(Financial Times) As murder rates plummet, Medellín-based companies grow generating 7% of Colombia’s gross domestic product. The city has been selected as the venue for the 2016 Global Entrepreneurship Congress, run by the US-based Kauffman Foundation.
In what has been dubbed “the Medellín miracle”, this sunny Colombian city is attempting to change its image from violent drugs fiefdom to something more like a model metropolis. Medellín’s murder rate, once among the highest in the world, plummeted between 1991 and 2010. Libraries, parks and museums have expanded and new public transport has been built. The city has been selected as the venue for the 2016 Global Entrepreneurship Congress, run by the US-based Kauffman Foundation.
The case for: The Grupo Empresarial Antioqueño, a grouping of fast-growing Medellín-based companies, now generates 7 per cent of Colombia’s gross domestic product, which has more than doubled in 20 years.
Some estimates put Colombia’s middle class at about a third of the total population of 47m, a good size of internal market for new ventures to serve before growing into “multilatinas”, companies in the region that increasingly rival foreign competitors.
The case against: Medellín investors complain that they are still looking for a project that can be grown into a multinational operation. The supply of talented coders has struggled to keep pace with the growth of new tech companies in the city.
Local heroes: Diego Angel, creator of Angel Studios, is one of the veterans of Medellín’s start-up scene. Having moved to Los Angeles as a young man, he was behind the technology that powers several video games, including Grand Theft Auto. He is now back in Medellín, helping local tech start-ups. Michael Puscar, founder of Philadelphia-based Yuxi Pacific, opened its subsidiary in Medellín in 2011. Now it is the cornerstone of the business: by 2013 the company had more than 100 employees in Medellín and had quadrupled its annual revenues. Mr Puscar then created GITP Ventures, an early stage investment firm that focuses on Colombian companies.
Show me the money: Colombia’s venture capital industry is small but growing fast. According to the Latin America Venture Capital Association, Brazil accounts for half the region’s venture capital, but Colombia now ranks alongside Chile. Colombian banks are expensive, highly regulated and generally risk averse, so most founder teams get backing from friends and family. Grants are available from organisations such as iNNpulsa Colombia, part of the country’s development bank Bancoldex.
Is it easy to get around? A cable-car system, linked to the modern and spotless metro, carries thousands of people around town each day. Medellín is linked by air to several big cities in the US and South America. There are two daily flights to Miami, less than three and a half hours away, but just three a week to New York, which is just over five hours away. Madrid is the only European city with a direct flight and there are two of these a week.
What do the locals say? Catalina Ortiz, executive director at iNNpulsa Colombia: “Medellín is a great example of how amazing things can happen when vision meets collaboration with a can-do attitude.” Yuxi Pacific’s Mr Puscar hails the “deep talent pool, a business-friendly government, and a low cost of doing business”. Jonathan Ortmans, senior fellow, Ewing Marion Kauffman Foundation: “From being a place known for drugs and violence, to turn around its culture and reputation by focusing on empowering entrepreneurs, is extraordinary.”