A recent article on the CNBC website included Medellín in a list of three growing start-up cities in South America. Also listed in the article are Santiago, Chile and Buenos Aires, Argentina. The article calls Medellín “one of South America’s hottest new places for start-ups”. Medellín already has a reputation for innovation, having beat out New York City and Tel Aviv in 2012 to be ranked as the world’s most innovative city by the Wall Street Journal and Citi. Also in 2012, Hewlett-Packard (HP) opened a Global Services Center in Medellín, recognizing Medellín for becoming a city of knowledge and innovation.
At the center of the start-up activity in Medellín is Ruta N, which is a government-sponsored organization that is an innovation and business center for new companies. Ruta N has big aspirations; looking to grow to 11 million square feet, up from roughly 344,000 square feet at present. Ruta N aims to eventually provide over 28,000 jobs in the city.
The CNBC article provided the example of Viajala as a new travel search start-up company based in Medellín that recently raised $500,000 USD in seed funding from the Venture Capital firm Altabix. Viajala’s website is powered by Amazon web services and the company has grown very rapidly at a pace of about 30% per month over the past year.
Medellín is also praised for its mild climate plus the city has over 30 universities as well as good healthcare with eight of the top 42 hospitals in South America located in the city.
Colombia’s Booming Economy
In 2015, the International Monetary Fund (IMF) expects Colombia to triple the size of its economy from a decade ago. Colombia’s middle class also grew by about 50% over the past decade according to World Bank. Other economies in South America like Brazil and Argentina are expected to decline in 2015, but Colombia’s diversified economy is expected to post another growth year.
The telecommunications market in Colombia was liberalized in 1991 and has seen the second largest infrastructure investment (after the energy sector) in the country for many of the past years. The Colombian telecommunications market has continued to be a growth market with increasing adoption of smart phones, but it is also competitive, with several providers in each of the top cities.
According to the Colombian government, Colombia’s technology industry grew 177% from 2007 to 2012. By 2018, the Colombian government hopes to have 63% of the country connected to broadband.
The Bottom Line
With a booming technology market in Colombia as well as a rapidly growing telecommunications industry some are starting to make a case for the country pushing to become the Silicon Valley of South America. With Medellín’s reputation for innovation and business friendliness plus the city having Ruta N and the numerous universities in the city, Medellín in particular is well positioned to attract more start-up companies.