The gaming startup market in Mexico: Opportunities and challenges

The vibrant world of tech startups has found a space carved out for growth and innovation in the gaming sector.

Despite being dominated by tech giants from Asia and the United States, the gaming industry still has great potential in Mexico, the 10th largest market in terms of revenue globally and the biggest market in Latin America.

There are 67 startups related to the video game industry (gametech) in the country, while the category received $70,000 in venture capital investment from 2022 to 2023.

To put this in perspective, during 2024, $5 billion was invested worldwide in startups in the industry, according to the newly released study “Game On: The Rise of Gaming in Mexico,” from global entrepreneurial development organization Endeavor and Santander Bank.

In 2021, De Kabeza and Wasabi Videojuegos raised $275,000 and $150,000, respectively, demonstrating the viability of innovative projects in the gaming industry.

Although in Mexico, 80% of startup investment is concentrated in fintech, e-commerce, and logistics, the video game industry could begin to gain ground in the future, noted Vincent Speranza, CEO of Endeavor, during a presentation for the study that I attended in Mexico City on April 2. 

However, the numbers show that currently, for gaming startups, the challenge is raising capital. Fifty-six percent of entrepreneurs in this industry fund themselves with their own resources.

Business opportunities for startups in gaming

Mexico has a base of 76 million video game players across the country – from experienced eSports participants who compete internationally, all the way to hobbyists who play games on their smartphones during their morning commutes on public transit. 

“Mexico is emerging as a regional leader in video game development and consumption. While many gamers still play on mobile devices, and the market is not yet as competitive as that of the United States or Asia, the growing popularity of eSports in Mexico and Latin America is creating a large market of video game consumers,” said Chris Mut, CEO of Nerdytec. “For a company like Nerdytec, which manufactures ergonomic lap desks for gamers, Mexico is undoubtedly an attractive market.” 

Opportunities for startups in the gaming industry lie primarily in integrated advertising, where revenues are estimated at $960 million by 2025.

Due to the engagement generated by video game platforms, especially on mobile devices, advertising on these platforms is often up to five times more effective within the gaming category, noted Laura Cruz Urquiza, deputy general manager of strategy, innovation, and customer experience at Santander, during the presentation of the study.

The next area where there’s an opportunity is eSports, with revenues from the segment reaching $387 million this year. 

Examples include Monou, a platform for hosting tournaments and earning money, or Draftea, which “is a company close to the industry. It started as a fantasy football platform for Latin America and is now more involved in the gaming space,” Speranza explained. Draftea has secured investment from renowned funds such as Sequoia and Kaszek.

Faced with these opportunities, the challenges are greater because not enough venture capitalists have invested in the gametech industry.

Vicent Speranza acknowledges that “although funds are designed to take risks, actually being the first fund to write a big check, a big bet (in the gametech industry), always makes you feel a bit shaky, because naturally they opt for slightly safer bets.”

In Mexico, there is only one fund specialized in this industry: Altered Ventures, created in 2016 by Mario Valle Reyes to support independent studios. So far, it has invested not only in the country but also in Silicon Valley and Abu Dhabi.