Venture Debt - Mexico | Statista Market Forecast

Mexico is expected to see the Total Capital Raised in the Venture Debt market market reach US$308.10m by 2024.
Traditional Venture Debt is set to dominate the market with a projected market volume of US$270.30m in 2024.
In global comparison, the United States will lead in Capital Raised, with US$22.4bn expected in 2024.
In Mexico, the Venture Debt market is gaining traction among startups seeking alternative capital raising options for growth and expansion.

Definition:

The Venture Debt market refers to a form of equity and debt financing combination, which is used to finance early stage and growth stage capital-backed companies. Besides equity funding rounds, business can seek venture debt that minimizes ownership dilution and governance requirements to increase the cash runway to reach the next milestone or even provide a cushion for delays.

Structure:

The market consists of two segments:
- The Traditional Venture Debt market refers to a form of debt financing that is often provided to venture-backed companies to either buy new equipment, meet a deficiency of short-term capital, or support expansion plans.
- The Growth Venture Debt market refers to a form of debt financing that is often structured with warrants or options, which provides a rapid development stage in which businesses can support their long-term oriented growth plans.
The market data comprises of the amount of capital raised, number of deals, and average deal size.

Key players in this market are companies such as Wells Fargo and Hercules Capital.

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Venture Capital
Venture Debt funds are sponsors by governments

The Venture Debt market in Mexico has been experiencing significant growth in recent years, driven by various factors such as customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors.

Customer preferences: Mexican entrepreneurs and startups have increasingly turned to venture debt as a financing option due to its attractive features. Venture debt provides them with the necessary capital to fuel their growth without diluting their equity ownership. This allows entrepreneurs to maintain control of their companies while still accessing the funds they need to scale their operations. Additionally, venture debt offers more flexible terms compared to traditional bank loans, making it an appealing choice for startups with uncertain cash flows.

Trends in the market: One of the key trends in the Venture Debt market in Mexico is the growing number of venture capital-backed startups. As the startup ecosystem in Mexico continues to mature, more companies are securing funding from venture capital firms. This influx of venture capital has created a demand for venture debt as startups seek additional capital to support their growth plans. Furthermore, venture debt providers have become more active in the Mexican market, offering tailored financing solutions to meet the unique needs of startups.

Local special circumstances: Mexico's proximity to the United States, which has a well-established venture debt market, has played a role in the development of the Venture Debt market in Mexico. Mexican startups often have ties to the US market, either through investors or customers, which has facilitated the adoption of venture debt as a financing option. Additionally, the Mexican government has implemented initiatives to support entrepreneurship and innovation, providing a conducive environment for startups to thrive. These factors have contributed to the growth of the Venture Debt market in Mexico.

Underlying macroeconomic factors: The overall economic growth in Mexico has also had a positive impact on the Venture Debt market. As the Mexican economy expands, more opportunities arise for startups to address market gaps and drive innovation. This has attracted both domestic and international investors, leading to increased funding availability for startups. Additionally, low interest rates in Mexico have made venture debt an attractive financing option for both startups and investors, further fueling the growth of the market. In conclusion, the Venture Debt market in Mexico is experiencing significant growth due to customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors. As more startups seek alternative financing options and the Mexican economy continues to expand, the Venture Debt market is expected to further flourish in the coming years.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Venture capital is the term used to call the financial resources provided by investors to startup firms and small businesses that show potential for long-term growth. It has become a very important source of capital for entrepreneurs, who often have problems with financing their needs through risk-averse banks. Venture capital investments incorporate a high level of risk as only some of the VC-backed companies develop into successful and highly profitable businesses. In 2020, the leading venture capital backed company worldwide was the Manbang Group, which based in Nanjing, China.