Colombia is the surprise winner in the Latin American venture capital landscape, according to a new report from the Latin American Venture Capital Association. VentureBeat was able to secure an advanced copy to bring you a sneak peak. See a PDF of the report after the jump.

The primary story is this: After more than four decades of civil war, Colombia improved its private equity and venture capital score the most compared to last year — a change that can be attributed to stronger protections for minority shareholders’ rights, corporate governance and greater access to the private equity and venture capital industries for institutional investors.

The report, titled “2009 Scorecard: The Private Equity and Venture Capital Environment in Latin America,” praised the country’s capital market reforms, initiated in 2007 and just now beginning to take effect. More favorable laws guiding private equity and venture capital fund formation also became effective in 2008. Colombia’s fondos de capital privado, established in 2006, can now invest overseas and create regional funds. Restrictions were also eased last year for pension funds looking to participate in private equity and venture capital activity.

Peru was the only other Latin American country that improved its score since 2008. Last December, a ruling opened up the country’s four private pension funds to international funds that are registered locally. The report states that this “could be viewed as the most advanced regulation in the region in this area.”

Despite the success of Colombia and Peru, seven of the 12 Latin American countries evaluated saw their scores decline, and three saw no change. This stands in stark contrast to the 2008 Scorecard, which reported improved scores for 11 countries. This year, global economic woes were cited as the main reason for the drop in scores. At the same time, the report notes that Latin America has weathered the recent financial crisis much better than others in the past. Its fundamental macroeconomic indicators appear to be much stronger than they have been previously.

We say that Colombia is the unlikely hero this year due to the boost from last year’s figures. But that said, Chile still has the highest score of any Latin American country, with Brazil in second, Trinidad and Tobago in third and Mexico in fourth. The only change in that lineup from 2008 is that Brazil has gained a bit on the front runner.

Chile continues to lead the region mostly due to “the quality of its institutions, which gives investors a lot of confidence,” says Cate Ambrose, executive director of the Latin American Venture Capital Association (LAVCA). It scores points for its perceived lack of corruption, IP rights and strong judiciary. At the same time, she says that Brazil is unquestionably the region’s leader in having a developed local venture capital and private equity industry. “Brazil has done a phenomenal job in the past decade,” she told VentureBeat.

The LAVCA, a New York-based non-profit, began issuing its annual Scorecard in 2006 in collaboration with the Economist Intelligence Unit. Every year, it analyzes criteria like the tax treatment of venture capital and private equity funds and investments, restrictions on institutional investors, capital market development and feasibility of local exits, corporate governance requirements, intellectual property rights, bankruptcy regulations, corruption metrics, and laws governing fund formation and operation, among others.

“It’s so cool,” says Tim Draper, managing director of Draper Fisher Jurvetson, of the LAVCA Scorecard. “It’s so important for governments to see how they rank relative to others as attractors of capital, entrepreneurship and business people. It’s useful to businesses that want to expand to Latin America.”

Asked if the report missed any major criteria, Draper said that, “I think they have hit the big ones. We need these reports all over the world.”

Even so, Ambrose acknowledges that the Scorecard’s focus is evaluating the broader regulatory framework for private capital in each of these countries. It is not meant to detect more subtle shifts in the business culture. Argentina for example finished third from last this year, barely ahead of El Salvador and the Dominican Republic. Yet, she says that the country “is a hub for early stage venture capital in the region.” This is largely due to the growing presence and leadership of local “serial entrepreneurs.”

The Scorecard also does not provide specific data on deals. For that, LAVCA recently published its first Industry report in collaboration with the Wharton School. Though the full country-specific report must be purchased, Venturebeat can share the following highlights:

110 global and local funds were surveyed and reported a total of 200 investments in 2008 for $4.6 billion. Firms raised $6.4 billion from investors, and there were 56 exits for a total of $2.6 billion. 80 percent of respondents said they plan to maintain or increase the level of their investments in Latin America in 2009.

Here’s a snapshot of the scorecard:

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