Article by Paul Foley of Sim Local
The past couple of decades have seen Colombia go through seismic change. From a country plagued by the impact of its infamous drug trade and violent civil conflict to having its city of Medellin be named by The Wall Street Journal as its ‘City of the Year’, Colombia today has the third-most important economy in South America.
Although the journey has been arduous, Colombia has been building an impressive tech and startup ecosystem that now rivals longstanding Latin American veterans such as Argentina, Brazil and Mexico.
Encouraging investors, innovators and leaders to consider Colombia used to be a hard sell.
However, the ecosystem has rapidly matured since the pandemic.
With countless examples of successful startups, a wealth of homegrown tech talent, and the development of a reliable digital and mobile infrastructure, Colombia in 2024 can clearly show it is a top contender for business opportunities both in Latin America and at an international level.
A snapshot of Colombia’s tech prowess in 2024
Recent data underscores this progress.
For instance, over the course of 2023 there was a 30% increase in total startups which together secured $786 million in funding, according to the ‘Colombia Tech Report 2023-2024’. Other sources confirm the weight of local entrepreneurship in the Latin American and global panorama: in 2023, the country was third in the region to attract the most venture investment, behind only Brazil and Mexico, according to a recent report by LAVCA.
Colombia also boasts an impressive track record within certain verticals and industries. In 2023, the fintech sector boasted the highest number of startups, with 295 representing 17% of the total. Startups in the country’s capital of Bogotá accounted for 60% of equity investment equivalent to $267 million, 45% of which was allocated to the fintech sector.
Meanwhile Rappi, Tul, Robin Food and Liftit as just a few examples of some of the most well-known and fastest-growing startups across transportation, e-commerce and food tech.
Just a few years ago, Colombia was classed as an emerging tech hub that showed promise. Today, the investors and innovators who had faith in its potential are part of an established ecosystem.
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, and Bogotá.
Powerful mobile-first culture, with an increasingly large eSim market
When exploring the rise of Colombia’s tech ecosystem, it’s important to note this strong performance was accelerated by the strong mobile culture in the country.
On the one hand, government initiatives from 2018 set out to have 63% of the country connected to broadband in efforts to fuel development. Mobile operators, incentivized by this digital agenda, have played their part, investing $9 billion in networks and spectrum since the start of the decade.
As a result, mobile broadband coverage in Colombia exceeds 90% for 3G, with 4G coverage expanding rapidly and now reaching nearly two-thirds of the population. This will be boosted further as Movistar Colombia has begun the deployment of 5G, making it the first operator to roll out the technology in the country.
Additionally, the eSim market continues to grow in the country and greater region. In 2023, mobile technologies and services, including its eSim market, generated 8% of GDP in Latin America – a contribution that amounted to $520 billion of economic value added, with eSim companies including Sim Local expanding to the region.
The latest available figures, from the first quarter, show that more than 40 million mobile internet lines are in operation. Claro led the market with 20.9 million customers, Movistar had 8.8mn, Tigo 7.2mn and WOM at 2.1mn.
This infrastructure and access have helped to fuel high mobile penetration rates, along with having a culture that is keen to leverage the benefits that mobile services offer, whether that’s easier access to products, digital banking solutions or seamless deliveries that support both individuals and businesses.
Colombians spend an average of 9 hours online, surpassing even the US average of 6.5 hours.
Deep talent pool
Another part of the Colombian government’s strategy to help the ecosystem mature was to rebrand Colombia as a technology center that involved drawing in IT services with tax incentives and professional training programs.
A $6.8 billion industry has taken strong root as a result, with 1,800 software development and IT service companies registered in the country. Looking forward, the hope is that IT, and the investments that went into promoting it, can diversify into a broader innovation ecosystem.
For years and across all industries, Colombia has been on the losing end of an epic “brain drain” that has sent many of its best and brightest abroad for good.
However, in more recent years the strength of this trend seems to have waned as Colombia becomes increasingly well known for its high-quality tech talent pool.
In Medellin, for instance, the city went through a rigorous plan of action to create the specially-developed Innovation District based in Ruta N, designed to promote innovation and collaboration between startups.
Since 2012, Ruta N has hosted around 320 companies from more than 30 countries, creating more than 8,000 jobs. Initiatives like this not only helped to stem the flow out but, over time, attracted major tech companies to its shores.
For instance, the former CEO of Coursera and founder of the Google Brain project, Andrew Ng, selected Medellin as the second headquarters for the projects.
Said Maria Yepe’s of Sim Local’s expansion into the market, “The talented individuals in Colombia, in addition to the explosion of internet-enabled devices and its eSim market in the country, are evidence of the growth potential in Latin America, and we are excited to further our growth here.”
Meanwhile, Colombia’s strategic position at the top of South America enhances its accessibility, simplifying travel and fostering stronger business relationships essential for successful nearshoring in data and AI.
These factors combine to ensure that a wide range of professional opportunities can be found within the country to keep this vital part of the ecosystem in place.
The road ahead
While Colombia’s tech sector has gone from strength to strength over the past decade, it’s important not to take the foot off the gas just yet.
As this hub has emerged relatively recently, especially when compared to places like Silicon Valley, the government and private sectors must work together on initiatives that will keep Colombia ahead of the pack and provide the innovators with the tools and infrastructure needed to focus on growth.
This article includes a client of an Espacio portfolio company
