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Colombia Venture Capital & Startup Overview 2020

When one thinks of Colombia, its history of violence and corruption cannot be ignored. Colombia certainly still has a way to go until its final destination. Yet, the country’s progress over the last two decades has made considerable impacts on its global presence. In particular, Colombia’s VC and startup ecosystems have seen tremendous changes. Now a hub for entrepreneurship and talent, this country continues to make strides as a contributor to the Latin American startup culture. Below I have highlighted some of the trends impacting Colombia’s startup and VC industry using data from independent research, interviews with the individuals shaping the community, and detailed analysis found through various venture capital resources. My goal is to educate you on the current state of startup funding, the economy and legislation affecting the ecosystem, and the roadblocks and opportunities the country currently has as it continues its upward trend to becoming a major hub for startups and investing.



To understand the opportunities for starting and investing in businesses in Colombia, it’s essential to first dive into how the country’s market is developing. One can break the class structure down into four distinct groups: impoverished, vulnerable, middle class, and upper class. According to Jerónimo Uribe, CEO & Co-Founder of La Haus, this class breakdown is a significant determining factor in how the startup scene in Colombia will continue to grow. “I think the biggest opportunity revolves around the consolidation of the middle class.” says Uribe, “Within this segment of the population, there is a capacity for smartphone use, good connectivity, and consumerism through mobile applications of web services.”

Indeed, the overall improvement of their economy over time has led to an increasingly large middle class, which is measured at roughly 30% of the population and has driven Colombia’s demand for new products – and, therefore, new companies. Some Colombian venture programs such as Polymath Ventures base their entire thesis around the consolidation and growth of this population segment – highlighting its overall importance to not only their economy but their startup ecosystem.

Even though the middle class has expanded, Colombia still has an issue of wealth inequality. According to the World Bank, Colombia’s top 10% earners received 40% of the wealth generated in 2017. Colombia needs to continue pushing legislation to expand the middle class while decreasing the wealth gap. Jerónino Uribe continues, “The most important policies the government can work on will have to involve pushing these trends forward to create new market opportunities.” By lifting individuals out of poverty, this move not only increases access to education and resources for potential entrepreneurs, but it also allows capital for more individuals to privately invest in new companies – thus increasing benefits to the overall ecosystem.


Startups & Funding

As the economy has expanded and its citizens’ spending power has increased, both the consumer and business marketplaces in Colombia (and Latin America as a whole) have exposed opportunities for tech startups and investment. In 2019, Colombian startups raised $1.3B compared to $400M in 2018, a +225% increase. Japanese investment firm Softbank has inflated those numbers due to its $1B investment in delivery startup Rappi. If you remove Softbank’s investment from the picture, Colombian startups still raised close to $700M in 2019, showing a marked increase of +75% in investment dollars into the startup ecosystem. Some of the top-funded startups are ones that are taking advantage of Colombia’s increasing marketplace mentioned above, including:

  • Rappi: A consumer delivery service for just about everything has raised $1.4B to date.

  • Ayenda Rooms: The fastest-growing budget hotel chain in Latin America has raised $9.9M, most recently building a Series A round in Feb. 2020.

  • Frubana: A B2B restaurant platform that eliminates the middle man in farm-to-table supply chains has raised $12M.

  • Liftit: The last-mile delivery marketplace that connects drivers to businesses has raised $26.5M.

  • Omnibnk: Financial services platform has raised $201.6M.

Data provided by Crunchbase

The positive side of Rappi’s success is the increase of external investment dollars into the country. Andreessen Horowitz, Sequoia Capital, Y Combinator, and Softbank are all notable firms investing in startups here. However, there is still a lack of internal dollars in private markets. According to the Global Entrepreneurship Monitor, Colombia currently ranks 43 out of 54 in investment, highlighting a need for more capital in the ecosystem. 

The biggest obstacles to private investment in Colombia revolve around the total number of individuals investing in the asset class, either directly as angel investors or indirectly as limited partners in a fund. “There are way too many investment opportunities compared to the money available here,” says Carlos Guitierrez, Co-Founder & General Partner at Simma Capital. “It makes it more difficult to raise funds from LP’s. Also, it makes it more difficult for companies to raise a funding round.”

Rappi delivers products spanning from restaurant takeout, groceries, and office supplies across Latin America.

Beyond the investors, Colombia’s founders agree that more initiatives will help. “If you compare Colombia to other countries, especially in terms of early-stage companies, you see less overall angel investors and VC’s from here.” says Thomas Harsch, Co-Founder & COO of Elenas, “Most of the investment dollars have come from other Latin American countries like Mexico and Brazil.”

