Country Guide

Colombia

Colombia
Andres Barreto

Guest Editor

Andres Barreto

General Partner at Firstrock Capital

Andres Barreto is a seed investor and entrepreneur. He has founded and led several ventures as both an investor and operator, including Firstrock Capital, Socialatom Group, Grooveshark, PulsoSocial and Onswipe. With Socialatom Group he has built or invested in over 80 companies. He is a founding fellow of Non-Profit coderise.org, and has been featured in BusinessWeek’s top 25 under 25, MIT Tech Review Top 10 Innovators under 35, and Inc Magazine’s Top 30 under 30.

Guest editors are local ecosystem leaders: successful founders, investors, or thought leaders. Have someone in mind? Nominate a country guest editor.

Disclaimer: all content within the Startup Ecosystem Summary and Editor’s Guide sections is written by and reflects the personal perspective of the guest editor. The guest editor is not responsible for content within the Country Snapshot and Community sections, as much of this content is compiled from external sources and does not necessarily reflect the guest editor’s view.

Startup ecosystem summary

Key Startup Cities

Medellin, Bogota, Cali

Connected Country Ecosystems

U.S., Mexico

Differentiators

  • Affordability
  • Technical talent
  • Proximity to the U.S. in terms of geography, culture and time zone

Challenges

  • Lack of access to seed and angel capital; no active local VCs and very few experienced angel investors
  • Small talent pool for experienced managers for tech scale-ups

Editor's Guide

Introduction

Colombia has had explosive growth in funding and number of startups with a remarkable velocity over the last four years, going from very little activity to major investors like Softbank, A16Z, Sequoia and Y Combinator taking the lead in both volumes of funding and number of startups. 

There are more than 25 Y Combinator companies from Colombia or with core teams in Colombia, up from just 2 in 2015. This is more than the number of companies from any other country in the region. There’s also a growing number of Silicon Valley and New York-based startups that have an engineering office in Colombia (AI Fund, Envoy, Splice, Snappr). Colombia has become attractive not just for its market, but also for its tech talent. 

Although local VC funds, limited partners, family offices and corporates were broadly absent in this explosive growth, after Rappi’s meteoric rise from a small startup to a unicorn in less than three years, there’s an awakening from corporates and family offices to not miss out on any more deals and they are gearing up to participate through corporate VC, corporate accelerators and investment in funds. 

A promoter of this rapid change has also been the government, starting with entrepreneurship initiatives under President Juan Manuel Santos. New president Ivan Duque has expanded those efforts and turned it into a core tenet of his administration.

Outlook

Colombia’s headed to its first wave of Series A and Series B companies, attracting more international capital while activating local capital that is looking to catch up. There’s still a very broad gap for funding under US$5 million that neither local not international funds are filling in. More companies, angels and funds need to become active in the seed stages for there to be a strong pipeline international investors can fund. The challenge is family offices, pension funds and university endowments are not incentivized to invest in the VC asset class, and they would rather invest in a Blackrock than become limited partners for a local fund. 

That said, the biggest corporations in Colombia, like Sura, Nutresa, Argos and Bancolombia, have made their first steps with their own corporate VC funds, most of them managed separately by Vero Norte, to the tune of US$250 million for Series A onwards and most deals have happened with companies not in Colombia. Everything is pointing to corporate VC becoming the standard investor in this asset class.

Featured Tech Startups

Editor’s choice of the country’s top 10 emerging tech startups.

Startup Showcase

Editor’s pick of which ‘Featured Startup’ is especially worth following and why.

Originally started as a student to student food delivery business in college campuses across Latin America, KiwiBot has become the company with the most robot deliveries in the world since they decided to focus on the U.S. market exclusively. This team has underspent and over-performed its Silicon Valley-based competitors by simply building their R&D in Colombia and having a very scrappy mentality, especially when it comes to hyper-fast hardware iterations.

Focus Industries

Editor’s choice of the industries with the most potential for technology disruption and growth.

Artificial IntelligenceCompanies looking to build out a machine learning team are picking Colombia because of its talent pool as well as employee retention rates. US-based US$175 million company builder AI Fund, on-demand photography startup Snappr, and robot delivery startup KiwiBot have made Colombia--specifically Medellin-- their engineering headquarters.
FintechColombia’s financial sector is the most regulated in the world. This has left gaps in terms of access to finance that startups are starting to fill, from micro lending, wallets, and small business loans. Some examples include; Mesfix, Sempli, Bankity, Nequi, TPaga, RappiPay.
LogisticsDue to Colombia’s difficult geography and traffic congestion, logistic tech companies have thrived in both growth and funding; notable examples include Quick, Rappi, Mercadoni, Merqueo, Liftit, and Logixboard.

Talent

Editor’s perspective of the maturity level of talent in the ecosystem.

  • Technical TalentAdvanced
  • Marketing TalentModerate
  • Experienced TalentModerate
  • International TalentModerate

Culture and History

Editor’s commentary on how the country’s culture and history have impacted the ecosystem.

