Bogotá is well-positioned as a powerhouse in Latin America’s startup ecosystem, raising 93% of its total capital for 2023 in the first half of 2024 alone. The latest report from Invest in Bogotá reveals that the city captured 97% of the capital raised in Colombia, underscoring its strategic advantage in attracting substantial financial inflows. Notably, Bogotá accounted for nearly 77% of all investment rounds conducted in the country during this period.
Medellín, Colombia’s second-largest city and a regional hub for software development and innovation captured 2.4% of the total direct foreign investment by mid-year, equivalent to US$11 million. Barranquilla and Cali were below singe digitis, with 0.6% and 0.1% respectively.
According to data released by Invest in Bogotá in its Levantamiento de Capital en Bogotá report, during the first six months of this year, Bogotá attracted US$452 million across 27 investment rounds, nearing the US$486 million raised throughout all of 2023, which required 88 investment rounds. This capital influx highlights the growing maturity of the city’s startup ecosystem, where fewer but larger deals are becoming the norm. The report indicates a strategic shift toward larger, more mature investments, suggesting a preference for companies with proven business models and scalability.
“Entrepreneurship is driving a transformation in our economy and creating true disruption across all sectors,” said Isabella Muñoz, Executive Director of Invest in Bogotá. “In this new report, Bogotá continues to lead the country in capital raising, positioning the capital as the third-largest investment platform in venture capital in Latin America, after São Paulo and Mexico City.”
Fintech Takes the Lead
The fintech sector has been the standout performer, attracting an estimated US$405 million through 16 rounds of investment. Startups like Nu Colombia and Simetrik have played a key role in driving this growth, capitalizing on Colombia’s large unbanked population and the increasing demand for digital financial services.
Fintech’s dominance, with 38.5% of the investment portfolio, is followed by RetailTech at 11%. This trend is not just a local phenomenon; it also reflects a broader regional trend in Latin America’s digital transformation. These companies address market inefficiencies and provide financial access to a growing middle class, making them attractive to both domestic and international investors. While fintech dominated the investment rounds, other sectors such as PropTech (4%) and FoodTech (4%) also secured significant investments, indicating a diverse and versatile entrepreneurial spirit in the Colombian capital.
Foreign investors have shown strong confidence in Bogotá’s startup scene. The United States remains the primary source of foreign capital, contributing over 38% of the total investment in the city. This reflects growing international confidence in Bogotá’s entrepreneurial landscape and its ability to deliver attractive returns. However, despite these successes, Bogotá faces ongoing challenges in attracting direct foreign investment and more venture capital.
“The city boasts extraordinary human talent that is both efficient and skilled, as well as an interesting local market,” Muñoz said. “Today, the Bogotá Region has 11 million inhabitants, whom these business models can serve. Additionally, we have a strategic geographic location with the best cargo airport in Latin America.” However, she also acknowledged the city’s challenges: “We are aware of Mayor Carlos Fernando Galán’s initiatives to combat insecurity and advance with mobility infrastructure. Addressing these issues is crucial for sustaining our growth and attracting further investment.”
The top five venture capital firms that have raised significant funding for Bogotá startups are Goldman Sachs (USA), Andreessen Horowitz (USA), Kaszek (Brazil), Monashees (Brazil), and Movtech (Mexico).
One of the most notable trends in Bogotá’s investment landscape is the increase in average deal size. While the number of investment rounds has decreased, the total amount raised has surged, indicating that investors are placing bigger bets on companies with proven business models and scalability. This shift suggests a maturing market where established startups are securing larger funding tickets, moving beyond the early-stage investment phase.
Muñoz expressed optimism about the future: “This gives us some reassurance and confidence because if the entrepreneurship ecosystem continues to evolve during this second half of the year, we expect these amounts to potentially double.”
As Bogotá continues to attract significant capital and evolve as a key player in Latin America’s startup ecosystem, Invest in Bogotá’s report provides valuable insights into the city’s evolving investment dynamics. With the current trajectory, Bogotá is poised to not only match but potentially double its 2023 investment figures, further strengthening its status as a major hub for entrepreneurial activity and international investment.