Financing & venture capital.

About technology, business & management issues..

A few weeks ago, while reading the newspaper I noticed an article in the business section. Constantly these items appear, with due intention, to promote the financing of small and medium enterprises through government and venture capital (VC) of Mexican investors and some foreign investment funds.

The article talked about the Mexican government's efforts to try to encourage small entrepreneurs and mentioned the millions of pesos provided by the funds. Of course, it never mentioned the results of such programs or its mechanisms to access this capital. It is not necessary: ​​it surely requires a lengthy bureaucratic process, as well as connections with the officials who manage and make decisions in these bodies.

On the other hand , there were the venture capital investors where, in his clear love of  this country, decide that they need to create and develop the corporate culture amongst Mexicans and invite entrepreneurs to submit their  businesses ideas, as any beauty pageant , to assess whether it was "worth" taking into account to invest in them. Of course the amount contributed was a joke considering the slice of the business  VC´s owners would get in return for its "contribution."

What surprises me is that some people actually get to create great business ideas, but by one or more reasons are not willing to take a leap of faith required to develop their businesses. I remember reading about a young mechanical engineer who had developed software that would help the auto manufacturing lines to properly combine the colors of the pieces. The software would have allowed to save up many man- hours and reach even higher levels of efficiency. She had a booth of its business, had created a logo, website, business cards and brochures of her product presentation. It also had a video tutorial explaining in a very concrete way what was her idea about and how the software would help manufacturing companies.

Her big problem?  She needed some investors to put up around $ 85.000 pesos to develop the sales  strategy (already had some potential customers) of the product. As I read the latter  I could not believe she had  such a brilliant idea that apparently was able to capture a market of millions of dollars and yet had been unable to get that amount of money and was hoping some private investors snatched a significant amount of their business in exchange for an amount that, being honest, means nothing if compared with the potential profits of her business idea.

As you read this I got the idea that perhaps the main problem is that within the corporate culture in this country is  all about copying schemes operating in other developed countries where venture capital is abundant and where entrepreneurs believe that only by having a brilliant idea, surely someone else will come and provide the funding.

The problem with this scheme is that it does not apply in Mexico. Unfortunately for the entrepreneurs there is either the government or private initiative the ones who would finance business ideas. So what's the solution? In my opinion it would first try to bootstrap your business so you do not have to waste time accountable to anyone, nor will be subject to attempts to tell you how to run your own business. Surely this young have a way to get those $ 85.000 pesos, perhaps with the good old-uncle who lives in another city, the mother who has the money under the mattress or just looking to finance with your own suppliers.

But I am sure that if  she develop a viable idea to turn it into a profitable business, getting the capital should be the least of her problems.
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