Security is improving in Colombia’s second city and foreigners are flooding in at rates never before seen.
Many come to Medellin for the beautiful weather, people and the lively nightlife. However, the City of Eternal Spring is attracting another sub-group of foreigners, a group more interested in innovation than libations.
Medellin has spent the last decade shedding its international image as a violent narco-state and encouraging foreign investment by cutting red tape, investing in education and providing seed funding to startups and early-stage venture capitalists. The city is beginning to see the fruits of its commitments.
Last year Colombia’s GDP grew 4.3 percent and it overtook Argentina as Latin America’s third largest economy. The tech sector has also seen improvement, becoming the third largest in Latin America and attracting international companies such as Google, Facebook, Hewlett Packard and IBM.
With its tech-savvy, college-educated workforce, Colombia, and Medellin in particular, is attracting young tech start-ups looking for affordable, qualified help.
As Michael Puscar, founder of the venture capital firm GITP Ventures, explains, “Medellin’s advantage is the unique confluence of low-cost operations and an abundance of talent in working with cutting edge technology. The universities produce excellent graduates, but entry-level salaries for programmers are 60 percent lower than the equivalent in the U.S.”
According to ProExport, in Colombia 1.9 million professionals have degrees and 22 percent are in engineering.
In addition to educational investments such as Digital Talent, which offers up to 100 percent forgivable loans for students with tech-specific career paths, government initiatives like iNNpulsa and apps.co are attracting venture capitalists to the country.
In 2013, iNNpulsa, a division of the Ministry of Commerce, Industry and Tourism, awarded three grants of $800,000 to investor groups setting up operations in Colombia.
This year Medellin-based Ruta N awarded venture capital firm Velum Ventures $3 million to spur early-stage technology investments.
Last August, Medellin’s government announced it would invest $389 million in the creation of a tech district as part of the city’s strategy to become Latin America’s main tech hub by 2021, confirming how the city is now confidently looking ahead.
All of these initiatives are points of attraction for entrepreneurs looking to start new businesses.
Says Estaban Velasco, a partner at Velum Ventures, “When you walk around Medellin you start seeing foreigners, not tourists but businessmen wanting to create their own business. If you look at my pipeline I would say some 14 or 15 percent of the companies I see are foreigners landing in Medellin. When you ask them why they are here, the answer is that there’s a quality of life. So you have to integrate not only the DNA of entrepreneurship, the environment of information and technology the government and private sector are creating, but also the quality of life.”
New startups are arising in the city, including educational platform TarasPlus, which raised $1.8 million in venture funding at the end of 2012, PaMotos, an e-commerce platform for motorcycles, and angel-backed mobile payment and management startup Nest5.
The startup ecosystem in Medellin is still young, however it shows more promise with each passing year.
Says Harvard law graduate and Langon Colombia founder Alan Gongora, “It’s no secret that Colombia’s economy is now the darling of the international entrepreneurial crowd. What’s even more significant is the fact that more and more entrepreneurs are choosing Colombia as the place where they launch their very first tech venture.”
Colombia Reports, the country’s largest English-language news outlet, is fundraising for a new book, Invest in Colombia, that hopes to track these relatively unknown investment opportunities and demystify the risks involved in doing business in one of the six most promising emerging tiger markets in the world today.