21 de February 2018
Bogota, the entrepreneurs’ capital
El surgimiento de startups dinamiza y oxigena el entorno de negocios, y sirve de termómetro para medir el comportamiento de la economía.
Bogota is a city of entrepreneurs and as home to 50.2% of Colombia’s startups, it’s the most important center for new companies in the country. Good ideas, new approaches and alternative models have found fertile ground in the capital to germinate and expand, as the cases of Rappi, Mercadoni, Tappsi or Fitpal can testify. They went from an idea to internationally-focused businesses.
This is due to several factors, among them the capacity, quality and quantity of the capital’s human talent, which accounts for 71% of Colombia’s total bilingual talent and has the highest annual rate of graduates in the country - 92,091 undergraduates and 34,496 postgraduates in 2016. In addition, there´s a diversity of business opportunities in multiple sectors and a growing market with greater purchasing power on the lookout for new services and experiences.
According to the Latin American Economic Outlook 2017 report on youth, skills and entrepreneurship, the young entrepreneurs of Colombia between the ages of 18 and 29 have the highest proportion of graduates in tertiary education in Latin America with 26.7%, well above the region’s average of 12.9%. In this sense, education has been a catalyst for the emergence of startups and Bogota is the favorite destination.
The capital is home to over 370,000 enterprises, 26.3% of all companies registered in the country, according to Confecámaras, 70,000 of which were created in the last year, 27% of all new registered companies. This growth is significant because, according to the Global Entrepreneurship Monitor report for 2016, 1 in 4 adults in Bogota is related to entrepreneurial activities.
If this is seen in relation to the region, Colombia, with 11.3%, has the second highest rate in Latin America of new entrepreneurs whose companies are between 3 months and 3.5 years old, following only Brazil (14%), and is 4 percentage points above the average for Latin America, whose rate is 7.4%. This positioning is due to entrepreneurs’ growing confidence in recent years, as the country has risen from a rate of new entrepreneurs of 6.9% in 2012 to 11.3% in 2016.
These initiatives contribute to flourishing new sectors such as software and technology development, services and the so-called creative industries, where the city has gained importance in fields such as music, publishing projects, audiovisual production, videogame development and digital content.
The most obvious challenge facing entrepreneurs in the development of their projects is funding, which in most cases comes from their own resources, since private equity funds focused on entrepreneurship are still incipient in Bogota and the country as a whole. At Invest in Bogota, in conjunction with our allies, we are working on improving the business environment to attract foreign investment and thus leverage the development of new initiatives.
The city has earned international recognition as the cradle of enterprises with high scalability, as reflected in its hosting of events such as Héroes Fest, Open Innovation Summit and South Summit, which are high-quality showcases for presenting the city’s innovation and entrepreneurial projects to the world. The business rounds that are held at these events bring together in the same space entrepreneurs, investors, corporations and business angels, among other key players in the entrepreneurial ecosystem.
One of the factors that has influenced the prominence of the country - and especially of Bogota - as a 'hub' for startups in Latin America is the propensity of the young entrepreneurs to develop international trade partnerships. While the average in the region for startups where at least 25% of their customers are international is 10%, Colombia’s is 23.8%, surpassing even the average of the OECD member countries (20, 8%).
Bogota’s growth over the last decade has been remarkable and has led to its collecting 55% of all banking transactions, since it’s a center for a whole range of expanding sectors and a vital link in the value chains passing through its free zones, offering opportunities that have been seized by foreign investors seeking to take advantage of the entrepreneurial spirit that has been such a significant catalyst.
According to the Capital Managers 2016 survey conducted by ColCapital and EY Colombia, Colombia would seem to be an attractive country for investment, since 80.5% of Private Equity Funds interviewed responded that they would prefer Colombia as an investment destination in Latin America, with Bogota as the access point. The survey also revealed a latent optimism - 85% of the respondents believe that investment levels in the country will increase by 10%.
This optimism is reflected in the support that foreign Private Equity Funds have given both to consolidated companies and to entrepreneurs. Two examples of this are those of Grupo Biotos-cana, a pharmaceutical firm which with the support of Advent International was transformed from a family company to a major player at the regional level, traded on the Sao Paulo Stock Exchange; and Inmaculada Guadalupe & Amigos en CIA S.A., owner of the Andrés Carne de Res brand, which with the support of MAS Equity Partners managed to diversify its business lines to restaurants, events and art exhibitions.
Rappi is a good example of entrepreneurial achievement. In 2016 it was selected by the startups accelerator Combinator for one of its programs, and at the international entrepreneurship event Demo Day it managed to capture the attention of investors of the likes of Andreessen Horowitz and Foundation Capital, organizations that leveraged Netflix, Airbnb and Facebook.
The emergence of startups is an engine that energizes and oxygenates the business environment and serves as a thermometer to measure the economy’s performance. In this sense the rise of entrepreneurship is a good sign, since the people of Bogota see their capital as an attractive setting for doing business.
Juan Gabriel Pérez