Sun, Oct 20, 2019 - Page 16 News List

Undercover entrepreneurs:
Fearful Mexican tech start-ups shun spotlight

The ever-present risk of being kidnapped for ransom means that even the most successful of the country’s technology entrepreneurs keep a low profile, stunting growth in the sector

By Julia Love and Daina Beth Solomon  /  Reuters, MEXICO CITY

Armed members of the Sinaloa cartel block a road during a botched attempt by security forces to arrest Ovidio Guzman, son of drug kingpin Joaquin “El Chapo” Guzman, in Culiacan, Mexico, on Thursday.

Photo: Reuters

In Mexico’s burgeoning start-up scene, publicity is the last thing many entrepreneurs want.

Unlike plenty of their PR-hungry counterparts in Silicon Valley, Mexican start-up founders often decline media interviews, avoid public announcements and suppress details of financial success.

One big reason: They do not want to attract criminals.

“You are getting yourself in a position where you could be subject to ransom,” entrepreneur Ulises Vazquez said of the drug-fueled violence and kidnappings that have scarred society.

“You want to have a low profile to be able to continue with your freedom,” he added.

Vazquez twice kept quiet on major start-up milestones: when he sold a stake in his advertising agency Ergos in 2010, and when the acquiring firm, Matomy, went public in 2014.

Although understandable, the low-profile approach is holding back Mexico’s technology industry, investors and experts said, making it harder to attract talent and money, especially from abroad.

Mexico’s tech sector last year drew only US$175 million in venture capital, according to the Association for Private Capital Investment in Latin America.

That was dwarfed by Brazil, the region’s powerhouse, which received US$1.3 billion, but also trailed Colombia, which drew US$334 million in venture capital, although its economy is worth about a quarter of Mexico’s.

Reuters spoke with two dozen investors and start-up founders who acknowledged that security concerns were widespread in the tech community and had even pushed some entrepreneurs abroad.

Illustrating the concern, most declined to speak on the record.

Without publicity, entrepreneurs struggle to recruit the best, bring in money and inspire the next generation, said Daniel Green, a partner at Silicon Valley law firm Gunderson Dettmer LLP who advises start-ups across Latin America.

“It certainly stunts the growth,” he said.

To be sure, violence is rampant elsewhere in Latin America, from drug-torn Colombia to crime-ridden Brazil.

However, the issue is especially acute in Mexico due to an escalation of violence from more than a decade ago, when the government sent armed forces into the streets to crack down on the cartels. Around the same time, drug gangs began branching into extortion.

A string of high-profile kidnappings and murders, including the death of an executive at broadcaster Televisa S.A.B. killed on his bike during a shootout in 2017, rattled the elite.

That has generated business for executive protection firms, who provide bullet-proof vehicles, GPS trackers, armed bodyguards and real-time monitoring.

For start-ups, the fears might be more perception than reality: There are no known cases of tech entrepreneurs being attacked after sharing their company’s success.

Some do still announce their deals.

Bismarck Lepe, chief executive of software company Wizeline, said his peers are being over-cautious, despite the horrors Mexico has suffered.

“Communicating more about your success helps the community, helps the company, helps the investors,” said Lepe, who divides his time between Silicon Valley and Mexico.

“As long as you are not involved in the drug trade, nothing is going to happen to you,” he said.

Mexican entrepreneur Domingo Guerra, who founded cybersecurity start-up Appthority in California, said he is not generally worried about safety when he returns home.

This story has been viewed 2378 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top