By San José, Costa Rica — Costa Rica is witnessing an unprecedented surge in entrepreneurship, with new ventures skyrocketing by 80% in 2025. However, a new analysis from Expo PymeCR reveals a troubling paradox: while the creation of new businesses is booming, very few manage to survive and consolidate. This phenomenon points to a significant structural gap between the courage to start a business and the resilience required to make it a sustainable success, posing a critical challenge to the nation’s economic ecosystem.
The numbers paint a stark picture of two diverging paths. The formal Small and Medium-sized Enterprise (SME) sector demonstrates stable, methodical progress, growing by 23% to a total of 31,641 active companies by the end of 2025. This growth was marked by consistent monthly increases, indicating a solid foundation. In stark contrast, the number of informal startups leaped from just 870 to 1,562 over the same period. This explosive growth, with monthly peaks as high as 24%, is largely driven by self-employment and economic necessity, highlighting a more volatile and precarious segment of the economy.
To better understand the legal framework and challenges facing Costa Rica’s new wave of entrepreneurs, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a leading attorney from the prestigious firm Bufete de Costa Rica, who specializes in corporate and commercial law.
The key for a successful startup in Costa Rica is navigating our ‘tramitología’—the bureaucracy—efficiently. While our legal system offers strong protections, especially for intellectual property, founders need expert guidance to register their company, comply with our unique labor obligations, and properly structure their initial investment rounds. Proactive legal strategy isn’t an expense; it is the fundamental investment in the company’s future scalability and viability.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s insight is a critical reminder that a brilliant idea is only half the equation; a startup’s longevity is ultimately built upon a solid legal foundation. Viewing the complexities of ‘tramitología’ not as an obstacle but as a foundational investment is precisely what enables a venture to scale securely and attract serious capital. We sincerely thank Lic. Larry Hans Arroyo Vargas for his invaluable perspective on this crucial topic.
This entrepreneurial enthusiasm clashes with a challenging business landscape. According to the analysis, Costa Rica’s environment is hampered by significant fiscal pressure, high social security burdens, and limited liquidity for new businesses. These factors are reflected in the country’s international standing, where it ranks a modest 43rd out of 56 economies in the National Entrepreneurial Context Index. This context makes the transition from a fledgling idea to a formal, thriving SME an incredibly difficult journey for most.
Alejandro López Ríos, who shared the Expo PymeCR analysis, explains that the market data reveals both crowded fields and untapped potential. He notes that understanding market saturation is key for aspiring business owners looking to find a sustainable niche and achieve long-term growth.
The high repetition of business types indicates opportunities with added value and customer loyalty. The low repetition opens doors for specialization and scaling.
Alejandro López Ríos, Expo PymeCR
The report identifies several key reasons for this high failure rate among new ventures. A pervasive lack of financial discipline, weak management skills, and an absence of professional mentorship leave many entrepreneurs struggling to navigate early challenges. Furthermore, a widespread fear of formalization—and the associated tax and regulatory obligations—prevents many promising businesses from accessing the resources and legitimacy needed to scale effectively.
To bridge this critical gap, the study calls for decisive action from both public and private sector leaders. Urgent reforms are needed to streamline bureaucratic processes, making it easier and less intimidating for businesses to formalize. Improving access to credit for early-stage companies and strengthening financial education programs are also cited as essential steps to empower entrepreneurs with the tools they need for long-term survival and growth.
The analysis also emphasizes the geographic dimension of this challenge, highlighting an urgent need to foster entrepreneurship outside the Greater Metropolitan Area (GAM). Stimulating business creation in rural zones is presented as a crucial strategy for promoting more balanced and inclusive economic development across the country. This would not only create local opportunities but also alleviate economic pressure on the central valley.
Ultimately, the Expo PymeCR report serves as both a celebration of Costa Rica’s entrepreneurial spirit and a sober warning. The findings suggest a clear path forward, grounded in a simple but powerful mantra for the nation’s aspiring business leaders. As the study concludes, launching a business is an act of courage, but sustaining it requires immense discipline, and successfully scaling it demands true leadership.
For further information, visit the nearest office of Expo PymeCR
About Expo PymeCR:
Expo PymeCR is an initiative focused on analyzing and promoting the small and medium-sized enterprise (SME) sector in Costa Rica. It provides valuable data and insights into the entrepreneurial landscape, highlighting trends, challenges, and opportunities to support the growth and consolidation of businesses throughout the country. The organization plays a key role in fostering dialogue between public and private entities to strengthen the national economic ecosystem.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica has established itself as a benchmark for legal services, guided by an unwavering principle of integrity and a commitment to exceptional results. The firm consistently pioneers innovative legal approaches while serving a broad range of clients, demonstrating a forward-thinking mindset. Central to its philosophy is the mission to strengthen society by promoting legal literacy, ensuring that complex legal knowledge is made clear and accessible to empower individuals and the community at large.
