Bogota and its entrepreneurial culture are ideal for testing and getting acquainted with a changing market in the midst of a digitalisation drive. The capital offers low-cost talent and successful start-ups in various sectors. The best remedy for altitude sickness caused by risk aversion in entrepreneurship or investment.
At 2.650 meters above sea level, Bogota is the fourth highest capital city in the world. Accordingly, Bogota’s entrepreneurs are soroche, or altitude sickness, proof. Far from running out of oxygen, their entrepreneurial vision is looking to go even higher.
More than 1,100 start-ups make up Colombia’s entrepreneurial ecosystem, 52% of which are located in the capital city. Over the past few years, many entrepreneurs have taken advantage of this Andean advance to gain momentum and attract investor interest. Bogota achieved a 200% growth in funding for emerging projects between 2019 and 2021, in addition to achieving fourth place in StartupBlink´s Best Startup Cities in South America.
If you have an idea, want to start a business in Colombia and, most crucially, don’t fancy suffering from altitude sickness, take a look at what makes Bogota the ideal city for your project.
It´s a cultural thing: Bogota’s citizens support local entrepreneurs. Rodrigo Atuesta, CEO of sustainable travel start-up Impulse Travel, one of the winners of last year’s competition organised by the World Tourism Organisation and the Wakalua innovation hub in collaboration with BBVA, appreciates how much of Bogota’s population looks out for local commerce, which makes “you feel like you have a ‘fanbase’ when it comes to running a business.”
On a demographic level, however, Bogota, with its almost 8 million inhabitants, is a big city for testing and finding the right market fit. Nicolás Toro, selection manager at the entrepreneurship network Endeavor Colombia points out that “Bogota is a great, cheap place to experiment. Users and companies are open to trying new things so B2C [Business to consumer] and B2B [Business to business] models can be launched”.
Isabella Muñoz, executive director of the public-private investment promotion agency ‘Invest in Bogota’, highlights the country’s positive legislative framework for economic development. “The government is committed to entrepreneurship and Bogota is the Colombian region that promotes the innovation ecosystem the most,” says Muñoz. The capital city has seven accelerators and six public-private entities that connect entrepreneurs, companies and funds into a single network, according to Colombia Fintech.
BBVA Colombia also highlights the country’s dynamism in entrepreneurship ecosystems; it ranks 23rd worldwide in venture capital financing, with growth of 236%.
Moreover, the Entrepreneurship Law 2069, approved in 2020, offers differentiated rates in registration tax and the possibility of exemptions in income tax payment in the first few years of a company depending on the number of jobs it generates.
BBVA Colombia also points out that Bogota stands out as the leading Colombian city in the competitiveness indexes, explaining that “this is thanks to the programs of the Bogota Chamber of Commerce, which is looking to establish the city as one of the main international financial centres, the District Secretariat of Economic Development and entities such as Colombia Fintech, iNNNpulsa and the Chamber of Commerce, among others.”
Alongside the environment of growth and support for entrepreneurship, the country is experiencing a wave of digitalisation that marks an excellent business opportunity.
Muñoz points out how access to smartphones has led to the emergence of a multitude of digital initiatives that make life easier for Colombians. What´s more, the internet penetration rate in Colombia is on the rise, with Bogotá in first place.
Colombia also occupies the fourth position in the Global Fintech Ranking 2021 for Latin America in fintech ecosystem development. Among the reasons for this, Muñoz highlights the clustering of a start-up community with big potential, a favourable regulatory framework for entrepreneurship, specialised capital funds and talent training initiatives.
“The development of this sector in the country is evident in the use of digital wallets,” says the expert in investment and market structuring. According to a study carried out by Colombia Fintech, the money transferred through these platforms increased by 195% in 2021 compared to the previous year and is visible in many sectors.
A good example of digitalisation in the transportation sector is ‘Tapsi’, the first app for calling a taxi from a mobile phone. This, in turn, inspired the founders of PayU, which now is one of LATAM´s strongest payment gateways.
Both ‘Tapsi’ and ‘PayU’ were precursors to Rappi, which began in an Endeavour Colombia mentoring program in 2017 and now boasts the title of first national unicorn (start-ups valued at more than $1 billion without going public).
Another success story is ´Truora´, a Colombian company that has raised $15 million in a Series A financing round led by Propel, the fund that manages BBVA´s fintech investments, and Accel. The project connects users to online shopping platforms and fintech services through automated chatbots, facial recognition, document verification and background checks, according to BBVA Colombia.
It’s not just quantity: Colombia is experiencing an entrepreneurship revaluation phenomenon in terms of project quality. “Four years ago it was an effort to try to find companies that achieved a month-over-month growth of 20%. We´ve gone from selecting three companies, at most, to the seven or eight we are selecting now,” says Endeavor’s selection manager in Colombia.
The scaling start-up expert points out that today’s start-ups have more funding, a renowned support network and are founded by more prepared entrepreneurs compared to a few years ago.
“The emergence of role models -successful entrepreneurs- has been the most important factor in Colombia’s entrepreneurial development,” says Toro. Those successful projects have paved the way for investment in new projects and their founders have also become investors in new ideas.
Public-private initiatives and the establishment of good business examples are bearing fruit in Bogota. And although “there is still a lot of work ahead”, Muñoz acknowledges, and the elections on 29 May could mean a brief period of uncertainty, “the capital is experiencing one of the best moments to coordinate its entrepreneurship ecosystem”.
Toro is confident in the potential of the companies now being born to become unicorns, as well as the emergence of new powerful entities that will “solve the problems of the future”. As he concludes: “many of the companies out there now are solving problems that we didn’t even know existed four years ago.”
There are also challenges. The rise of start-ups is creating major challenges, when it comes to digitalisation, to create new products and services with competitive prices that have a direct impact on the customer. On this issue, BBVA Colombia emphasises that any action plan should keep in mind that “the restructuring of disruptive businesses with qualified personnel and customisation for current clients in an increasingly competitive market with a high capacity for acceleration are some of the main challenges that companies face.”
Although there are mountains to climb, experts agree that Bogota’s entrepreneurs are aiming to go even further than before above Colombia´s sea level.