Colombia today is far from what Netflix portrays of Colombia in the 1980s. Today, Colombia’s public and private sector is aligned in promoting tech entrepreneurship. Despite its violent past, Colombia has had the most stable economy in Latin America throughout the decades.

Colombia has had a complex history of armed conflict that went on for decades stemming from weak institutions and inequality that paved the way for marxist guerrillas, cartels, right-wing paramilitaries and everything in between.

Throughout the previous two administrations, the government was able to negotiate disarmament and peace deals to demobilize the vast majority of the different armed groups. Now the macro-economic and political focus is on maintaining that fragile peace by generating economic prosperity through a digital transformation of the economy.

This means an emphasis on tech entrepreneurship and tech education. The government has already signed memorandums of understanding (MOUs) with Softbank, 500 Startups, and the French Government to bring a Station F-inspired model to the country. San Francisco-based Holberton School, a software programming school, has already opened 3 campuses in the country and paris-based Ecole 42 is set to open in Bogotá as well.

Interested in becoming more involved in this ecosystem and connecting with local ecosystem leaders? Let us know.

Community

Active Investors

Firstrock Capital (Medellin, Bogota): An early-stage VC fund that backs companies in the U.S. market that leverage top engineering talent in Latin America. (Source: Firstrock Capital)

Polymath Ventures (Bogota): A fund and company builder building technology companies for the middle class in Latin America.

Softbank Innovation Fund (Bogota): The largest-ever technology fund focused exclusively on the fast-growing Latin American market. (Source: Softbank)

Vero Norte (Medellin): A corporate VC investing in early-stage companies through Series B stage. (Source: Vero Norte)

incubators

Creame (Medellin)

HubBOG (Bogota)

MacondoLab (Barranquilla)

Parque E (Medellin)

Ruta N (Medellin)

accelerators

Rockstart Colombia (Bogota): The 150-day Web & Mobile Program is focused on startups using promising new technologies (AI, Blockchain, sensors) to make a positive impact. (Source: Rockstart Colombia)

Socialatom Group (Medellin): Socialatom’s Global Growth Program invests up to US$50,000 to help founders expand their company internationally. (Source: Socialatom Group)

Wayra Colombia (Bogota): An accelerator associated with telecom corporation Telefonica offering startups workspace, a network, and up to US$150,000 in seed capital. In October 2019, Wayra Colombia launched an IoT Lab in Bogota. (Source: Wayra)

Startups Raising Capital
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Government Programs

Apps.co: An online learning platform started by the Ministry of Technology and Communications that helps turn digital business ideas into fully-developed enterprises. (Source: Apps.co)

iNNpulsa: A program founded in 2012 by the National Government to promote business development in Colombia, with the goal of putting Colombia in the top three most innovative economies of Latin America. (Source: iNNpulsa)

Non-Government Organizations

Endeavor Colombia: Endeavor Colombia has positioned itself as a leader in the entrepreneurial sector, acting as a hub for activities, conferences, and country-wide discussions about entrepreneurship. (Source: Endeavor Colombia)

Country Snapshot

Economy

Startup funding
Startup funding
US$1.09 billion (2019)
Standard of living
Standard of living
Global rank: 86
Innovation
Innovation
Global rank: 68 (2020)
Entrepreneurship
Entrepreneurship
Global rank: 47 (2018)
Annual GDP growth
Annual GDP growth
3.3% (2019)
(Global avg. 3.0%)
Ease of doing business
Ease of doing business
Global rank: 67 (2019)
Ease of starting a business
Ease of starting a business
Global rank: 95
Research and development
Research and development
0.2% of GDP
(Global avg. 2.3%)
Contract enforcement
Contract enforcement
Global rank: 177

Sources

Startup Funding: LAVCA
STANDARD OF LIVING: International Monetary Fund - GDP per capita (PPP)
INNOVATION: Global Innovation Index
ENTREPRENEURSHIP: Global Entrepreneurship Index
ANNUAL GDP GROWTH: World Bank
EASE OF DOING BUSINESS: World Bank
EASE OF STARTING A BUSINESS: World Bank
RESEARCH AND DEVELOPMENT: World Bank
CONTRACT ENFORCEMENT: World Bank

*Updated with latest available data based on listed source.

Society

Population
Population
50.9 million (2020)
Government
Government
Presidential Republic
Stability
Stability
Global rank: 81 (2020)
Internet usage
Internet usage
65.0% (2019)
Smartphone usage
Smartphone usage
39.8% (2018)
Literacy
Literacy
95% (2018)
Population under 15
Population under 15
22% (2019)
Median age
Median age
30.0 (2018)

Sources

POPULATION: Worldometer
GOVERNMENT: The World Factbook
STABILITY: Global Innovation Index
INTERNET USAGE: International Telecommunications Union
SMARTPHONE USAGE: Newzoo
LITERACY: World Bank
POPULATION UNDER 15: World Bank
MEDIAN AGE: The World Factbook

*Updated with latest available data based on listed source.

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