MANILA, PHILIPPINES — The Philippines-based venture capital firm, Gobi-Core Philippine Fund is proud to announce the launch of its “Philippine Startup Ecosystem Report: Founders Edition 2023.”
The report is a testament to the firm’s continued commitment to capturing the evolving narrative of The Philippine technology ecosystem, following the firm’s previous report which covered the Startup Ecosystem Growth Flywheel.
Co-presented by Alibaba Global Initiatives, the report provides an in-depth analysis of the Philippine startup landscape based on insights from a survey conducted with several of the ecosystem’s established founders.
It highlights the nation’s strengths which include its large English-proficient consumer market, increasing digital adoption, passionate founders, and government initiatives aimed at supporting startups.
With favorable macroeconomic conditions supporting the adoption of technology and the establishment of businesses, the years characterized by low-interest rates – implemented globally by central banks to boost liquidity amidst the pandemic – have led to significant inflows of venture capital funding for founders between 2020 and 2022.
Given such low borrowing costs, lower returns from debt investments, and stock market uncertainty, global investors took notice of private markets and circled in on the venture capital space, delivering over US$200 million to the Philippine tech space in 2020. However, due to recent conditions, deal count and fundraising fell by over 21% and 40% from 2022 to YTD 2023 alone.
The source of funding alone doesn’t give you a clear picture of what a founder is up against. Founders, operating with a runway — i.e. the number of months’ worth of cash they have given current operations — are deeply conscious of how long it takes to fundraise at each stage of funding. The survey reveals a gap around the pre-series A stage whereby founders take an average of 14 months to raise the round.
The report’s temperature reading suggests that this is a long average length of time to raise a round. 57% of the founders we surveyed believe the Philippines ”greatly lacks” funding opportunities, while 74% believe that the country lacks government support.
Aside from the mere availability of funding both from the private and the public sector, the surveyed founders also voice difficulties vaulting regulatory hurdles, suggesting that addressing these would take government coordination, regulatory clarity, and a more supportive environment for startups. They also highlight a lack of educational and learning opportunities within the country, with the education system yet to fully align with the needs of the startup industry.
The entrepreneurs find ways and means to make their businesses work out of an industry-wide belief that The Philippines both deserves and is capable of building a dynamic startup ecosystem. Gobi-Core takes this same proud belief to heart and apprehends the slew of data reinforcing the potential for the ecosystem to succeed at scale.
Through the report, a diverse set of founders provides its collective take on advice it would give ecosystem players, challenges seen operating in the country, the gaps in local infrastructure, as well as the biggest opportunities they see ahead for local startups.
Gobi-Core is thrilled to share this wealth of founder experiences with industry stakeholders, recognizing that the entire ecosystem is built upon a shared passion for problem-solving, impactful contributions, and national pride.
The firm’s previous report underscored the significance of talent as the lifeblood of the ecosystem; expanding on this belief, the current report aims to illuminate the challenges founders are currently facing, particularly in the context of the global landscape where capital is tightly held. The objective is to gain a deeper understanding of how best to support and foster the growth of the Philippine startup ecosystem.
You can access the report here.