seen how Mexico's growing volatility had led to a brain drain - and he resolved to help reverse it.
"If we are to become leaders, what kind of example are we giving other people by leaving and letting everyone deal with that mess?" he asks.
His own way of leading by example was to set up Menthora, an online community that offers a question-and-answer forum for technology users.
Mr Tellez is one of a growing number of young Mexicans using start-ups in an effort to create positive social changes within the country.
It is the kind of effort that Mexico badly needs at the moment, as the country struggles to cope with a wave of killings blamed on organised crime.
There have been at least 50,000 drug-related killings since former President Felipe Calderon launched his crack-down on traffickers in late 2006.
And the death rate keeps on rising. Figures from the consultancy Lantia suggest a 10% rise in homicides related to organised crime in the first six months of 2012 compared with the final half of 2011.
But the economy is powering forward. In 2011, Mexico's growth rate of 4% outpaced that of Brazil, which managed a mere 2.7%. Forecasts suggest it will notch up the strongest growth in Latin America by the end of this year.
Unemployment has been declining as Mexico continues to recover from the deep recession it suffered back in 2009. In September, the rate fell to just 4.7% of the workforce, its lowest level for nearly four years.
Even so, Mr Tellez reckons it could be even lower if more people get the start-up habit. "I'm trying to help people start their own businesses, so they can create their own jobs," he says.
He says that in Mexico, you normally need connections to get access to business opportunities. He wants the knowledge required for entering business to be available to everyone.
Mr Tellez strongly believes that the start-up movement is a better vehicle for change than the country's political system. He worked on Mr Calderon's 2006 presidential campaign and the experience left him sceptical. It was slow-moving and "full of backstabbing", he says.
On the other hand, "you can empower people through technology", he says.
"And you can have scalable impact."
Mexico is currently showing a strong interest in start-ups. So far this year, there have been 17 start-up weekend events in the country, with 13 more planned for November and December.
There were only seven start-up weekends in 2011 and just one the year before, when the phenomenon first reached the country.
At the same time, a number of venture capital funds have been making their presence felt in Mexico, including Mexican VC, Alta Ventures and Angel Ventures Mexico.
Cesar Salazar, a serial entrepreneur, founded Mexican VC in April 2011 as a way of funding and mentoring Mexican start-ups, after experiencing frustration in finding seed funding for his own ventures.
It offers fledgling businesses $25,000 (£15,600) in cash and $30,000 in services. It has invested in 16 companies over the past 18 months after receiving 300 applications, and was recently acquired by the Californian seed fund 500 Start-ups.
Mr Salazar sees a noticeable interest in solving real-world problems. And these are the sorts of ventures Mexican VC wants to invest in.
Ventures recently taken on include RubberIt, a discreet condom delivery service. Mr Salazar says he got involved because contraception is still a taboo subject in Mexico, and the founder is passionate about the importance of practising safe sex, having lost a friend to Aids.
"Entrepreneurs believe in market mechanisms to solve problems," he says.
Celeste North is another keen start-up enthusiast. She co-founded NuFlick, an online platform for independent and art-house films, many of which explore gritty social issues. Since distribution can be difficult and costly to secure, her site provides a much-needed opportunity for film-makers to find an audience.
"In general, independent films talk about topics that big blockbusters just don't talk about," she says.
In her view, corruption and vested interests make it hard for the Mexican government to act effectively in promoting social change. This is where start-ups can step in.
"They have flexibility," she says. "They are faster with making new proposals."
HJ Barraza also believes that other methods of helping society can fall short. He works at Humana, a think tank for social innovators. He and his colleagues are working to launch technology start-ups dealing with neighbourhood improvement, citizenship and micro-volunteering.
"When you talk about social good, automatically everyone thinks about philanthropy and giving money away. That's a very Mexican thing," Mr Barraza says.
He thinks that start-ups can work where charities fail.
"Since they are always depending on donations, they dedicate most of their resources to getting money instead of solving real problems," he says.
And entrepreneurial activity in itself can have general social benefits. US start-up enthusiast Jonathan Nelson believes that entrepreneurs can encourage positive behaviour. "Entrepreneurship is a reputation-based economy, so you need to be helpful," he says.
Mr Nelson started Hackers and Founders in 2007 to provide communities specifically for tech start-ups. There are now branches in eight countries, including five in Mexico alone, with the Chihuahua, San Luis Potosi and Puebla branches opening this year.
Having grown up in Honduras and Costa Rica, he has experienced the region's difficulties.
"The only way Mexico will change is if business becomes more profitable than drugs," he says. "Only oil, finance and tech start-ups have similar profit margins."