What we can learn from Colombia

If entrepreneurship is a race, then the Latin American division just got an awful lot more interesting. Last week, StartUp Blink released its most recent report on the state of entrepreneurial ecosystems, where it ranks countries based on the development of startup clusters (read the entire report at StartUp Blink ). Not surprisingly, Brazil remains the top destination for entrepreneurs in Latam, with an ample difference in scores to its close rivals. However, the big surprise came when looking at the second spot for Latin America, as Colombia secured a lead over its close rivals.

In the 2024 report, Colombia managed to score a 6.386, thus surpassing Chile, which scored a 6.025. Even Mexico, often hailed as an inevitable step to enter the Latam market, scored a mere 5.868 (more on Everscale ). Meanwhile, Argentina, previously the home of the first large startups in the region (such as Despegar.com and Mercado Libre, fell to a score of 5.09. Colombia, simply put, is outplaying its peers when it comes to entrepreneurship.

Now, a part of this clearly has to do with the perils of its competitor—most crucially, the steady downfall of Mexico. Over the last two years, Mexico’s overall ranking in entrepreneurship has fallen from the 35th spot in StartUp Blink’s ranking to the 41st. This is likely due to the departure of foreign capital after an early excitement in 2019 led to the first unicorns in the region (more on Reuters and Latamlist ). Not to mention that, during the current Lopez Obrador administration, the Mexican government eliminated its well-established National Institute for Entrepreneurs (INADEM) which provided funding for startups and VCs across the country (more on El Economista ). The same decrease is true for Chile, falling from the 34th to 39th spot; and Argentina, falling behind from the 37th to the 42nd position.

But it is not just that close rivals are doing worse; it is also that Colombia is doing better. The real question is why? Why is Colombia rising in expectations as other Latam countries are stagnating.

One could argue, to start, that Colombia has a more robust government program than other Latam countries—although evidence of such claims is mixed. Colombia does have a national entity meant to support entrepreneurship (iNNpulsa), which, over the last decade, has provided support to over 22,000 entrepreneurs in the country (more on iNNpulsa’s website ). However, the current Petro administration is seeking a strategic merger of this entity with another government institution, Colombia Productiva, that would give iNNpulsa a broader mandate beyond entrepreneurship and more focused with shifting the country’s priorities away from agriculture and commodities (more on W Radio ). Yet, even then, iNNpulsa is rarely accredited with kicking off the Colombian startup ecosystem.

Instead, there seems to be a broader appreciation for regional chambers of commerce that support local entrepreneurial ventures (more on um.fi ). These, in turn, have supported cities like Cali and Barranquilla to rank amongst the top 500 entrepreneurial destinations in the world, besides the more developed capital city of Bogotá and Medellín (more on at StartUp Blink ).

Yet, government support is really one small part of the puzzle. Colombia today seems to be thriving not because of state intervention but because of a vibrant and growing community of startups that have helped create a large pool of “know-how” when it comes to accessing capital. Nowhere is this clearer than looking at the number of startups from a country that have entered Y-Combinator (the most prestigious and renowned startup accelerator). While Colombia ranks 38th in overall entrepreneurship, it is the 16th best when it comes to sending startups to YC? (more on at StartUp Blink ).?

Most importantly, Colombia has been marked by the fame of its startups and their ability to make entrepreneurship a mainstream career path within the country. The country has been characterized by creating some of the most innovative and renowned startups across Latam. The prime case, of course, is the delivery app Rappi which now operates in nine countries across Latam, employs 350,000 delivery workers, and boasts of having over 35 million active users (more on Rappi’s own website ). But other startups like Tul, Simetrik, and Yuno, have also gathered international recognition for their work. In fact, despite Colombia’s relatively small population of 51.8 million, we found that the country’s top 15 startups had raised well over $4.1 bn worth of investments. Not to mention that David Velez, founder of Nui Bank and arguably Latam’s most recognized entrepreneur, hails from Colombia (more on Bloomberg ).?

Here, we cannot downplay the huge role Rappi and its founding team have played in developing the ecosystem. It is well known that, after Rappi’s success, many early employees have gone on to create their own companies in the region including Morado, Tul, Yuno, and Frubana. In fact, it is estimated that some 110 startups have emerged from Rappi’s ranks, making it, at the same time, Colombia’s most successful startup and, quite arguably, the country’s premiere boot camp for entrepreneurs (more on Rest of the World ). That is why many have come to call the phenomenon the “Rappi Mafia” similar to the “Paypal Mafia” of Elon Musk and Peter Thiel (more on El Economista ).

Another such metric seems to be the prevalence of startup culture amongst students in Colombia’s private universities. In? general, such students are often perceived as risk averse, following more standard career paths in the corporate world. Yet, in the era of Rappi and Nu Bank, entrepreneurship has started to gain momentum. In fact, the country’s top private university, Universidad de los Andes, has become an essential player for the ecosystem, with graduates creating as many as 6 out of every 10 startups in Colombia (more on Universidad de los Andes ).

Simply put, Colombians have created a culture where startups aren’t seen as just “risky endeavors” but rather as a motor for change. It wasn’t necessarily pushed by the government (although some programs do exist to support Colombian startups). Rather, it was the result of growing momentum and an entrepreneurial ecosystem that normalized startups as a career path. Almost like the underdog in any sporting match that, once it picks up a cadence, feels confident to beat all adversaries, Colombia continues to make strides in the entrepreneurial ecosystem.