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No country for unicorns: why Philippine start-ups are struggling
- Last year, the Philippines got just a tenth of what its neighbour Indonesia received in start-up investment deals
- Analysts say inexperience and an aversion to entrepreneurship may be to blame – and a new law to assist tech start-ups may help
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It should be on a par with its neighbours. After all, it is home to 106 million people – the second-largest population in Southeast Asia. The country has a median age of 24.4, making it one of the youngest nations in the region. Powered by its English proficiency, it has risen to become the home of business process outsourcing, with the world’s largest companies tapping it for their labour needs. The young, robust market is internet-savvy, with its members spending an average of 10 hours a day on their screens – the most in the world, according to a global digital report.
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But in spite of a market ripe for growth, the Philippines is struggling in the start-up innovation race.
Over the past decade, Southeast Asia has seen soaring investment. Venture-capital (VC) deals quadrupled from 126 in 2012 to 524 in 2017, according to a report by management consultancy Bain & Company. Money has poured in since the region began producing US$1 billion start-ups known as unicorns, with ride-hailing firms Gojek in Indonesia and Grab from Singapore the best-known examples.
Philippine start-ups have failed to attract the same attention. Last year, they lagged behind their Southeast Asian counterparts, locking in just US$31.3 million worth of deals. The figure was a tenth of the number for Indonesian start-ups (US$2.93 billion), about a third of Thailand’s figure (US$114.6 million), and also fell short of Vietnam’s US$39.9 million, according to data analysis firm CB Insights.
While many surveys suggest the Philippines does at least have one unicorn – Revolution Precrafted, a property tech firm specialising in luxury prefabricated homes – it is largely seen as an anomaly.
The lacklustre performance can be partly attributed to the country’s inexperience in the sector. Many pitches for funding were copies of successful start-ups in Silicon Valley, according to Minette Navarrete, president of Kickstart Ventures, the largest venture-capital firm in the Philippines. Some showing promise tended to fall for bad deals early in the growth of the business.
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