Despite global headwinds, the Philippine startup ecosystem showcased resilience by raising US$956 million in funding in 2023, according to a report.
While this is a relatively modest dip (14 per cent) year-on-year, the number of deals increased by 16 per cent to 96, according to the Philippine Venture Capital Report released by Foxmont Capital Partners and BCG. This is a notable achievement, given the 62 per cent y-o-y decline in funding observed across the region by the Global Private Capital Association across Southeast Asia.
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The total deal value experienced a modest 14 per cent drop in the Philippines. In comparison, the deal value witnessed a 62 per cent decline across Southeast Asia, with Indonesia and Singapore feeling the largest drops at 68 per cent and 73 per cent, respectively.
Fintech (22 deals), B2B SaaS (14), and e-commerce (13) were the top 3 funded verticals
in 2023.
Agritech is the emerging sector with good public support as agriculture holds a significant role in the Philippine economic development in the coming years.
The report further revealed that the Philippines’s share of total funds raised in Southeast Asia continued to climb to 13 per cent from 7 per cent in 2022 and 5 per cent in 2021.
“The sustained momentum we see in Philippine startup investments is encouraging, particularly with early-stage deals. We attribute this performance to a deepening pool of strong founders, attractive Philippine macro fundamentals, modest entry valuations, and a reallocation of regional private capital,” said Jelmer Ikink, General Partner at Foxmont Capital Partners.
Furthermore, the report highlights that the Philippines has reached an inflexion point in key digital transformation levers, mirroring trends observed in countries like Indonesia, China, and India.
On the macro level, the report indicates that the Philippines’s growing labour participation rate is expected to overtake the global average by 2030. To fully capitalise on this demographic dividend, concerted efforts are underway within the public and private sectors to create job opportunities, improve talent quality, and promote entrepreneurship.
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While the Philippine startup ecosystem is nascent, the report links numerous initiatives that have begun to facilitate exits for alternative investments, with the government implementing more progressive laws to encourage inbound investments and boost participation in the public market. Joint consultations between the private sector, operations, and the public sector have been taking place to make IPOs more accessible to both growth companies and investors.
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