Philippine Venture Capital Report 2020 (Inaugural Edition)
The Philippine Venture Capital Report 2020 provides an overview of the country’s venture capital (VC) industry, touted as “the sunrise industry of the Philippines,” and its influence on the growth and development of the Philippine startup ecosystem. This inaugural report documents the latest deal activity, most notable startup transactions and other key developments in VC financing in the Philippines.
Foxmont Capital Partners used a combination of online resources, information made publicly available by data platforms, and information from locally based data partners in gathering venture data for the report. These include information from Crunchbase, Pitchbook, PwC Philippines, QBO Innovation Hub, UBX, and Manila Angel Investors Network (MAIN.ph). QBO Innovation Hub and MAIN.ph are partners of Investing in Women (IW) in shifting gender norms and promoting gender lens investing to expand women’s economic opportunities in the Philippines.
- Despite the COVID-19 crisis, the first half of 2020 saw USD 51.8 million in early-stage venture capital funding, surpassing the entirety of 2019’s USD 37.9 million.
However, this is still behind 2018’s recorded amount of USD 110.2 million.
- Deal flow slowed with 14 completed deals in the first half of 2020 compared to 24 recorded in the same period in 2019.
- The FinTech sector was responsible for over 80% of the total announced invested capital in startups and almost half the deal volume in the first half of 2020.
- Early-stage is the most prevalent form of funding, taking up 49% of deal count at 52 deals since 2018.
- There is room for improvement given that the Philippines still trails behind its South East Asian neighbors—namely, Indonesia, Thailand and Vietnam—in terms of deal volume.
- Majority of deal volume originated from Metro Manila, with Makati City remaining the top local startup destination despite lagging behind its neighbors in terms of deal value.
- Startup founders share mixed reviews on the impact to their businesses and outlook on the future. However, PwC Philippines reports that with most of the startups low in cash reserve, 64% of founders have expressed the need to raise capital in the near-term to finance working capital requirements, improving technology and hiring additional employees.
- Based on the 2020 Philippine Startup Survey: 78% of investors are confident about their prospects for revenue growth over the next two years; 73% want to inject up to USD 5 million in Philippine startups in the next three years; and 65% have exit plans in the next three to five years.
The Philippines is home to more than 400 startups, 50 angel investors, 40 venture capitalists and 35 incubators and accelerators. Due to the robust startup activity in the Philippines, the ecosystem as a whole jumped 17 global positions to rank 53rd in 2020 from 70th in 2017, based on the Startup Ecosystem Rankings Report by StartupBlink, which ranks the startup ecosystems of more than 100 countries and 1,000 cities. Metro Manila, the country’s National Capital Region, recently joined StartupBlink’s 100 cities club to rank 88th among 1,000 cities across the globe and has advanced by 830 positions from its previous rank in 2017. Notably, the capital also ranks 36th on Startup Genome’s Top 100 Emerging Ecosystems and is valued at USD 1.6 billion in 2020 compared to USD 37 million in 2019.
Proponents hope that the report will help generate increased investor participation, which in turn will further fuel the engine of the local startup ecosystem. Apart from generating insights, the report also provides practical information guides such as: Patents, Trademarks, & Copyrights 101, Term Sheets 101, and an Introduction to Venture Capital.
This report was previously published on 27 November 2020 on the Foxmont Capital Partners’ website.