Colombian entrepreneurship solidifies with an increasing number of players across the country

In recent years, Colombia has emerged as one of the most prominent innovative ecosystems in Latin America, a trend that continued in 2023. Over the course of the year, the country saw a 30% increase in startups, totaling 1,720, which together secured $786 million in funding. These achievements were underscored in the ‘Colombia Tech Report 2023-2024’, a comprehensive analysis of the Colombian startup ecosystem, unveiled last week.

Other sources confirm the weight of local entrepreneurship in the Latin American and global panorama: in 2023, the country was the third in the region to attract the most venture investment, behind only Brazil and Mexico, according to a recent report by LAVCA (the Association for Private Capital Investment in Latin America).

Map of Colombian entrepreneurship

In 2023, eleven Colombian cities have made their way into the top 1,000 most promising in terms of entrepreneurship globally, with seven (including Pereira, Manizales, and Bucaramanga) entering this ranking for the first time and joining others such as Medellín, Cali, Barranquilla, or Bogotá, according to the Global Startup Ecosystem Index by StartupBlink.

This index positions the Colombian capital as the 65th most prominent city globally in terms of entrepreneurship — and the third in Latin America — improving its ranking by 5 positions compared to 2022. It accumulates 55% of Colombian startups, followed by Medellín (with 25%) and Cali (8%). In 2023, the fintech sector boasted the highest number of startups, with 295, representing 17% of the total. Startups in Bogotá accounted for 60% of equity investment in Colombian startups in 2023, equivalent to $267 million, 45% of which was allocated to the fintech sector.

Other entrepreneurial hubs are gaining strength in the country: Medellín is solidifying as the home of 25% of Colombian startups (4% more than in 2022), which raised 35% of the venture capital raised in 2023 ($165 million), with proptech being the sector receiving the highest percentage of this investment, at 40%.

The number of startups also increased by 1% in Cali and another 1% in Barranquilla in 2023. In total, Bogotá and Antioquia concentrate 80% of startups, although other departments such as Valle del Cauca and Atlántico have seen a 10% increase each in the presence of technology-based startups.

“This year, we have a very relevant changing factor, which is a greater participation of other regions of the country that are betting on these projects, transforming the norm that only major cities covered the majority of this spectrum,” highlights María Paula Peñaranda, Innovation Manager and Emerging Giants Leader at KPMG Colombia (authors of the report, in collaboration with local strategic partners such as ANDI del Futuro, iNNpulsa Colombia, or the Chambers of Commerce of Bogotá, Cali, and Barranquilla).

Growth and ecosystem trends

The strengthening of Colombia’s startup ecosystem, reflected in the growth and geographical diversification of ventures and in the improvement of its positioning in the rankings of the most innovative countries and cities globally, is largely due to the alignment of public and private actors, highlights the ‘Colombia Tech Report’. Success stories of local companies also help drive the ecosystem, with examples of scaleups and unicorns like Habi, Bold, and Platzi serving as inspiration to other entrepreneurs and contributing to putting Colombian entrepreneurship on the investment radar.

In total, in 2023, local startups raised $341 million in venture debt and $445 million in equity through a total of 134 transactions (14 and 120 for each financing modality, respectively). This reflects a 42.3% decrease in total funding compared to 2022, mirroring the global downturn in investment last year. Debt, however, reached record figures that year in Colombia: with only 14 deals, 10.5% of the total transactions, it represented 43% of the funding raised by Colombian startups in 2023.

Investment was mainly distributed among three sectors, which together captured 74% of the total: fintech, once again the undisputed leader, receiving 39% of the capital; proptech, which captured 29%; and energy tech, with 8%. The latter, encompassed in the increasingly robust cleantech sector, climbed 6 positions in the ranking of favored sectors for investment in the country compared to 2022 (when it ranked 9th most funded), highlighting the growing importance of innovation in clean energy and technologies against climate change, which are a global investment trend.

In 2023, the fintech sector also had the largest number of startups (295, accounting for 17% of the total), followed by SaaS or ‘Software-as-a-Service’ (166, 10%), business management, healthtech, proptech, and edtech (each representing 6% of the total).

Looking to the future

The ‘Colombia Tech Report’ emphasizes the importance of collaboration among entrepreneurs, investors, public and private actors, and academic institutions for the consolidation of the Colombian ecosystem, as well as the promotion of policies and programs favorable to innovation. Likewise, the report concludes, supporting founders, promoting entrepreneurial mindset, and developing the venture capital ecosystem (exploring financing modalities such as corporate venture capital and debt) are the great opportunities to continue fostering local entrepreneurship.

This need is being met by entities such as BBVA Spark, created to meet the specific characteristics of startups, as highlighted by Eduardo González, head of BBVA Spark in Colombia and Argentina, during the presentation of the ‘Colombia Tech Report 2023-2024’. “We can do three things for startups: be their bank —each of the 1,720 companies listed in KPMG’s report needs a bank, and we want to be that bank—; invest in them to complement our offering, and work with them forming alliances to have startups as strategic suppliers,” González detailed.

Colombia is a strategic country for BBVA Spark, which celebrated its first anniversary in the country last March. A first year described as ‘spectacular’ by González, which he trusts will pave the way for consolidation and growth in 2024.

The report also highlights “the vital role” of events like Colombia VC Week, Colombia Tech Week, or Startco (in which BBVA Spark participates), which have helped boost high-impact entrepreneurship in the country.

Regional growth, diversity in capital access channels, alliances at multiple levels: there are many opportunities in Colombia’s entrepreneurial ecosystem, which is consolidating as a resilient contender ready to advance positions in the global innovation race.