So, where is all of this money going? Real estate. The culture in Colombia, particularly around investing, is very risk-averse. Real estate is both a conservative and stable asset class for high net worth individuals to place their money. It’s no secret that VC is a high-risk asset class, with around 80% of startups failing, but proper education on the potential upsides can fix this. The limited amount of capital being poured into private investing is currently distributed from a small number of firms. Some of the top funds in Colombia include Simma Capital, InQlab, Polymath Ventures, Impulsum Ventures, and Taurus Capital.

Ecosystem & Talent

Colombia has made strides to push programs forward to help facilitate innovation in the country. Most of Colombia’s startup ecosystem is in its larger cities, with Bogotá and Medellín leading the pack. Bogotá is home to HubBog, an accelerator program founded in 2008 as a “Campus for startups.” In Medellín, local accelerator Ruta N was founded in 2009 and housed in their “innovation district.” And in 2012, the government created INNPulsa to promote entrepreneurship in the country, attempting to become one of the three most innovative countries by 2025. These programs have helped promote education around startups and have increased Colombia’s talent pool.

Talent is an area where Colombia shines, but that hasn’t always been the case. “Back in 2012, when our firm started, there weren’t many tech-related entrepreneurs and companies to invest in,” says Laura María González, an analyst for InQlab. “Back then, people just weren’t eager to take the risk, but in the last few years, we’ve seen great talent emerge as the ecosystem continues to grow.” One reason for this is Colombia’s high education level and the focus on IT and software engineering programs. Colombia’s Ministry of Education has estimated that over 13,000 students graduate with degrees in these fields annually. Overall, over 14% of university graduates have degrees in areas related to technology.

Medellín, in particular, has attracted talent not just from Colombia, but also individuals from other countries who are moving there to start businesses. Beyond that, existing companies are looking to expand their operations into Colombia. Recently, Andrew Ng’s AI Fund opened a secondary engineering office in Medellín after a year pilot, concluding that Colombia’s engineering productivity fared very similar to the talent in their main office in Silicon Valley.

As more companies from Colombia have received investment dollars and higher valuations, the talent has found the risk of working for a startup more attractive. “The quality of companies in the ecosystem has gone up a lot over the last few years.” continues Thomas Harsch, “The success of Rappi has contributed to this by showing that venture investors think that money can be made here. People are recognizing that this is an attractive thing to do compared to banking, consulting, and other traditional careers.”

Although Colombia ranks very high in talent and entrepreneurship, There are still challenges for founding teams in acquiring capital investments and hiring talent. “Given that the capital funding necessary to start a business is scarce in Colombia, a first-time founder must have the resources necessary to get acquainted with investors outside of the country,” says Jerónimo Uribe. “I think any new entrepreneur will find it difficult to attract both managerial and technical talent because they are still very risk-averse and unfamiliar with the equity rewards that can potentially come from a startup.”

Daniel Blandon explains from a VC perspective, “Below the founding team; it is challenging to hire. The risk is very high, and the salary is meager, so some young people are turned off by the idea even if the environment is better at a startup than a big company.” The two sides of the table show how pervasive this issue can be.

Like investors, more effort put into educating young people around the risks and rewards of VC and startups will solve this. This kind of initiative will help individuals understand the upside of owning equity in a growing company. Another way to do this would be to see more companies from Colombia have more exits, thus cementing a startup’s ability to reach escape velocity and provide economic rewards for both investors and employees.

For specific technical skills, Uribe has an idea, “We need to work on the educational ecosystem that focuses on the number of technical people that graduate. We don’t need to have a five-year curriculum for an engineer to start coding. You can train an individual, such as a business analyst, in core statistical competencies in a twelve to eighteen-month program. An initiative like this would have a huge impact on the talent available to these emerging companies. It would also impact the students who would be able to enter the labor market earlier and have faster access to higher wages.”


Colombia is on an upward trajectory, but more action by the country will help generate startups that can truly capture global marketplaces. The single most prominent theme revolves around the access to and availability of capital. Without significant investment into the startup ecosystem, Colombia will not be able to increase the pace of investor education, founder support networks, and the influence of legislative action supportive of innovation. In addition to this, the continued injection of capital from outside resources will help create the cultural shifts necessary in this country to develop a taste for the high risk, high reward nature of startups. These shifts apply not only to the high net worth individuals who can invest their capital into startups but also for potential founders and employees of these ventures. With the above actions, Colombia can tap into the broader global marketplace beyond Latin America, creating groundbreaking products and generating outsized returns for investors.

For comments and feedback on my work, please e-mail me directly.

Thank you to Simma CapitalLa HausPolymath Ventures, and InQlab for the in-depth interviews.

Investment data provided by Crunchbase.

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