Philippine startup funding up 384% in H1 amidst pandemic

Manila, Philippines. Photo: David Milmont/unsplash

Despite the global economic slowdown caused by the coronavirus pandemic (COVID-19), startups in the Philippines managed to pull in an estimated $183.8 million in the first half of 2020, up 384 per cent from the whole of 2019.

According to a report released by Philippine-based venture capital firm Foxmont Capital Partners, local startups raised record capital in the first six months of this year with just 14 deals, or a little over half the number of deals raised during the same period of 2019.

The Philippine Venture Capital Report 2020, which Foxmont produced in partnership with PwC Philippines, innovation hub QBO, fintech firm UBX, and Manila Angel Investors Network, is one of the first that focuses on deal activity in the Philippines.

“Despite the economic burden that COVID-19 has placed on this country and all others, we’ve found one thing to be clear: that startup activity in the Philippines has matured significantly in a very short period of time,” the report said.

The report noted that the financial technology (fintech) sector accounted for over 80 percent of the total announced invested capital in startups during the said period and almost half the deal volume for the 2.5 year period between January 1, 2018 to June 30, 2020.

Philippine Venture Capital Report 2020

This indicates that a local pivot from traditional financial services towards tech-driven platforms in the finance industry, the report noted.

“It also reflects a favorable environment for fintech startups, owing to the country’s strong English language use and well-established outsourcing industries,” according to the report.

IT & Software is the second biggest sector in startups after fintech, taking 8 per cent of total deal value for the same period. Most of the activity in the sector relates to telecommunications and B2B software development as corporate entities open up to technology that startups continue to build.

Transport & Logistics ranks third, accounting for 3 per cent of the total deal value. Investment activity in this sector is driven by the rising logistic demands of e-commerce.

“The country is at a turning point in the way business is done, given the digital pivot, as well as the challenges presented by COVID-19,” says Franco Varona, Managing Partner at Foxmont Capital Partners.

Expand Table

CompanyDeal Launch DateFunding RoundFunds RaisedIndustry Group
Voyager Innovations Inc2018-10-04Private Equity$175 millionFintech
Voyager Innovations Inc2020-04-06Private Equity$120 millionFintech
Multisys2018-11-08Corporate$40.73 millionSoftware & Services
Voyager Innovations Inc2018-11-26Private Equity$40 millionFintech
C88 Financial Technologies2018-07-30Series C$28 millionFintech
First Circle2018-10-02Series A$26 millionFintech
Tonik Digital Bank 2020-06-01Seed$21 millionFintech
Great Deals E-commerce Corp2020-01-01Private Equity$12 millionE-commerce
Create Labz2019-09-12Seed $10.3 millionIncubators & Accelerator
Black Arrow Express2018-07-07Series A$7 millionLogistics
Sprout Solutions2019-10-14Series A$6 millionHR Services
Kumu2020-04-14Series A$5 millionMedia & Entertainment
Inteluck2020-03-31Bridge Round$5 millionLogistics
Black Arrow Express2019-12-06Undisclosed$4 millionLogistics
Ellana 2020-03-05Undisclosed$3.5 millionConsumer Goods & Services
Edukasyon.ph2020-02-05Series B$3.37 millionEducation
Right Choice Finance2019-04-01Series A$2.95 millionFintech
PayMongo2019-09-25Seed$2.7 millionFintech
SendFriend2019-02-11Pre-Seed$1.7 millionFintech
GoodWork.ph2020-05-14Seed$1.6 millionSoftware & Services

The report, however, noted that despite exciting prospects for the future, taking the landscape to the next level presents its own set of challenges. It said the lack of external funding has been slowing the growth of the industry in comparison to Southeast Asian neighbours.

“A majority of support systems such as government legislation, incubators, and sandboxes have been focused on early-stage efforts, and initiatives to boost startups in the growth stage towards becoming unicorns have remained scarce,” the report noted.

The Philippine startup ecosystem currently ranks 53rd in the world, with more than 400 startups, 50 angel investors, 40 venture capitalists, and 35 incubators and accelerators.

The country still trails behind SEA neighbors in terms of deal volume, but startup founders and investors expect a promising future in the landscape, Foxmont Ventures said.

“While the number of corporate venture arms, VCs, and angel investors in the country has grown, we still need to catch up with the rest of Southeast Asia. With the world’s current situation, a majority of investors are taking a wait-and-see approach,” Alexander B. Cabrera, Chairman and Senior Partner at PwC Philippines said.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.