Youprobably know Colombia from its world-famous paradisiac beaches, deliciouscoffee, and contagious reggaeton music. In this article, my goal is to showcasehow Colombia is also building world-class innovation through its boomingstartup industry.
Did youknow that Colombia is the fourth-largest economy in Latin America by GDP?
Colombiahas experienced a historic economic boom over the last decade. Throughout the20th century, Colombia was Latin America's 4th and 3rd largest economy whenmeasured by GDP. When it comes to poverty levels, the country was as high as65% in 1990. In 2018 it decreased to 27%, showing the amazing and acceleratedgrowth of the region.
Beforewe celebrate the 2021 achievements of these groups of entrepreneurs and theircollaborators, I would like to invite you on a trip to the past for you to geta more holistic view of the country’s economic changes over the last 20 yearsand a few fun facts. Are you ready?
Since its independence, Colombia, likemost Latin American countries, suffered from political and economical turmoil,generating a lack of interest from foreign investors and unstable economicdevelopment.
The economic development had itsacceleration in the early 90s with the economic liberalism policies or“apertura economica”, the governmental initiative highly focused on tariffreduction, financial deregulation, privatization of state-owned enterprise, andadoption of a more liberal foreign exchange rate. The changes that came fromthese new policies led to a peak of economic performance in the first half ofthe 1990s due to an increase in public spending and the wealth effect from theincreased oil production. On the other hand, continuous fiscal deficits resultin higher public debts, leaving the country vulnerable to the impacts of theAsia and Russia economic crisis, resulting in Colombia's first economicrecession in more than 60 years.
The1 990s crisis resulted in thegovernment and the Central Bank making a major policy decision: the exchangerate would be allowed to float and be determined by market forces, and the Bankof the Republic would no longer intervene in the foreign exchange market.
Since the early 2000s, the country hasbeen experiencing an incredible economic acceleration with the export sectorleading the way, as it enjoyed the benefit of the more competitive exchangerate, as well as strong prices for petroleum. In 1999, Colombia was LatinAmerica's 4th Largest economy and had a GDP per capita of only $5,500. As of2014, the GDP PPP per capita has increased to over $13,000 and GDP PPPincreased from US$320 Billion in 1999 to nearly US$800 Billion. Poverty levelswere as high as 63% in 1999, but decreased to under 25%.
In the current days, Colombia's economicdevelopment is rising in 02 new sections. The number one is exporting itscultural products, what’s called “The Orange Economy”, and the latter is backedby the digital evolution powered by startups, which we will dive deeper in ournext stop.
Atthis destination, we will go over Colombia’s startup ecosystem and itshighlights from 2021. If you know anything about Startups in LATAM you knowabout Rappi, one of the first unicorns in the region, which originated inColombia. Since its creation, Rappi and many other startups have been leadingthe way in bringing the best of Silicon Valley mindset to their home countries.
In2021 we saw massive growth in venture capital across Latin American Startups. Isat down with Joanna Glasner atCrunchbase to discuss this explosive growth. The last year venture and technology growth investors poured anestimated $19.5 billion into the region
“By global benchmarks, it was a particularly impressiveshowing. Latin America was the fastest-growing region in the world for venturefunding in 2021, according to Crunchbase data for the six largest geographies”Read full article here.
Todive into deeper specific country data on why we are bullish in Colombia, belowI gather key data points that demonstrate the growth of investments inColombian startups. If you have ever listened to any of our podcasts, you knowthat we believe that talent is globally distributed but capital is not, it’sgood to finally see the increase of foreign investors backing Colombian-basedstartups and in addition to it the spike in the creation of local venturefirms.
Inthe section below you will find the 2021 deals overview, how it compares to2020, the main industries that are booming, the top deals of the past year, alist of startups to keep an eye on, and a list of local investors. Enjoy!
1. VC investment in Colombia in 2021
a. # of deals: 104 | 28% YoY growth
b. $ of funding: $1,24 billion | 50% YoY growth
1. Rappi - One of the first SuperApp in Latin America, Rappi is a consumer tech company that specializes in providing online delivery services.
2. Addi - It’s a fintech company that provides credit and banking solutions.
3. Frubana - Frubana is the everything store for restaurants in LatAm, they are revolutionizing the world of agriculture and the restaurant industry!
4. Habi - Habi is a digital platform that aims to simplify the process of buying and selling real estate properties in Colombia.
5. Platzi - Platzi is an effective online education platform that offers classes on marketing, programming, business, and design
WeKall - WeKall cloud corporate telephony simplifies the operation to only one provider saving up to 60% of the monthly spend in telephony operation.
As political turmoil settles, successful startups trailblaze andventure capital becomes global, we at Prodigio Capital believe that the nextdecade will solidify LATAM as a key breeder of world-class global startups.
Digital transformation is accelerated due to the covid-19pandemic, every single industry is adopting digital technology on recordlevels, there is no turning back. The companies that we highlighted in thisarticle are leading the way in the creation of a digital economy in Colombia. Ihope that this article provides you with enough information to awaken yourinterest in the country.
If you would like to invest in Startups in Colombia, join oursyndicate and connect with over 300 world-class investors that are backing thebest founders in LATAM. To get started it’s pretty easy, just fill out the formon our website by clicking here.