We Are Now In the Golden Era of Philippine Startups

As published by: Esquire

As far as the Philippines’ startup landscape goes, the streets are paved with gold.

The highlights of Foxmont’s 2022 Venture Capital report were revealed at the opening talk of Build: the first startup festival co-organized by Sinigang Valley and Esquire Philippines. The session was moderated by Franco Varona, managing director of Foxmont Capital Partners. Together with panelists Paulo Campos of Kaya Founders, Field Pickering of Vulpes Ventures, Gervin Yang of Openspace Ventures, and Katrina Razon of KSR Ventures, the session offered striking insights from various other capital funds and startup founders. Here’s what we learned.

Foxmont’s 2022 Venture Capital Report—The Highlights

The 2022 report bears plenty of encouraging news on the state of our local startup scene. For one, funds raised by Philippine startups exceeded $1 billion in 2021. Fintech still stands as the most funded sector in the local startup scene, taking the lead in deal value for the second year in a row.

Fintech’s roaring success comes as no surprise. Given the country’s countless variations of lockdowns and community quarantines, digital banking and payment adoptions now play a more crucial role in Filipinos’ lives than ever before. And while the pandemic has forced everyone across the globe to go digital, the Philippines is now digitalizing faster than most other nations. In 2020 alone,eight million electronic bank accounts were opened nationwide with mobile wallets like GCash and PayMaya; today, the number of Filipinos who have digital wallets is at 51 million. This has also forcefully pulled forward the adoption of e-commerce, turning the Philippines into today’s fastest-growing e-commerce nation in the world.

Philippine Startups—The New Golden Jackpot for Foreign Investors

2021 was a watershed year for the local startup ecosystem. As pointed out by the panelists, the new bullishness of investors on the Philippine economy can be traced back to a number of good reasons.

An Alluring Population

Despite all the instability it’s still causing, the pandemic has acted as a great accelerator in terms of the general Filipino population upskilling themselves and adopting technology. Combined with the population’s grand size and youthfulness, the innate tech-savviness of Filipinos—manifested in their extremely active digital userbase and status as the social media capital of the world—all make it very compelling for investors. Field Pickering also noted how the westernness of Philippine culture makes it easier for Western investors to relate to Filipino founders.

More Ideas Than Capital

The panelists also noted a unique situation in the country: unlike the startup ecosystems in the west, the Philippines has more ideas than capital. Since the Philippines does not yet have an overcrowded venture market, now is the best time for investors to get in. Katrina Razon particularly noticed how Filipino entrepreneurs have been proposing many interesting ideas in telemedicine and telehealth during the pandemic, aiming to help solve some of the most pressing problems in the country. After all, the pandemic has accelerated our empathy with each other, too. This is a huge selling point for values-based investors, who hunt for entrepreneurs with a wider sense of purpose.

What’s Next?

All things considered, it's no wonder why many investors are championing the Philippine economy as the next big thing. In fact, Razon asserts that this new, rapid growth in our startup ecosystem has been long foretold given what she’s known about Filipinos from the beginning: they’re “smart, technologically savvy, imaginative, and innovative despite working with so much less.” And given the distinct aggressiveness of Filipino founders, Gervin Yang believes it’s just a matter of time until the Philippine startup ecosystem is at par with that of others in the Southeast Asian region.

The success of our local startup scene is a “flywheel wheel of opportunities,” says Paulo Campos—so opportune that even non-Filipino entrepreneurs are choosing the Philippines as their startup turf-of-choice. All we need now, he says, is for more Filipinos to return to the Philippines, or leave the corporate world to “throw their hat into the ring” and take a chance on the entrepreneurial journey.

In the meantime, venture capitals are working hard to build a startup scene that empowers more Filipinos to pursue their ideas. The pandemic may be an intimidating time to consider going out on a limb and trying one’s hand at entrepreneurship—but the pandemic has also shown us, in the words of Varona from Foxmount, that with increased challenges also come increased creativity. The Philippine local startup scene is marked by an extraordinary sense of collaboration. And thusly, all the giant investors that paneled at Build’s opening talk collectively believe that this flourishing startup ecosystem is exactly what the Philippines needs: a force for nation growth.