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Guadalajara is Mexico’s cultural epicenter, a hub of mariachi music, spicy food, and according to Andy Kieffer, a local startup scene growing “like wildfire.” It just needs a few sparks to really get going.
Kieffer is the founder of Agave Lab, a seed-stage fund, coworking space, and incubator program based in Guadalajara. Keiffer spent 15 years in the Silicon Valley startup scene. A few years ago, he decided to move to Mexico with his wife and two children and retire.
“I started to get the feeling that the Bay Area was overhyped and venture money was chasing some really dumb deals,” he said in an interview. “And then here I am in Mexico, where giant parts of the market haven’t been pursued yet. It’s like Silicon Valley was 20 years ago, but things are happening faster.”
Kieffer said there are more information science and information technology graduates in Guadalajara than in the Bay Area. Despite the technical talent, there isn’t a strong ecosystem to support startups — few mentors, little to no institutional investors, and a local economy that it just beginning to use Internet technology in a pervasive way.
He created Agave Lab to help local entrepreneurs get their ideas off the ground. The fund recently led a round of seed funding for ReTweeti, with participation from the Guadalajara Angel Investor Network (GAIN).
ReTweeti helps marketers in Mexico promote their brands on Twitter. It connects them with individual Twitter users who get compensated for tweeting about that brand. This enables marketers to reach a wider audience of people who aren’t in their existing follower network.
“Mexico is far behind the U.S. with regards to online media, but it is happening now and happening quickly,” Kieffer said. “Agencies here still do print ads and billboards, and the yellow pages are still huge. Marketing on social media is foreign, and the agencies here won’t do business unless they know and trust you.”
The U.S. tech scene is flooded with social media marketing services., but as Kieffer mentioned, local brands and agencies in Mexico are not likely to use them due to language, cultural, and social differences. This is a case where a local solution is likely to gain more traction.
When the ReTweeti team first started working at Agave Lab, Kieffer helped them set a series of measurable goals and said if they achieved them at the end of three months, he would fund their company.
ReTweeti hit the goals, and has signed up more than 10,000 users in the span of a few months. However even if the startup continues this momentum, that doesn’t mean there will be a return.
Opportunities for growth are strong in Mexico, but exit opportunities are a different story.
Venture capital makes money off returns, which are almost always generated by an acquisition or an IPO. Neither possibility is strong in Mexico yet, and Kieffer said local investors may have to come up with a different way to structure investments, perhaps based on dividends. He also said that opportunities for follow-on funding are limited, and thus the bottom line is to get profitable fast.
“I tell all my companies not to plan on an A round, and try to have revenue instantaneously,” Kieffer said. “There is a lot of money in Guadalajara, but wealthy individuals here are afraid to invest in tech startups. People are attracted to shiny objects, so if just one company hits big, everyone will start to pay attention.”