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Philippine startups break records in 2024: What’s driving the boom?

The burgeoning tech startup ecosystem in the Philippines is witnessing a significant surge in activity, marked by record deal flow and an unprecedented rise in international investor interest, according to the Philippine Venture Capital Report 2025, a collaboration between Foxmont Capital Partners and Boston Consulting Group (BCG).

Also Read: Money talks: How tech can boost Filipinos’ financial literacy

This upswing reflects the nation’s resilient economy, strong domestic demand, and a rapidly expanding digital landscape.

Economic fundamentals underpin growth

The Philippine economy is expanding at a robust pace, boasting a 5.6 per cent GDP growth rate, outpacing many of its Asian peers. This resilience is buoyed by strong domestic demand, a significant reduction in poverty from 22.3 per cent in 2012 to 13.7 per cent in 2023, and decreasing unemployment and underemployment rates, which have fallen below pre-pandemic levels. This solid macroeconomic foundation provides a fertile ground for the growth of tech startups.

Foreign investors flock to Philippine shores

In a notable development, international private market investor interest in the Philippines has surged, with the share of funds raised through foreign investors increasing by 45 per cent over the past year. Foreign direct investment (FDI) now leads over mixed deals, indicating that Philippine startups are not only capturing global attention but also securing larger ticket sizes attractive to global investors.

This growing confidence extends to the public markets, with foreigners becoming net buyers for the first time in six years, signalling renewed faith in the country’s economic trajectory.

Digital economy fuels innovation

The Philippines’s digital economy is experiencing substantial growth, although specific GMV increase figures comparing 2023 and 2024 vary across the provided snippets. The nation continues to exceed global averages in time spent using the internet and social media.

Notably, the country is the fifth largest market on TikTok Shop, with approximately US$3.1 billion in GMV and 116 per cent year-on-year growth. The value of the e-commerce market is projected to increase sevenfold from US$3 billion in 2019 to US$21B in 2024. This thriving digital environment offers vast opportunities for tech startups across various sectors.

Fintech remains a hotbed of activity

Fintech continues to be the most active sector for deals in 2024. Digital payments are on the rise, with the share of digital payments by value reaching 55.3 per cent and by volume 52.8 per cent in 2023.

GCash, a leading digital wallet, has seen its user base grow to 94 million in 2024, representing a significant portion of the total population. The digital loan book balance has also seen substantial increases.

The improving policy environment is further underscored by S&P Global Ratings raising the Philippines’ credit rating outlook to “positive” in November 2024.

Record-breaking deal flow in 2024

2024 marked a record-breaking year for deal flow in the Philippines, reflecting the maturing startup ecosystem. Yearly funds raised reached US$1.12 billion, and yearly deal volume hit 96. While 2023 saw more smaller-ticket deals, 2024 had a larger share of growth-stage investments. Fintech and cleantech emerged as fast-growing sectors, while e-commerce and B2B SaaS saw a decline in deal activity. The relative lack of investors in the US$10 million to US$20 million range presents a potential opportunity for those looking to bridge the gap to later-stage rounds.

The middle class: A powerful consumer force

The rise of the Philippine middle class is reshaping economic and social landscapes. The combined middle-income groups grew from 42 per cent of the population in 2012 to 47.5 per cent in 2023, despite a 20 per cent increase in the total population. This growing middle class exhibits an increasing capacity for discretionary spending, with savings ratios nearly doubling over the last two decades.

Also Read: AI is not slowing demand for software developers in the Philippines

Consumer behaviour is evolving, with a noticeable shift towards commoditisation for necessities and premiumisation for products and services that enhance quality of life, particularly in sectors like health, services, communication, and education. This evolving demand creates significant opportunities for startups catering to these needs in health, financing, power, and agriculture.

Healthcare under scrutiny: Gaps and opportunities

Despite improvements in overall well-being, the Philippine healthcare system faces challenges due to shifting demographics, increased health prioritisation, and a higher prevalence of non-communicable diseases (NCDs).

The probability of mortality from NCDs in the Philippines is among the highest in Southeast Asia. Significant gaps exist in healthcare infrastructure, with only 0.96 hospital beds per 1,000 people.

There is also a considerable disparity between registered and active healthcare workers, particularly nurses, many of whom migrate for better working conditions. Healthcare costs remain a significant challenge, with a medical inflation rate of 19.3 per cent in 2024.

These gaps, however, present prime opportunities for new players offering innovative solutions in areas like hospital modernisation, digital health, and affordable insurance.

Empowering small businesses: Bridging the funding divide

Micro, small, and medium enterprises (MSMEs) are crucial to the Philippine economy, accounting for 99.6 per cent of business enterprises and 67 per cent of total employment. However, they receive only 4.1 per cent of overall banking loans, significantly below the mandated 10 per cent and the real funding gap estimated at US$221 billion.

This funding gap is attributed to banks’ perceived high-risk and cost-to-profit issues, as well as demanding documentation requirements and rigid loan structures. Fintech companies are playing an increasingly vital role in bridging this gap by developing innovative financing models, partnering with banks, and helping MSMEs improve their credit readiness.

Government initiatives, such as reductions in the reserve requirement ratio (RRR) and interest rate cuts by the Bangko Sentral ng Pilipinas (BSP), aim to make borrowing cheaper for MSMEs.

Unlocking energy potential: A call for investment

The Philippine energy sector is on the cusp of a major transformation, driven by rising electricity consumption and economic expansion. Electricity demand is projected to grow annually by around 6 per cent until 2050. To meet this demand and the government’s renewable energy targets (35 per cent by 2030 and 50 per cent by 2040), significant investment in renewable energy and infrastructure is required, estimated at US$5.5 billion to US$8 billion per year until 2030.

Also Read: Philippine VC Kaya Founders backs AI, fintech, and B2B innovators in 2025

The Philippines has substantial geographical advantages for renewable energy, with over 800GW in potential capacity. Government initiatives and increasing private sector interest, including commitments from major players like AC Energy, Meralco, and AboitizPower, drive the shift towards cleaner energy sources. Venture capital has a crucial role to play in supporting energy efficiency and optimisation technologies.

Cultivating agriculture: Addressing fundamental challenges

Despite abundant natural resources, the Philippine agricultural sector struggles to meet domestic food demand, with a significant trade deficit. Key challenges include farmland fragmentation, ageing farmers, and lagging productivity.

A recent survey highlights the diverse realities farmers face, segmented into strong, stable, and struggling categories, revealing disparities in income, technology access, and third-party support. Poverty incidence among farmers remains twice the national average.

Addressing these challenges requires financial support through structured loans and insurance, technological advancements to improve efficiency and market access, and enhanced education on best agricultural practices.

A promising horizon for Philippine tech

The Philippine tech startup ecosystem exhibits strong fundamentals and attracts increasing global attention and investment. The confluence of a growing digital economy, a rising middle class with evolving consumer needs, and supportive government initiatives across various sectors like fintech, healthcare, energy, and agriculture presents a wealth of opportunities for innovative startups.

While challenges remain, particularly in areas like MSME funding, healthcare infrastructure, and agricultural productivity, the increasing engagement of both local and international investors signals a promising horizon for the Philippine startup revolution.

The post Philippine startups break records in 2024: What’s driving the boom? appeared first on e27.

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