Colombia is the gateway to South America as it is located in the continent’s northwestern region, and connects the continent with North and Central America. Colombia is home to the second largest Spanish-speaking population in the world. The majority of the people live in the country’s mountainous interior. Almost the entire country is proud of the purity of the Spanish language they use.
The country’s economy is still dominated by agriculture, mainly focused on the production of fruits and coffee, but recently, services and industries have been making huge contributions as well. While Colombia displays so much promise, the disparity in the distribution of wealth is still a big issue. Moreover, the country’s stability is tainted by the illicit drug trade which still haunts the nation.
Colombians are mostly of mixed race. The majority of the people are mestizos, as they are of Indian and European descent. Comprising the population are large minority groups of African and European roots. Their unique and diverse ancestry is seen in their art, dance, music and food.
Colombia’s startup scene
The idea of Colombia being a growing hub for any type of industry other than drug trade would be quite far-fetched 30 years ago. Many people have been thinking that Colombia was doomed, but today things are different. The country is proud to have a robust startup ecosystem within the region and there’s potential to explore it further.
The government’s plan was for more than half of the country to have a broadband connection by 2018. The latest available figures (June 2017) say that there are already 28.5 million Internet users in the country, whose population is 49 million (2017). At the end of the first quarter in 2016, Internet subscription (broadband, dial-up and mobile) reached 13.7 million. These are very encouraging figures for interested parties who are eyeing a market that is growing rapidly. Colombia, like most nations, aspires to be a part of the field of technological innovation, as there is already an internal tech culture that’s growing stronger.
Putting the foundation in place
The Colombian government is doing a joint campaign to have the country known as a tech center, which includes attracting IT service with professional training programs and tax incentives at the initial stage. The campaign is gaining ground and so far, it has grown an industry worth $6.8 billion. Most of the 1,800 registered companies are in technology-related industries such as IT services and software development. The government is looking forward to the tech industry growing and diversifying into other related innovative fields.
In conjunction with the first stage of the re-branding program, the Colombian government is also addressing the scarcity of venture capital, which is what hinders the robust growth of the country’s tech industry. It established the iNNpulsa in 2012, which is the country’s management unit for business growth. Its task is to promote and support new ventures and tech innovation. It provided three grants in 2013, amounting to $800,000 to support investor groups that are willing to establish their operations in the country.
Another organization that the federal government supports is Medellín-based Ruta N. It offers support for early-stage businesses via networking support, opportunities for promotion and finance, as well as business classes.
More recent developments
A more tech-specific initiative of the Colombian government is Apps.co, which they expect to fund partnership programs with universities and accelerators. Apps.co is located in Bogotá. It is tasked to help Colombian startups to develop their ideas into businesses under the supervision of the Ministry of Communications and Transportation. The government initiative supports the development of content, software and mobile applications. The program was created in 2012 and to date, it has helped 137,000 people and provided support to 2,175 companies and teams.
From zero, the country now has 38 seed funds, venture capital and private equity. Innovation is the focus of the government initiatives, encouraging entrepreneurs to develop tech-related businesses. With government support, Colombia is now turning into a viable technology hub. And because Colombians are the fourth highest Internet users in Latin America, many ideas for improving daily lives are sprouting around the country.
Tech scene in Colombia
One of the most popular startups in Colombia is Rappi, an on-demand delivery app. In September 2018 it was able to raise an additional US$220 million. Rappi is valued at US$1.1 billion today. It partnered with Avon Brazil, which is a big boom for the company and its customers, as the delivery service of Rappi assures them that the products they purchase will reach them within two hours. Rappi is continuing to grow. It is now operating in Uruguay, Perú, Mexico, Colombia, Chile and Brazil.
Here are more changes and developments in the country’s startup scene:
- Getting insight and ideas from The World Bank’s Doing Business Report, the country is making new ways to improve the country’s business regulations for the private sector. Business owners are now able to register their own products and movable assets as business collateral.
- Colombia welcomes new talents and ideas, as more than half of the adult population in the country are would-be entrepreneurs. The World Economic Forum and Global Entrepreneurship Monitor found that Colombians are highly favorable of entrepreneurship. Along with Chile, the country is agog with early-stage entrepreneurial activities. Many of the current entrepreneurs are not only innovative but highly ambitious.
