South America is a very interesting region, relatively homogeneous in culture and language. It is a very big market by itself, but it also has a very close relationship with both Mexico and the USA, as well as to Europe through its historic ties to Spain and Portugal. As with most developing markets, the region’s economies are highly dependent on raw materials. Nevertheless, very hopeful signs are appearing in ecosystems throughout the subcontinent, from Chile to Colombia. Half of the top-10 cities in the region for startups are in Brazil (including 2 in the Top-5). Colombia is the second most represented country, with 2 cities. In this article, we will present the 10 Best Startup cities in South America in 2020.
- São Paulo, Brazil
- Buenos Aires, Argentina
- Santiago, Chile
- Bogotá, Colombia
- Rio de Janeiro, Brazil
- Belo Horizonte, Brazil
- Lima, Perú
- Medellín, Colombia
- Curitiba, Brazil
- Porto Alegre, Brazil
The Best Startup Cities in South America
Nine South American countries represent the region in the Top-100 (including 4 in the Top-50). Seventy six ecosystems represent the region in the Top-1000 cities ranking, with 6 in the Top-100.
1. São Paulo, Brazil
São Paulo is a massive city of more than 12 million people and a tenth of Brazil’s GDP. In this context, it is becoming an increasingly important startup and innovation hub. Ranked 18th, it is the highest placed city from the Southern Hemisphere, beating Sydney by more than 10 spots. The quality of the startups born in the city has been outstanding, with 7 current unicorns – including Nubank and Quinto Andar – being headquartered in São Paulo.
2. Buenos Aires, Argentina
In recent years (and not so recent) Argentina’s economy has gone through turbulent times. Nevertheless, the country has managed to create one of the most exciting startup ecosystems of the region. Buenos Aires is the home of MercadoLibre, with a market cap higher than $50b is Latin America’s most successful tech company so far. The city is ranked as the 46th best startup city in the world, up two spots since last year’s ranking.
3. Santiago, Chile
In recent years, Chile’s economy has been an overperformer in Latin America, relative to population. In the startup scene, the same is true, especially for its capital city, Santiago. Since the creation of Startup Chile by the Government, the country and its capital have seen its regional and global visibility soar, positioning themselves as one of the Best Startup cities in South America.
4. Bogotá, Colombia
Although ranked at the 4th South American city for startups, Bogotá had actually a bad year overall (dropping 25 spots to 77th). The country’s innovation ecosystem lacks regulation, and the consequences become visible when companies like Uber have to shut down, even if temporarily. It’s not all bad news though, as Rappi (Latin America’s delivery giant) received a $1b Series E funding from Softbank. This funding round makes Rappi one of the region’s most valuable startups.
5. Rio de Janeiro, Brazil
Rio de Janeiro, ranked 93rd in the world, is South America’s last city in the Top-100. The city lost 29 spots in the overall ranking, but it has many things to celebrate. Access to capital (previously concentrated in São Paulo) is becoming increasingly easy for entrepreneurs in the city, and the country-level efforts to diminish red tape and increase the ease of doing business are expected to benefit Rio in the long run.
6. Belo Horizonte
Belo Horizonte is Brazil’s 6th largest city, but it’s an overperforming up-and-coming hub when it comes to startups. Relatively close to São Paulo and Rio by Brazilian standards, the city offers entrepreneurs an infrastructure similar to those cities’, but has the advantage of being a more “livable city”: lower rent, safer, and less traffic (and pollution).
7. Lima, Perú
Perú had a good year in the rankings, increasing one spot, but Lima fell below the Top-100 cities. There is increasing support for the country and city to become tech and innovation hubs, with the creation of initiatives such as Startup Perú or Innovate Peru, so we expect future growth in this ecosystem.
8. Medellín, Colombia
The second Colombian city in the rankings is increasingly popular for expats and digital nomads to work on their startups. This gives the city the potential of a real international boost to the local ecosystem. Although Medellín dropped 24 spots since the 2019 rankings, it’s very inspiring to see the development of a city which not long ago was one of the most violent in the world.
9. Curitiba, Brazil
Like most of the cities in the South American Region, Curitiba lost momentum in 2020. Even so, the city has earned a reputation for innovation at governance (it’s considered by some “the most innovative city in the world”), and it’s currently leveraging those strengths in order to develop a thriving startup ecosystem. In line with this, different players of the ecosystem signed the 20 Curitiba Innovation pacts for 2018, but these weren’t renovated for 2019. The city must persist on its initiatives for startups to achieve long term success.
10. Porto Alegre, Brazil
Porto Alegre is the smallest city by population in this list, and it ranks as the 200th best city in the world for startups (losing 28 spots from 2019). Although nationally the city was a late bloomer in the startup scene, it has had some successes (especially in e-commerce). The ecosystem’s proximity to Buenos Aires and Montevideo should be leveraged to further develop the ecosystem.
Of the cities in this Top-10, only the 2 highest ranked (São Paulo and Buenos Aires) moved up in the global rankings this year. South American nations have realized that innovation is one of the best options to leave behind their overreliance on raw materials. But now it’s time to put those realizations into actions. Initiatives like Startup Chile are leading the way, but governments and other important players must back more efforts, and make it easier for entrepreneurs to do business, and even fail. This is the way forward to create true tech hubs in the region and strengthen their economies in the long term.
This list was compiled based on the results of Global Startup Ecosystem Rankings Report 2020 that ranked 1,000 cities and 100 countries worldwide. If your city was not included in this list yet but you want to find out the current status of your local startup ecosystem, download the Report for free here and start discovering.
If you want to check Best Startup Cities in the Middle East, check this article.