Nearshoring and the Surge of Startups in Latin America

Nearshoring and the Surge of Startups in Latin America

The concept of nearshoring isn't just reshaping the manufacturing landscape; it's also proving to be a window of opportunity for startups across Latin America.

Over the past two years, an increasing number of large corporations and their suppliers have been redirecting their investments towards Mexico. The aim: to manufacture closer to the U.S. market, enjoying more favorable conditions compared to those in China.

Impact on Established Corporations

This shift has been particularly noticeable in industries like logistics and transportation, where companies are already witnessing the effects of nearshoring in their bottom lines.

But it's not just the giants or local incumbents that stand to benefit from this trend; startups and emerging enterprises are poised to thrive as well. According to José Kont, director of Cuantico, a venture capital research firm in Latin America, nearshoring is prompting small and medium-sized businesses to embrace digital transformation. While some digital services and software solutions may come with a hefty price tag, this presents an opportunity for startups to offer more affordable alternatives.

The SME Perspective

José Kont elaborates, "There's a very interesting situation in the country because, besides the realm of venture capital investment, there's also the entire nearshoring scenario...which has a compelling direct effect. If we look at Latin America, not just Mexico but the entire region, the majority of companies are SMEs. 90% to 95% of them aren't digitized."
Kuvan kuvausta ei ole saatavilla.
José Kont, director of Cuantico

He further emphasizes how this opens doors for local startups and entrepreneurs to fill the gap with innovative solutions tailored to the needs of SMEs.

Moreover, fintech companies are stepping up to provide credit and other financial products specifically targeting SMEs, further fueling their growth and digitalization journey.

In essence, as nearshoring continues to reshape the business landscape in Latin America, startups are seizing the opportunity to thrive by offering cost-effective solutions and driving digital transformation across industries.