Colombia: A Venture Capitalist Analysis Francisco Lutz, Fabrizio Vernice, Xavier Everaert, Tomislav Turcin Colombia: Venture Capitalist Analysis May 15, 2009 2 Table of Contents Table of Tables ................................................................................................................................ 6 Table of Figures .............................................................................................................................. 6 Letter to Interarts .......................................................................................................................... 8 Executive Summary ...................................................................................................................... 9 Purpose: ........................................................................................................................................................ 9 Background ................................................................................................................................................. 9 Political ....................................................................................................................................................................... 9 Economic ................................................................................................................................................................... 9 Social ............................................................................................................................................................................ 9 Technological........................................................................................................................................................... 9 Creative / Cultural Industry............................................................................................................................. 9 Private Equity .......................................................................................................................................................... 9 Venture Capitalist Fund .................................................................................................................................. 10 Scope ............................................................................................................................................................ 10 Methodology............................................................................................................................................. 10 Conclusions ............................................................................................................................................... 10 Recommendations ................................................................................................................................. 11 1. Introduction .............................................................................................................................. 12 1.1 Background ....................................................................................................................................... 12 Political .................................................................................................................................................................... 12 Economic ................................................................................................................................................................ 12 Social ......................................................................................................................................................................... 12 Technological........................................................................................................................................................ 13 Creative / Cultural Industry.......................................................................................................................... 13 Venture Capitalist/Private Equity definition ....................................................................................... 13 1.2 Purpose ............................................................................................................................................... 13 1.3 Scope .................................................................................................................................................... 13 1. 4 Methodology .................................................................................................................................... 13 2.1 Pest: Political Analysis Colombia .................................................................................. 13 2.1.1 Background on Colombian Politics................................................................................................ 13 2.1.2 Government Structure ......................................................................................................................... 14 2.1.3 Political Arena .......................................................................................................................................... 14 2.1.4 Government Policy towards Economic Development ......................................................... 14 2.1.5 Freedom of Press, Rule of Law, and Corruption ..................................................................... 15 2.1.6 Governmental Regulatory Decisions ............................................................................................ 15 2.1.7 Tax System ................................................................................................................................................. 15 2.1.8 Conclusions ................................................................................................................................................ 16 2.2 PEST: Economic Analysis Colombia ....................................................................................... 16 2.2.1 Economic Background ......................................................................................................................... 16 2.2.2 Recent Years (2007).............................................................................................................................. 16 2.2.3 Today (2008-2009) ............................................................................................................................... 17 2.2.4 Export & Import ...................................................................................................................................... 17 Colombia: Venture Capitalist Analysis September 25, 2009 3 2.2.5 Predictions for the Future .................................................................................................................. 18 2.2.6 Conclusion .................................................................................................................................................. 18 2.3 Pest: Social Analysis Colombia ................................................................................................. 19 2.3.1 Demographic ............................................................................................................................................. 19 2.3.2 Distribution of the income ................................................................................................................. 19 2.3.3 Unemployment ........................................................................................................................................ 19 2.3.4 Social classes ............................................................................................................................................. 19 2.3.4.1 Upper class ............................................................................................................................................. 19 2.3.4.1 Middle class............................................................................................................................................ 19 2.3.4.2 Lower class and masses................................................................................................................... 20 2.3.5 Human rights ............................................................................................................................................ 20 2.3.6 Drug trade................................................................................................................................................... 20 2.3.6.1 Medellin Cartel ..................................................................................................................................... 20 2.3.6.2 Cali Cartel ................................................................................................................................................ 21 2.3.6.3 Norte del Valle Cartel ........................................................................................................................ 21 2.3.6.4 North Coast Cartel .............................................................................................................................. 21 2.3.7 Education .................................................................................................................................................... 21 2.3.8 Customs and Lifestyle .........................................................................................................................