Why do 56% of startup companies fail in Colombia

One of the great challenges facing Colombian startups or startups is paying attention to market needs, since a good number of them would be failing to think about products and services that would make users' lives simpler or more satisfying.

This was stated by representatives of the seed capital fund Newtopia, following an analysis with data from the Association for Private Equity Investment in Latin America, the Colombia Tech Report 2021 by KPMG and the Global Innovation Index for 2021, among other sources.

This is how one of his partners, Diego Noriega, referred to the subject:

It is in the best interest of investors that startup companies stop thinking with their hearts and develop solutions to important problems of people or companies. With that mindset, these ventures are more likely to exceed the valley of death, as is called the critical phase of a company where its costs are greater than its revenue.

This advice is useful for Colombians who are part of the more than 1,100 startup companies in the country. According to the KPMG report, these ventures raised more than $800 million in 2021 and make Colombia the fourth largest entrepreneurship ecosystem in Latin America, behind Brazil, Mexico and Argentina.

Although entrepreneurship presents the problem already mentioned, the people who are in charge of them have characteristics such as entrepreneurship, high-tech production and research, according to the Global Innovation Index, so it is a good ecosystem for the emergence of new unicorns.

The example that everyone wants to imitate is Rappi, the best known Colombian unicorn, valued at more than a billion dollars. Other startup companies that could follow Rappi's successful footsteps are fintech Addi, shipping company Liftit, digital real estate La Haus, Merqueo app and direct grocery sales platform Frubana. To date, all these ventures have valuations greater than 100 million dollars.

To promote entrepreneurship, Colombia currently has the presence of accelerators, incubators and public-private partnerships, as well as chambers of commerce and state support programs. In addition, the recent Entrepreneurship Law seeks to position the country as an entrepreneurial nation and a regional benchmark in innovation.

For Francisco Noguera, president of INNPulsa Colombia, this is the moment for entrepreneurship in the country: “Startups have proven themselves ready and have solutions that are relevant, not only for the Colombian market, but also for the Latin American and global context. We welcome all initiatives that bring international funds closer to international funds so that, with financial resources, knowledge and networks, they continue to support the growth of our entrepreneurial ecosystem.”

According to Mariano Mayer, co-founder of Newtopia, the president who wins the elections must maintain the sense of politics because of the entrepreneurship initiated by Iván Duque's government. In addition, “it must promote clear rules for local investment by this type of company, allowing them to continue growing and doing what they do most: creating value, jobs, innovation and solutions to problems”.

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