Last year, Philippines just received a 10th of what its bordering country Indonesia got in investment deals for start-up businesses. According to analysts, aversion to private enterprise and inexperience are the main culprit- and a new regulation to help technology start-ups might help.
It must be on par with its bordering countries. After all, the Philippines have a population of 106M and in #2 spot in the countries in Southeast Asia with the biggest population. The Philippines is one of the youngest countries in Southeast Asia with a medium age of 24.4. Due to the proficiency in English, the country becomes the place of BPO or business process outsourcing, wherein even the largest companies across the globe are tapping it due to workforce demands. The robust, young market is proficient with technology. Research also shows that the average Filipino spends ten hours in front of their computer or smartphone, the biggest in the world.
On the other hand, despite growth, the country is facing difficulty in startup innovation. In previous years, there was a visible investment growth in the Southeast Asian region. VC or Venture Capital deals increased from 126 in the year 2012 to 524 in the year 2017. There’s been an influx of resources as the country started generating $1b startups called as Unicorns, including ride-hailing companies Grab from Singapore and Gojek in Indonesia.
Startups in the Philippines have failed to get the same attention. In 2018, Philippines lagged behind countries in the region, with $31.3m deals. The statistic was a 10th of the number for start-ups in Indonesia, 3rd of Thailand and Vietnam as well.
While a lot of surveys shows that this country does have one unicorn- Revolution PreCrafted a tech company that specializes in lavish fabricated properties- it is mainly viewed as an inconsistency. The poor performance can be attributed partly to the rawness of the country in the segment. A lot of pitches for financial support were copies of thriving start-ups in Silicon Valley. Many showing assurances tended to fall for terrible deal early in the development of the trade.
There have not been too many investors with the proper comprehension of the startup community and are eager to capitalize in the country of late.
A study conducted by QBO Philippines, a public-private incubator suggested that there were fewer than 100 official venture capitals as well as angel investors in essential start-up places in the Philippines, which include Manila.
A lot of founders might look for mentorship from business owners who might not have had experience in this matter, and therefore they get conventional advice that does not apply to startups looking for scale in the early hours. Scaling is not just about turning an income that is hard to comprehend for many investors in the local area.
Start-up founders also lack braveness; they are afraid of taking a risk. For many Filipinos, the objective is to work abroad or work for other companies. Filipinos aren’t trained to put up their own company.