General Partner at Firstrock Capital
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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.
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.
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.
Editor’s choice of the industries with the most potential for technology disruption and growth.
Editor’s choice of the country’s top 10 emerging tech startups.
Robotics, Artificial Intelligence, Logistics
Real Estate Tech
Editor’s pick of which ‘Featured Startup’ is especially worth following and why.
Editor’s perspective of the maturity level of talent in the ecosystem.
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.
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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)
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)
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)
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)