Philippines Startup Ecosystem
Table of Contents:1. Country Overview
The Philippine startup ecosystem is fairly young, and along with its neighbors Thailand, Vietnam, Indonesia, Malaysia, and Singapore, Southeast Asia is relatively untapped but very promising region for technology startups.
As early as year 2000, organizations like AFI’s Ayala Technology Business Incubator Network have established startup incubating facilities, working with educational institutions like the University of the Philippines and Asian Institute of Management.
The acceleration of the startup ecosystem in Philippines went into high gear a little over two years ago, and it was launched by a handful of incubators and accelerators comprised of foreigners and Filipinos both local and ones that have been educated and/or have worked abroad.
It was through the aid of Startup Weekend (the first in the Philippines was in 2011), as well as two seed incubators/accelerators started by the two largest telco providers in the country, that local startups started getting more attention. Out of 37 startups surveyed, 92% of the founders are male, 38% are 26-30 years of age, and 61% are funded from the founders’ own pockets.
Given the infancy of the local startup ecosystem, there are still plenty of opportunities for new startups to gain noteworthiness, but a few have already set themselves apart from the rest of the pack.
According to the Web Information Company, Alexa, Metro Deal has the most number of page views as compared to any deal sites in the country. It has 306,561 page views and 80,482 unique visitors. This is regarded as one of the recent successes in the Philippines startup scene, a shopping deals site that offered everything from food, to gadgets, to vacation packages, and more.
Lenddo is another company that has made some significant headway; it is a startup with a presence in the Philippines, Colombia, and the United States that managed to raise US $8M through a set of well-known investors.
Sulit.com.ph is one of the leading local classified ads sites, it was started by RJ and Arianne David.
Airborne access is the first and largest local WiFi hotspot operator founded by Jay Fajardo; it was fully acquired by ePLDT in 2008.
Chikka, an internet-based instant messaging system that allowed users to send messages to phones via SMS, was pioneered by Dennis Mendiola.
Startups TwitMusic, Payroll Hero, and ZipMatch were incubated/accelerated by 500 Startups, while Kalibrr was accepted into the Y Combinator program. Even when compared to other Southeast Asian countries, the list is still rather short, meaning there are still a lot of untapped opportunities in the country.
As of March 2014, the Philippines has hardly any ‘local’ VC money beyond the seed stage. There have been 47 identified angel investors/venture capitalists that have made at least one investment in the Philippine tech startup scene.
The most active players in the early stage are Kickstart and IdeaSpace, each supported by the two largest local telco companies (Globe and Smart/PLDT, respectively). On a positive note, 500 Startups is becoming more active together with new VC comers with the likes of IMJ Fenox. To acquire larger funding, a majority of the startups have done their funding rounds in the United States.
Seed funding is very limited in the Philippines, with hardly any sources of funding beyond this stage. Apart from Kickstart and IdeaSpace, there are a very limited number of options; a limited number of seed funds led by startup scene dignitaries, and two venture capitalists. Most of these entities are foreigners based in other countries in Southeast Asia.
Another challenge that faces VC investment is the 60-40 rule for limiting foreign ownership of companies in the country (this might change with the amendment of the 1987 Philippine Constitution). The difficulty in this is that there might not be enough local investors to match up against prospective foreign investment in a startup. This might become a hindrance to the future growth of the company. Thus, the country in which a startup will incorporate becomes an important decision to consider.
Since 2012, the Philippines has seen significant increase in startup-related community meetups, events, discussion groups, conferences and media companies.
In terms of major events, Geeks on a Beach, Echelon 27: Philippines Satellite, and AngelHack all took place in the Philippines in 2013. The ON3 Pitching Competition started in 2010, and has held two competitions, so far. Startup Weekend had its first event in the Philippines on 2011. Locally grown startup community meetups are also organized by groups like Roofcamp, Startup Philippines, WebGeek.ph, and TechTalks.ph, among others.
List of Events in the Philippines
In the Philippine startup community, Dennis Mendiola (Chikka), Jay Fajardo (Airborne Access). Winston Damarillo (Morphlabs), RJ David (Sulit), and the venerable Dado Banatao (Ikanos) are some of the local tech heroes because of their past successes in building some of the most recognized startups in the Philippines. Most of them are also actively participating in helping younger entrepreneurs and engineers in realizing their own goals, like Dado leading the Philippine Development Foundation, and Jay’s Roofcamp.
Admittedly, the roster of local heroes is not as expansive as that of the startup communities in the more developed countries; that being said, there is still a lot of room to be filled at startup hall of heroes in the Philippines, and this Wiki hopes to help increase the number of exemplars in the local startup community.
Some foreign startup dignitaries have also visited the Philippines to seek startup opportunities and share their expertise and support, namely, Ravi Agarwal (Sand Hill Angels), Ron Hose (Innovation Endeavors), and Bowei Gai (World Startup Report).
The Department of Science and Technology has been incubating technology startups in the University of the Philippines campus by providing office space. At the moment, there is limited funding given to teams in the internet space. However, Monchito Ibrahim, Deputy Executive Director of the ICT Office, an attached agency of the Department of Science and Technology, has been working very closely with startup leaders and advisers to further support the needs of the technology startup ecosystem in the country.
In addition, The Philippine Software Industry Association has developed the Spring.PH program to strengthen local technology ventures into becoming world-class high value startups. This initiative is supported by the ICT Office.
The University of the Philippines has the following startup incubation programs:
UPD Enterprise Center for Technopreneurship (UP Diliman)
UP Ayala Technology Business Incubator (UP-Ayala Technopark)
CeBuinIT (UP Cebu)
There are no particular government policies that favor startups (e.g. tax credits), or policies to heavily burden them. There are a number of agencies, departments, and bureaus such as the Securities and Exchange Commission, Department of Trade and Industry, Bureau of Internal Revenue, National Telecommunications Commission, Board of Investments, Department of Labor and Employment, Department of Science and Technology, and other offices that may have some regulatory function that may concern technology startups, depending on the nature of the business.
Private Learning Institutions
There are a number of institutions teaching engineering and entrepreneurship, but there appears to be no specific program that combines both disciplines in preparation for the Internet startup scene. However, a few of the more prestigious universities in the Philippines such as the Ateneo de Manila (School of Management Business Incubator) and De La Salle University (Animo Labs) have existing campus incubators and courses in technology entrepreneurship to support the learning experience of students who are interested in the tech startup scene.
According to the 2013-2014 Times Higher Education World University Rankings, the Philippines does not have a university that ranks in the Top 100 Universities for Engineering and Technology.