When most people think of Bogotá, technology and investing are not the first things that come to mind. For most, Colombia still drums up images of a bloody civil war and a cocaine industry, along with a reputation for violence that caused its citizens to flee and foreigners to stay away. Yet, in the past few years, this South American country has worked diligently to put its tarnished reputation behind, focusing on the potential offered by innovation in technology.
Strong Support Drive Technology Innovation and Investment
Tax breaks made available to foreign investments combined with strong government support has set the perfect stage for technology innovation, driving the country toward a bright future. As a result, Colombia is now becoming known more as a hub for technology than a quarry of violence.
Colombia’s turnaround began in 2002. When President Uribe took office, the country suffered from record levels of violence and broken peace negotiations with a warring guerilla group, the Fuerzas Armadas Revolucionarias de Colombia (FARC). Over the next eight years, Uribe worked diligently to bring FARC to its knees. Although it took time, Uribe was eventually able to restore order. As a result, Colombia is now recognized as safe for foreign travel and stable enough for investors to pour their money into the country. (See also Is It Safe To Travel To Colombia?)
Boasting the third largest economy in South America, Colombia is home to vast amounts of natural resources, such as natural gas, gold and oil. With Bogotá already positioned as an important transportation hub, this Colombian city can easily provide connections with investors from practically anywhere in the world.
Compared to much of Latin America, Colombia also offers one of the best business environments. The presence of ever-increasing incentives for investors, such as free trade zones and tax deductions has made investing in technology projects in the country even more appealing.
Bogotá also has a strong education system, graduating tens of thousands of technicians and professionals annually. The abundance of talent provides highly appealing options for entrepreneurs and investors alike. Currently, the potential in Colombia seems almost without limit, a fact that has not gone unnoticed by foreign investors and accelerators. The tech industry in Colombia grew by more than 175% between 2007 and 2012, reaching almost $7 billion.
In an effort to lay the foundation necessary to attract more foreign investment, the Colombian government established a goal of having more than 60% of the country connected online via broadband by 2018. In fact, the government established Live Digital, a campaign funded with $2.5 billion specifically for the purpose of establishing broadband Internet access in even the most remote areas of Colombia, including near border regions with Brazil, Peru and Venezuela.
The results of such investments have been nothing short of astounding. Global consulting firm A.T. Kearney ranked Bogota seventh in the Emerging Cities Outlook Index, which measures cities in developing nations based on a number of criteria, including innovation, business development and human capital.
The GSMA mobile economy figures estimated that more than half of the country's 47 million people were mobile users in 2013. In a continuing effort to spur even more foreign investment, the Colombian government has also launched numerous public initiatives aimed at attracting venture capital. iNNpulsa was founded for the specific purpose of promoting technology innovation in Colombia. The government also launched Apps.co, an initiative focused specifically on technology.
Investors Take Notice
As a result, the number of venture capital, equity and seed funds has grown rapidly, increasing from virtually none to more than three dozen within a short period of time. Some of the biggest names in technology have expressed an interest in Colombia, including Google Inc. (GOOGL) and Facebook (FB). Both companies recently opened offices there.
Homegrown startups are also beginning to make progress in Colombia. Among the most successful is CO, acquired for a price tag of $109 million last year by Neustar. Online services have also made strong progress in Colombia. Click Delivery and PagosOnline were both acquired for several million dollars each. Colombia is also home to a number of other successful startups, including ComparaMejor.com, a startup specializing in providing insurance policies and financial products. Medellin-based LaBonoteca is yet another tech startup that has achieved success by developing a smartphone app that provides promotions and discounts.
While many of the start-ups emerging in Colombia are based in Bogotá, Medellin is also showing strong promise. Once the home of drug kingpin Pablo Escobar, Medellin is now known for something more positive. In 2012, the city was named the most innovative city of the year, beating out Tel Aviv and New York City. The local government in Medellin has proven to be highly supportive of technology innovation, committing almost $400 million over the course of the next decade. At the heart of innovation in Medellin is Ruta N, a government organization similar to iNNPulsa and Apps.co. In 2014, it committed $3 million in venture capital.
What was once considered the murder capital of the world is now increasingly being recognized as a technology capital. Not surprisingly, an increasing number of Colombians who had sought refuge in the United States during the height of Colombia's violence are now choosing to return home. Colombians once again feel safe and are eager to take advantage of the new opportunities that investments in technology offer. Last year the country's economy expanded by more than 4 percent, and as a result of technology investments, it's rapidly developed into a regional hub for tech start-ups. (See also Find Latin America's Safest, Cheapest Countries.)
The Bottom Line
Strong government support has paved the way for Colombia to become a serious contender in technology innovation in recent years. Although the country still lags behind, Colombia has experienced tremendous success, emerging as a global player in the technology scene.