Technology that has the ability to transform cities has given power to how people live their everyday lives. Whether it’s autonomous vehicles streamlining public transportation, city 311 apps to help its citizens instantly report potholes and broken street lights to be fixed, or installing contactless payments at the grocery store, there are a vast amount of ways in which the cities people live in can make subtle changes to augment everyday tasks. And while these may seem like minimal tasks for now, the groundwork is being laid to help transform cities around the world into smart city hubs.
One city that's been growing in its technology sector over the last few years is Mexico City. Essentially, the two main areas of interest that the city is helping push forward in terms of technological advances are public transportation and environmental-related tech.
Before we jump into the post, here are a few facts about Mexico City and its tech scene:
- Greater Mexico City had a population of 21.3 million, making it the largest metropolitan area in the Western Hemisphere and the largest Spanish-speaking city in the world
- GDP of Mexico City: $490.6 billion in 2016
- Median household income: 158,876 pesos, which equals roughly just over $9,000 per year
- Number of startups and tech companies: 1,235
- Number of startups launched since the beginning of 2017: 319
- Total funding for the last 12 months: $295,263,418
In this week’s Tech Center tracker, we explore how the rising transportation and environment technologies are helping to raise Mexico City’s profile on the global stage as a major tech player.
Over the last five years, Mexico City has continually built up its tech scene through education at its local universities. It’s estimated that there are 130,000 new engineers every year in the area. It’s quite likely that this growth in tech-minded young professionals won’t slow down any time soon as half of the city’s population is under the age of 20 and university enrollment has tripled over the last few decades.
Meanwhile, the Mexican government has been pushing for business expansion over the last few years, handing out $658 million to entrepreneurs in 2014, which resulted in 6,000 new companies. By the year 2050, Goldman Sachs is predicting that Mexico City on its own will be the fifth largest economy in the world. For Latin America, 36.6 percent of funding comes from the city, according to analyst company LAVCA, and the number of registered VC funds has jumped from 14 in 2012 to 45 today.
Pepe Villatoro, who runs an event meet up series firm, commented to Red Herring on why he believes Mexico City is becoming a target for tech entrepreneurs. “... in Mexico City, there’s less competition in general, less sophisticated competitors, lower costs, easier access to venture capital for early stages, easier access to decision makers in corporations and potential big clients and easier access to most types of talent than big cities of the U.S.; making it a great place to create and position solutions for the whole world, the Spanish-speaking world – or for 6 billion people living in developing economies.”
With less competition in Mexico City and its universities pumping out a significant number of engineers every year, it’s no wonder that Mexico’s capital is becoming one of the major tech players. Over the last five years, Mexico City has seen a wide range of tech startups, including Linio, Conekta, Konfio and Bitso, as well as welcoming in companies like Amazon and Drayson Technologies setting up offices. Just a few years ago, SAP set up its Startup Focus Program, which helps local-area entrepreneurs get up and running.
As we reported earlier this summer, Mastercard partnered up with Mexico City to help its public transit payment system become cashless. The hope with this is that the credit card company will be able to expand its efforts to other small-to-medium sized businesses in Mexico City.
Moving forward, Mexico’s capital city looks as though the current moves being made by larger companies and the venture capital funding flowing through it is enough to help propel it forward into the big leagues of tech.