- The government continues its technological innovation initiatives. It created the Ministry of Science, Technology and Innovation. It aims to find and distribute more resources for research projects.
- In 2015 alone, the e-commerce market in Colombia grew by 64%. It generated US$3.1 billion in revenue in that year. Online fraud is quite low in Colombia so the sector is predicted to grow some more. The unbanked population is still sizable, but there is a prediction that things will change as the number of connected people in Colombia continues to increase.
- The country’s economy is generally a free and open market and there are several trade agreements with important partners such as the European Union and the United States. It is considered a very vital location for business due its ports in the Atlantic and Pacific Oceans. Colombia promotes foreign direct investments and enforces the same restrictions on investments for local and foreign investors.
- Colombia is now Latin America’s Crypto ATM destination because of the number of Venezuelan refugees in the county. By 2021, the number of refugees from Venezuela could reach four million, according to the foreign minister. Athena Bitcoin is already in Colombia. Due to their currency’s instability, Venezuelans prefer cryptocurrency. The company has established 27 crypto ATMs around Colombia. In contrast, Argentina only has five crypto ATMs.
- Medellín was recognized by The Wall Street Journal and Citibank as an innovative city. It provided a solution for environmental sustainability and mobility. Medellín built a huge escalator system and distinct gondola to convey citizens who live in the neighborhoods on the city’s poor hillside locations. The city likewise established schools, parks and public libraries.
Bogotá and Medellín are favorite destinations of entrepreneurs from Europe and the U.S. as there are plenty of direct flights from several airlines into the two cities. It’s a favorable setup for tech entrepreneurs who want to conduct business in Colombia.
Startups and investors
With the huge potential for tech-related startups in Colombia, it also attracted several international companies such as Google and Facebook that opened permanent offices in Colombia.
Although there are still many things to be done in order for Colombia’s tech startups to realize their full potential, some already established companies are attracting customers as well as investors.
One of the biggest success stories is .CO Internet S.A.S, which administers the .CO domain. The Internet country code and top-level domain of Columbia is .co. The company, which is now a subsidiary of the U.S.-based Neustar, sells second-level domain names worldwide. Neustar acquired the company for US$109 million in 2014. It may be difficult to replicate the success of .CO, although there are several other companies that are being noticed, such as the online delivery service called Click Delivery and the online payment program called PagosOnline.
Known in many parts of the world is VoiceBunny, a marketplace for digital voice-overs that was founded by entrepreneur Alex Torrenegra of Bogotá.
Many of the outstanding startups in Colombia are in Bogotá and Medellín that had successful exits include:
- Portal Finance
Some of the leaders who provide in-depth information and support for tech startups in Colombia, especially in Medellín and Bogotá are entrepreneurs as well, such as:
- Juan Diego Calle (.CO founder)
- Alan Colmenares (think tank of the startup ecosystem)
- Catalina Ortiz (iNNpulsa CEO)
- Juan Salcedo and Andres Gutierrez (Tappsi founders)
- Christian Van Der Henst and Freddy Vega (Mejorando.la founders)
- Diego Serebrisky (partner – Alta Ventures)
- Andres Barreto (manages the accelerators of the government)
- Roberto Cuartas and Hernan Jaramillo (TareasPlus founders)
- Eduardo Quiroz (Ruta N)
- Esteban Mancusco and Esteban Velasco (founders of Velum Ventures)
- Juan Sebastian Franco (entrepreneurship head of ANDI, a local business association)
- Eddie Arrieta (Espacio co-founder)
The two top cities, Medellín and Bogotá, also host several accelerators, incubators and venture capitalists. Prominent are HubBOG, Wayra Colombia, Creame, Medellín ACI, Firstrock Capital, Magma Partners, Polymath Ventures and Parque del Emprendimiento.
Aside from Medellín and Bogotá, other locations that are starting to be hubs for tech startups are Cali and Barranquilla. These four locations provide several coworking spaces to ensure that the startups have places to work around the city.
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