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In the world of startups, the Philippines has undergone a remarkable transformation in recent years. Just a short while ago, headlines lamented the state of the country's tech scene, asking questions like "What's holding back the Philippines' startup ecosystem?" and "No country for unicorns: why Philippine start-ups are struggling." But fast forward to 2023, and a simple Google search for "the Philippines startup scene" reveals a completely different narrative. Some platforms boldly proclaim that the Philippines is experiencing its "Golden Era of Startups."
Tech in Asia is particularly enthusiastic about this market, going as far as producing a three-part documentary series about the Philippines' burgeoning startup scene. The country has also earned a spot on the roster of destinations for Tech in Asia's monthly Founders' Meetup.
Let's dive deeper into what makes the Philippines' startup landscape so exciting.
The Current State of Affairs
As of today, the Philippines ranks sixth among startup ecosystems in Southeast Asia and holds the 59th position globally, according to StartupBlink. Examining Tech in Asia's data, it's evident that the Philippines experienced a significant increase in funding from 2020 to 2021, soaring from US$180 million to a staggering US$863.7 million—a record high. Although the country's startups faced an investment slowdown in 2022, the previous year's funding achievement remains the second-highest in the last five years.
Notably, the Philippines has given birth to several standout startups, including its two unicorns: Mynt, the operator of the mobile wallet Cash, and Voyager Innovations, the force behind the payments platform Maya. Additionally, it boasts prominent players in the web space, such as Yield Guild Games and Coins.ph, which was acquired first by Gojek in 2019 and subsequently by former Binance CFO Wei Zhou in 2022.
Abundant Opportunities
While the Philippines' startup scene might not have always taken center stage in Southeast Asia's tech conversations, it possesses a wealth of potential. With a population exceeding 110 million—the second-largest in the region after Indonesia—and a youthful median age of 25, the Philippines presents a vast market with a predominantly young, tech-savvy, and adventurous population. This demographic sets the stage for startups to address critical issues and craft innovative experiences.
Here are a few verticals that are particularly promising in the Philippines:
- Fintech: Filipinos are no strangers to fintech, with mobile money offerings dating back to the early 2000s. Despite this history, banking penetration remains low at just 56%, leaving ample room for startups to provide access to financial services like loans and investments.
- Ecommerce: The country's ecommerce sector has been on a rapid growth trajectory, expanding by 31.3% in 2022 to reach US$9.8 billion, with projections of reaching US$12 billion by 2025. Social commerce, in particular, is booming, with startups like GrowSari and Kumu supporting social commerce and livestreaming, raising substantial funding in recent years.
- Web3: The Philippines is an exciting launchpad for crypto and Web3 startups. A survey by UOB revealed that 33% of respondents in the Philippines have invested in a crypto exchange, the second-highest rate in Southeast Asia. The country also ranks second on Chainalysis' Global Crypto Adoption Index, and Filipino interest in Web3 gaming is among the highest in the world, according to CoinGecko.
Onwards and Upwards
While the Philippines presents a tantalizing landscape for startups, it's not without its challenges. Infrastructural obstacles, including low internet penetration in rural areas, regulatory requirements, and costly setup expenses, can be daunting. Additionally, the Philippines' tech ecosystem is relatively young and inexperienced compared to other Southeast Asian markets. Many founders are embarking on their entrepreneurial journey for the first time, and 46% of local venture capital firms were established in the last three years. This lack of experience and connections can pose difficulties, particularly in the process of growing and scaling businesses within the country.
Despite these challenges, the Philippines' startup scene is undoubtedly on an upward trajectory, inviting adventurers, innovators, and investors to join in on the excitement of this burgeoning ecosystem. As it continues to evolve and mature, the Philippines may well become the next destination for startup success in Southeast Asia.
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