A new wave of venture capital funds have set up in Colombia over the past couple of years, filling a funding void and signaling new interest in local start-ups.
According to a survey conducted by financial newspaper Dinero, venture capital firms backed by investors from Mexico, the US and Colombia are cropping up to support a fledgling pool of entrepreneurs ranging from high-tech digital start-ups to solar energy ventures.
The survey found that some $200 million is available to Colombian start-ups. One fund is backed by Mexican billionaire Carlos Slim. And even though “it is fledgling industry,” Diego Serebrisky of AltaVentures told Dinero, “it shows that the country has evolved and is going in the right direction, because a few years ago there was nothing.”
Yet entrepreneur Camilo Jimenez says the fledgling industry is still severely underdeveloped. “Out of the seven funds in Colombia, only two venture capital groups have invested,” Jimenez told Colombia Reports.
Jimenez, the man behind a digital startup called laspartes.com, has gone to all of the seven funds to try and get funding. He received none.
“In December we received $115 thousand, but it was from an angel investor, not one of these funds,” said Jimenez. “The problem is that most venture capital funds will only invest in later stage start-ups.” Jimenez said that one fund, Amerigo, has been in Colombia for five years, but has yet to make its first investment.
In Colombia, registering a business has become significantly easier. A report issued by the World Bank, Doing Business, found that Colombia’s business climate for small and medium enterprises has become less costly and faster over the past years.
A series of recent reforms cut out lengthy registration procedures, reduced the cost of starting up from 28% of income per capita to 8%, and shortened the time needed for starting a business to 14 days from 60 in 2003.
But Jimenez says that the way the investment community works for entrepreneurs is still a problem: there is a gap in the early stages.
“Before VCs start growing at a fast pace, there needs to be a community of angel investors,” he explained. “But it’s really hard to find angel investors in Colombia. Laspartes.com has been the only case.” Angel investors generally tend to take the risk with earlier stage startups like Jimenez’ laspartes.com, but without that community, he says, it is difficult to evolve.
“The thing is that the community needs more angel investors so that they can foster early stage startups,” says Jimenez. “That way they can actually go on to these funds later.”