The Pandemic Fueled the Growth of the Philippines Startups

The increasing number of startups demonstrates that the growth potential in the Philippines is huge, although it is still in its early stages.

FREMONT, CA: The pandemic played a vital role in advancing the Philippines' nascent startup system with growth it had never witnessed before. Many examples are seen in the country with rising investments and revenue generation.

The Philippines has traditionally lived in the shadow of its neighbours. In early 2019, startups from the country acquired only one per cent of all the venture capital (VC) invested in Southeast Asian startups and accounted for just four per cent of deal volumes. However, the first half of 2021 observed a significant shift, and the Philippines was responsible for nine per cent of VC dollars and four per cent of all deals. In the last few years, the Philippines, which previously has been a laggard in attracting investment, has drastically changed.

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One of the reasons for this transformation is the population's dramatic shifts in mobile internet access and smartphone ownership fueling growth for wallet mobile applications, making the ground fertile for e-commerce services. Services that suit lockdown increased users' activity and doubled their reach during the pandemic. Investors were forced out of their comfort zones to make deals remotely. This benefitted Southeast Asia, and the incredible stock rally gave cause to view the region with the Philippines progressing further than its neighbours.

This is seen as a snowball effect that slowly rolls down the hill with small investors and companies and starts to collect more until it becomes momentum and continues to roll down. However, there is much more work left for the country to do. Most Southeast Asia is still grappling with a talent shortage, especially talent and investment flow with a greater intensity only when the country can show that tangible startups exist with regularity.

Before the pandemic, a company made an acquisition of an organisation for 70 million USD, representing the first time a major player bought a Philippine tech business. This helped people gain a view of more opportunities. Moreover, local and foreign investors started to see great potential, which was a real catalyst for startup founders.

Many overseas investors began acquisitions and recognised the Philippines’ potential to become a vibrant startup market in Southeast Asia. Although it was hard initially to get people interested in the Philippines as a market, a few mergers created interest in the region with the emergence of remote work. Covid became an equaliser as people overcame their hesitancy to invest in teams they could not meet in person. This opened new opportunities and acquisitions that would not have been possible otherwise.

App-based work has revamped how investors tackle their jobs and changed hiring practices with unique benefits. It helped to hire people with different experiences and rebuild product teams. As many large organisations struggled to adapt to working from home or remotely, the pandemic soared corporate workers’ interest in startups. However, despite several renowned personalities becoming startup founders, there has not been a complete change. This gap can be addressed by attracting employees in the corporate landscape or at traditional companies.

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