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.