Attention entrepreneurs and startups, this is how Corporate Venture Capital invests in Mexico according to study

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Within the framework of the virtual event INCmty , Dr. Félix Cárdenas , director of the Center for Innovation and Corporate Entrepreneurship at EGADE Business School , presented the results of the study ‘Experiences and good practices of Corporate Venture Capital in Mexico’ . The research measured the pulse of the so-called CVC or Corporate Entrepreneur Capital , yielding very interesting data for entrepreneurs and startups seeking financing .

The concept of Corporate Venture Capital (CVC) refers to funds that seek start-ups or early-stage companies with an innovative proposal or business model, and drive them with investment to grow and compete in their industry. In turn, this method creates value in the business model to generate profits for investors, explains the Wortev Capital portal.

In his participation, Dr. Félix Cárdenas detailed what they have observed in the Mexican entrepreneurial ecosystem after spending the last 25 years studying around 400 corporations in different regions of the world.
“In Mexico we identified that the main CVCs help business growth while being profitable. They support B2B commerce, emerging technologies and the artificial intelligence revolution, as well as disruptive business models, ” said the researcher and professor at Tec de Monterrey . “CVCs are concerned about the survival of startups and, consequently, are committed to actively participating in this type of investment,” he added.

The panorama of Corporate Entrepreneurial Capital in Mexico

According to the professor, who has also collaborated with institutions such as Harvard University and Columbia University, the results show that of the 23 Mexican corporations that agreed to participate in this study, 19% are investing in statups .

“If we compare Mexico with the United States and the rest of the world, of the global companies [listed in the index] Fortune 100, 50% of them are conducting Corporate Capital Venture activities. In the United States, 20%, that is, 20 cents of every dollar in the world of Venture Capital, comes from corporate capital, ” the specialist highlighted, adding that as of 2018 they saw a notable increase in the number of corporations that they got involved in these investments.

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“Surprisingly, in Mexico we identified that 50% of CVC activity , or at least the central offices, are concentrated in Mexico City . Meanwhile, 29% are in Monterrey, Nuevo León ” , the researcher pointed out regarding the poor distribution of these funds in geographical terms.

“We note that the main source of resources for these CVCs, 29% to be precise, are other investors, other corporations, or perhaps other venture capital funds, as well as angel investors ,” he added. In addition, they found that 26% also have a direct relationship with the entrepreneur or the founders of the funded startups.

How much and where do Mexican CVCs invest?

The professor said that in Mexico ” we still see many cases of funds that have less than 10 million dollars in commitments, and only a couple have exceeded the 50 million mark.”

Regarding the amount of investments, most CVCs are injecting less than a million dollars and “very few are going beyond that amount.” However, this is not necessarily a problem, as rather this data “suggests that these are investments in the early stages or perhaps a series A” .

53% of Mexican CVCs “are investing globally, in Israel, Switzerland, the United States and other countries,” and 26% focus only on Mexico. forecasting a growth in number and volume of investments in the coming years.

“CVC’s activities are financially sustainable, which means they have the means to survive. At the same time, they are strategically supporting the development of technologies and new business models ”, concluded the speaker in his presentation during the INCmty virtual festival, held from November 8 to 10.