There are a lot of things that make the Philippines an interesting place.
It is the 13th most populous country, consists of 7,640 islands (the second largest archipelago of the world), and has 175 languages spoken in the country.
However, one aspect that gets passed along is that it also boasts a fast-growing technological ecosystem.
A growing ecosystem
The Philippines enjoys a talented English-speaking workforce, a young population with a median age of only 25.7 years, and an economy that is globalizing at an increasing rate.
Moreover, technology adoption is ever growing, with Filipinos being amongst the most digital savvy in the world.Filipinos send about 400 million text messages every day, more than anyone else in the world.
This has resulted in a booming start-up ecosystem, ranking 53rd across the globe in 2020, up 17 positions from three years ago.
Ofcourse, as we know, with a booming start-up environment comes increasing investor attention. Between 2018 and the first half of 2020, total investments into startups in the country to about US$547 million. In the first half of 2020 alone, funding was US$183 million, up 384% from the entire previous year.
Underpenetrated
However, despite this improvement in funding, there is potential for a lot more funding that can power the ecosystem forward.
The country trails behind its Southeast Asian neighbours by a fair bit when it comes to funding, accounting for only 10 – 50% of funding received by peers like Indonesia, Thailand and Vietnam.
Common reasons cited for this are a less mature system, the need for more landmark exits, and the need for growth in more sectors. All these factors are however expected to soon change.
Growing confidence
Philippines’ ecosystem is now seeing a shift in landscape. From being traditionally dominated by subsidiaries of foreign startups, to seeing an emergence of home-grown startups solving inherently Filipino problems through new and imaginative solutions.
The growth of local founders is accelerated by many advantages for today’s entrepreneurs, including access to more mentors, the entry of new funds and investors, and the rising number of successes.
This is certainly reflected in the growing confidence of both operators and investors alike. 96% and 95% of founders and investors alike are confident about revenue growth prospects over the next couple of years.
Moreover, given the similarities in pain points faced by Southeast Asian countries, Filipino founders are now also increasingly confident in their ability to also scale overseas, 65% aiming to enter new territories in the next 5 years.
Growth across all sectors, with FinTech dominating
FinTech has comprised 80% of total funding over the last three years. The reasons for this are obvious – only 29% of adults have a bank account in the countrys, with 1.2 branches per 10,000 adults.
These factors, combined with an impressive 65% smartphone penetration and 54% of internet users using some form of mobile banking services, has led to a flurry of start-ups attacking the space.
These include those in the payments space (like Voyager, Paymongo, Mynt, Dragonpay, Ayannah, Jazzypay and others), neo-banks like Tonik, and lending services providers like Uploan.
However, apart from FinTech, there have been several other sectors getting attention, particularly post COVID. These include e-Commerce (whose GMV increases to US$12 billion in 2025), EdTech (with close to 30 million students in the country to cater to), logistics (whose revenues are expected to reach US$1 billion in 2024), amongst others.
It remains to be seen which sectors and players win out, but one thing is for certain that the Philippines is poised for an exciting decade ahead.