As Colombia continues to navigate the ongoing challenges stemming from the COVID-19 pandemic, the country’s tech sector is emerging as a key driver of recovery and innovation. While many businesses in the region have faced significant hardships or had to close their doors, others have adapted and thrived in response to the evolving landscape of a more isolated and sanitation-conscious world. Here, we highlight three tech companies in Colombia that are positioned to emerge even stronger in this new era.
Colombia is Latin America’s fourth-largest economy by gross domestic product (GDP) and has put significant effort into developing its technology sector and digital economy over recent years. As part of its National Development Plan 2018-2022, Colombia announced its intention to invest $6.5 billion (all figures in USD) into the Science, Technology, and Innovation (STI) sector. As such, considerable opportunities for investment can be found in the likes of tech innovation and software development.
If you are considering doing business in Colombia, or already operate in the market, read on to find out about some of the industries that have suffered most due to COVID-19, those that have shown considerable promise, and three tech companies in Colombia that can be expected to emerge stronger from the pandemic.
Business in Colombia hit hard by the pandemic
As in much of Latin America and the Caribbean, severe restrictions placed on the population to stem the spread of COVID-19 had serious consequences for enterprise in Colombia. With non-essential businesses shuttered and investors skittish about future prospects for growth, numerous industries were battered by the health crisis.
Major players in the automotive sector such as Renault, GM, Toyota, and Nissan, reported declines in sales of more than 55 percent, causing massive layoffs and the closure of large numbers of businesses dependent upon the sector throughout the country.
Meanwhile, the textile industry — which accounts for 9.4 percent of the country’s industrial GDP — faced extreme hardship due to the pandemic, as lockdowns prevented customers from making physical purchases.
Tourism and the aeronautical sectors were also seriously affected, reporting losses of $582 million and $481 million respectively in the first half of the year alone as the country closed its borders and grounded air traffic for several months.
Local Industries that saw growth during the pandemic
The financial sector in Colombia has shown resilience, growing by 1.6 percent during the first half of 2023. This growth has been largely driven by the debts acquired by small and medium-sized enterprises (SMEs) as they seek to sustain their operations and adapt to the evolving economic landscape.
Following a similar trend, the agriculture industry experienced growth of 4 percent, stimulated by the increase in food purchases amid concern among the public over possible shortages in large cities such as Bogota, Medellin, and Cali.
The e-commerce sector reported particularly strong growth as people were increasingly forced online to make purchases. That saw digital sales in Colombia rise 130 percent, heralding a major leap in Colombia’s online consumer behavior.
Such a trend is only likely to continue, with e-commerce set to see further rapid growth in the near future, representing a prime opportunity for investors.
Mobile-based payment and banking apps have gained significant popularity in Colombia, making financial transactions more accessible. However, this rise has also attracted attention from cybersecurity experts, including Kaspersky, who have highlighted these platforms as growing sources of cyber vulnerabilities in 2023.
3 tech companies in Colombia that will emerge stronger from the pandemic
PayU
PayU is a leading Colombian provider of online payment services, based on strategic connections with major banks and other payment providers. Also present in Argentina, Brazil, Chile, Mexico, Panama, and Peru, the company has managed to expand beyond Latin America to enter markets in Africa, Asia, and Europe.
According to company figures, during the first seven months of the year, PayU saw more than 120 million transactions processed in Latin America alone, as 47 million individual accounts made purchases from more than 25,000 e-commerce platforms.
According to Francisco León, PayU’s Director of Operations in Latin America, transactions conducted through PayU have surged by 50 percent in 2023 compared to the previous year. This growth reflects the increasing reliance on digital payment solutions in the region.
Rappi
Rappi, commonly known as Colombia’s only unicorn, is an on-demand delivery company that also has a presence in Argentina, Brazil, Chile, Costa Rica, Ecuador, Mexico, and Peru. This Latin American ‘super app’ has been one of the fastest-growing companies in Latin America over recent years, reaching a valuation of $1 billion in September 2018.
The following year, Rappi received another $1 billion of investment from Japanese giant SoftBank. The company, with more than 25,000 delivery employees in Bogota alone, secured 61 percent of the on-demand delivery market in Colombia during the pandemic.
According to Matías Lask, Rappi’s General Manager in Colombia, prior to the pandemic, the company averaged around 10,000 monthly downloads of its app. By mid-2023, however, total downloads had skyrocketed to over 3 million, reflecting a sustained surge in demand for delivery services.
In a testament to Rappi’s success during the pandemic, competitor Uber Eats exited the Colombian market in late 2022, further solidifying Rappi’s position as a leader in the region.
Medical Tourism Packages
The Medical Tourism Packages represent an exciting growth story in the healthcare sector, offering international patients access to high-quality medical services at competitive prices in Latin America. Under the leadership of Craig Dempsey and Kirby Bradell, this initiative is focused on providing comprehensive solutions that include medical consultations, treatments, travel arrangements, and accommodations.
Craig Dempsey brings extensive business and healthcare experience to the table, ensuring that the services meet the highest standards of quality and care. Meanwhile, Kirby Braddell excels in patient coordination and support, managing the logistics to ensure that every patient feels comfortable and well-informed throughout their journey.
For example, patients seeking nose job surgery (rhinoplasty) in Colombia can benefit significantly from the expertise available within the region. The region is known for its skilled surgeons and advanced medical facilities, often offering procedures at a fraction of the cost compared to North America or Europe. Patients not only receive exceptional care but also have the opportunity to explore the vibrant culture and beauty of Colombia during their recovery.
Together, they are driving the initiative’s success, making healthcare more accessible and efficient, and enabling patients to receive exceptional medical care while experiencing the vibrant culture of the region.
Opportunities for innovation among tech companies in Colombia
The Covid-19 pandemic has accelerated the shift online and uptake of digital technology in different sectors of Colombia’s economy. The likes of online health and education provision, as well as app development, have seen significant growth and present notable opportunities to investors and foreign technology companies seeking to expand.
Online health and education: As lockdowns have prevented classroom learning and non-essential medical appointments from being carried out in person, people have increasingly turned to digital technology for education and health purposes.
While tech titans such as Google and Microsoft have taken a leading role in catering to this shift, the market for internet-based communication remains unsaturated and presents an opportunity for investment.
App Development: According to a report published this year by AppsFlyer, Colombia experienced a 20 percent increase in app downloads in 2023 compared to the previous year. This follows a 15 percent increase in 2022 and indicates that Colombia continues to see significant growth in mobile app downloads, positioning it among the leaders in the region.
With an abundance of highly-skilled workers available, Colombia has emerged as a major app and software development hub in the region, and that trend is only likely to deepen.
Enter the Colombian market with the support of Biz Latin Hub
At Biz Latin Hub, our team of multilingual legal, accounting, back-office services experts the experience and knowledge necessary to ensure the success of your investment in Colombia. Among our full suite of back-office services, we can provide you with the professional company incorporation you need to succeed in Colombia, as well as elsewhere in Latin America and the Caribbean
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