Bolivia is a landlocked country with lots of natural riches located right in the middle of the South American continent.
The Andean country is bordered by local startup giants such as Argentina, Brazil, and Chile, but within its borders, the startup ecosystem is still in its infancy—for now.
Thanks to individual efforts, the country has seen exceptional growth in recent years, and we might even see more international seed funding flowing in soon.
Let’s look at the current state of Bolivia’s startup ecosystem, including its challenges and requirements for growth. We’ll conclude with a few success stories and startups you may hear from in the future.
If you’re interested in a more elaborate financial and cultural picture of Bolivia, Magma Partners’ managing partner Nathan Lustig did a great job describing the country here.
What does Bolivia’s startup scene look like?
Bolivia’s startup ecosystem is still in its infancy. Compared to other South American countries, there are few startups per capita. According to Mapeo TIC Bolivia, an annual report on startups in Bolivia, there were 155 active startups in 2021.
While the number of startups remained more or less stable in the past years, a lot was going on behind the scenes. During the pandemic years, Bolivia witnessed a promising rise in the number of accelerators, incubators, and other supporting institutions.
We’ve also seen an increase in the projected number of employees per startup. In 2022, startups are expected to reach 13 members, compared to an average of only 4.5 members per startup in 2019.
A large majority of these members are male. While Bolivian women are typically entrepreneurial, only 13.5% of co-founders are female. The problem isn’t a lack of talent or ambition but rather a lack of awareness about viable career options in startups.
Pista8, Tech4, Microsoft Bolivia, and the Bolivian Coca-Cola Foundation aim to close this gap. Their new Fast-Track startup program will incubate six ideas and accelerate eight startups with at least one female team member.
Where are Bolivian startups located, and what is their focus?
A bit more than half of Bolivia’s startups are located in Santa Cruz de la Sierra, one-third in La Paz, and a little less than one-tenth in Cochabamba. Only a tiny fraction of startups are found in one of the seven remaining departments.
About half of the current startups in Bolivia belong to four categories:
- Corporate software
Still, fintech is also an exciting industry, where we’ll see a lot of movement soon. Especially after the foundation of the “Cámara Fintech Bolivia” on 18 March 2022.
Currently, there are about 30 companies like Axon, iZi, Libélula, and Multipago facilitating online payments, e-commerce, and digitalization of the banking systems for people in cities as well as remote communities.
Challenges for the Bolivian startup ecosystem
Despite the ambition and drive from the people at the top of the ecosystem, some change is still needed to compete on international levels. This isn’t specific to startups, however, as it can also be said about sports and education in Bolivia.
Leading figures in the startup ecosystem indicate there’s a general lack of innovation, training, and preparation at universities. They are not yet delivering professionals who meet international standards, and they organize few events with a focus on entrepreneurship.
“Universities talk a lot about wanting to help but they still teach in traditional ways. Many students aren’t even familiar with startup vocabulary like MVP, product-market fit and so on.” Mauricio Dulon, Serial entrepreneur and co-founder of the “Cámara Fintech Bolivia”
There is light at the end of the tunnel, however, with promising collaborations like Pista8 teaming up with the Universidad Privada Boliviana (UPB) to bring international speakers to Bolivia.
“The international experts from diverse partner organizations in Latin America have been critical in incorporating best practices in our initiatives, primarily in the acceleration phase. A product of this collaborative approach is our pioneer accelerator program which paves the way for Bolivian entrepreneurial talent.” Viviana Angulo, Pista 8 Co-founder
Besides the educational struggles, there are few to no government incentives. No tax benefits or other support exist, as startups are treated like regular companies.
There’s more, according to the Global Innovation Index, Bolivia is one of the most complex countries in the world to start a business due to its strict regulations, among other factors.
The fact that commercial law dates back to the late seventies doesn’t help much either. There’s little flexibility, so it doesn’t help modern startups, especially when it comes to fintech, drones, and other modern technology.
Additionally, there’s a mindset challenge. About half of the country’s startups aren’t looking to scale outside internationally, according to Mapeo TIC Bolivia. With a population size of 12 million people—smaller than Buenos Aires or Rio de Janeiro—the market is too small to be interesting.
The remaining half does plan to expand internationally.However, with the exception of DeltaX and tuGerente, there are few signs of activity beyond Bolivia’s borders so far.
Finally, there’s the financial challenge. Because Bolivia has a limited market size and companies aren’t ready to expand to neighboring countries, the current ecosystem doesn’t deliver very lucrative investment opportunities yet. Taking into account political difficulties as well, few venture capital funds have set their eyes on Bolivia so far.
What is needed for the Bolivian ecosystem to take off?
Maybe it’s just a vicious circle and investments are the primary need to scale Bolivian startups. According to Mapeo TIC Bolivia, 75.7% of the interviewed stakeholders believe investments are the solution to Bolivia’s startup struggles.
And they may have a point as more than 50% of the 155 startups have a cash runway of fewer than 12 months, and 25% will even run out of funds in six months or less.
Antonio Riveros, president of Startups Bolivia, disagrees. He says, “we need more than money. First, the local ecosystem needs to be ready to receive the money and use it intelligently.”
To improve the ecosystem, he identifies three pillars apart from the above-mentioned challenges.
First, more international visibility is needed. On the one hand, this can be achieved by embassies and international relationships. On the other hand, universities and other interested institutions should organize more international events. Unfortunately, there isn’t much going on at the moment.
Secondly, there are few renowned incubators and accelerators. And while these provide access to coaches and domain experts, budding entrepreneurs don’t have access to a network of mentors because there are few successful exit stories in Bolivia.
At the same time, more and more people started calling themselves startup mentors or coaches. That’s why Pista8 joined forces with the UPB to train and certify qualified startup coaches.
Finally, stakeholders are lobbying for the creation of startup laws. They ask for incentives, a government fund, more flexibility, and startup company status. Now, companies have limited options, and it takes some capital and a lot of paperwork to get started.
The authors of Ruptura, an innovation study of the Bolivian startup ecosystem, agree. They also believe Bolivia needs stronger alliances between established companies and startups, and more data collection to facilitate understanding of the ecosystem.
How Bolivian startups get funding
As we already identified, receiving intelligent funding following international best practices is a major challenge in the Bolivian startup ecosystem.
For starters, most startups have no contact with seed or venture capital funds. Those that do mostly find their financing in the same city, with less than 10% looking for funding abroad.
So the funding they obtain is very often from friends and family, or local investment companies, which are scarce, and relatively unknown. The most notorious investors in Bolivia are SC Angeles, an angel syndicate. But so far, they’ve mainly invested in startups from other Latin American countries.
There are no active VC funds in Bolivia because they don’t have a legal basis in the country. However, US-based iThink aims to focus on Paraguay and Bolivia with its 20-million-dollar maiden fund Ignite. And Bolivia’s startup scene is eagerly awaiting the launch of Ariel Valverde’s Big Valley VC after his successful Yaigo exit.
“Big Valley Ventures is exploring different opportunities in Bolivia and hopes to have its first investment completed by June 2022.” Ariel Valverde, Big Valley Ventures founder and Yaigo CEO
Accelerators like Pista8 and Solydes provide little to no funds, but they help early startups scale and meet international partners. Examples include alumni who successfully participated in international accelerator programs, like tuGerente’s participation in Peruvian UTEC Ventures’ female founder accelerator and Mikendu’s selection for Start-up Chile’s Build Program.
It’s also worth noting that DeltaX is one of the ten selected startups to participate in the Harvard Alumni Entrepreneurs Accelerator powered by Pegasus Tech Venture.
Another reason information about funding is so obscure is the complex political landscape. Since there are no startup laws and traditional VC firms can’t legally exist in the country, companies don’t like to draw much attention to their funding rounds. A missed opportunity but a well-considered decision.
We do know that companies like Ultragrupo, the real estate startup behind Ultracasas, has received funding from Peru and Bid Lab, while DeltaX, the country’s first freight and logistics startup, has received foreign funding from Magma Partners (Chile), Duro Capital (California), Cibersons (Paraguay), SC Angeles (Bolivia), and angel investors such as Deepak Chhugani (Nuvocargo), Alfonso de los Rios (Nowports) and Pedro Jaramillo (Port of Mejillones).
And there are some interesting movements in the pipeline. As these are still in the term sheet and due diligence stage, however, we’ll have to wait a few more months before we can really place Bolivia in the international startup market.
Finally, there is some corporate funding activity. Examples include the participation of Grupo Venado, Grupo La Papelera, and more in Pista8, Biopetrol’s stake in Mo.bi’s seed funding round, and Plastiforte and Vidcla’s investment in Quantum Motors.
Local startups in the spotlight
Ultragrupo seems to be the most advanced startup, having raised two international rounds and working on a third one. But DeltaX is also working on a second international round and is busily expanding its business to neighboring countries Chile, Paraguay, and Peru.
“We’re laser-focused on improving the lives of truck drivers in the Andean region, and optimizing cargo and freight company supply chains.” Luis Fernando Ortiz, Founder and CEO at DeltaX
Other success stories include NetComidas’ after their acquisition by PedidosYa and Yaigo’s 8-figure exit when they were acquired by the Venezuelan Yummy, a fast-expanding, YC-backed startup.
The future for Bolivian startups looks bright as well with Mapeo TIC Bolivia identifying Mo.bi, Creotec/Drontec, and iZi as the most exciting startups of the moment.
- Mo.bi produces electric vehicles with Bolivian Lithium batteries, which can be rented in Santa Cruz de la Sierra via their app.
- Creotec and Drontec operate at the edge of technology to create prostheses and advanced drone footage, respectively.
- iZi offers digital solutions, such as billing, for the Bolivian market.
Personally, I’m rooting for Minkedu, an EdTech aiming to narrow the gap between home and school, and Medicinets, a HealthTech connecting doctors and patients more easily.
Conclusion: 2022 is a crucial year for Bolivia’s startup ecosystem
Thanks to a lot of individual effort from various important stakeholders, Bolivia’s startup scene has made huge strides in the last few years.
The country is still far behind neighboring countries like Brazil, Argentina, Chile, and even Peru. However, stakeholders are eagerly waiting for crucial government changes, and if all goes well, some exciting startups should be receiving their first international funding rounds later this year.
It is, indeed, an exciting year for Bolivian startups.
This post is also available in: Español (Spanish)
Excellent article and insight!