Marking “capital requirements” as their greatest challenge, most Philippine-based startups are planning to go public and engage in equity financing to finance their growth, according to a latest study done by professional services firm PwC Philippines.
In the 2017 Philippine Startup Survey, about 88 per cent of 106 startup leaders interviewed cited capital requirements as their top challenge in starting their businesses, followed by regulatory requirements (54 per cent), and general economic/business conditions (50 per cent).
The findings, however, reflected confidence and optimism among Filipino entrepreneurs, as 86 per cent believe that business outlook in the country will be better in the next 12 months, and 54 per cent see themselves entering new geographies in five to 10 years.
A total of 63 per cent of the startup leaders said they are planning to conduct initial public offerings (IPO) and raise equity financing, with 95 per cent mulling to tap new markets within and outside the Philippines in the next five to seven years.
About 47 per cent of startups said they are planning to raise less than $1 million in the next three to five years, while 27 per cent are planning to raise between $1 million and $3 million.
Among the industries they’re engaged in are technology (35 per cent), retail (15 per cent), financial services (9 per cent), telco (5 per cent), education (5 per cent), and transportation (4 per cent).
PwC Philippines or Isla Lipana & Co, a member firm of the PwC global network, noted the startups also want to make their business sustainable through improved tax incentives (59 per cent) and wish to see improved ease of doing business (59 per cent), and better access to capital (55 per cent).
Strategies for growth in the next three to five years are to improve existing products and services (84 per cent), introduce new ones (79 per cent), and enter new territories outside the Philippines (61 per cent).
Highlighted as new markets to tap were: other areas in the Philippines (56 per cent), Indonesia (59 per cent), Thailand (57 per cent), Malaysia (55 per cent), and Vietnam (52 per cent).
The report also gave a snapshot of the present status of the Philippine startup ecosystem which now has over 300 startups, more than 30 angel investors, and more than 20 incubators/accelerators, venture capitalists, and co-working spaces.
A total of 35 per cent of the respondents founded their startups in 2016, 14 per cent in 2014, 11 per cent in 2015, and 19 per cent in 2017. Some began before year 2012.
PwC Philippines did the survey in partnership with QBO Philippines, the country’s first public-private initiative for startups formed in 2016. The report will officially be launched during Slingshot ASEAN 2017 on October 20.
Both PwC Philippines and QBO Philippines stressed the importance of understanding the startups’ challenges and promoting the Philippine startup ecosystem to foreign investors.
PwC Philippines recently launched its own hub for startups and entrepreneurs called VentureHub@PwCPH.
PwC Philippines chairman and senior partner Alexander Cabrera said he hopes the survey results will inspire other startups, investors, corporates, and the government to work together, and build great companies.
“We are confident that with the demonstrated capacity of the Filipino in terms of creativity, talent, and hard work to be innovative and entrepreneurial, plus the continued partnership among stakeholders, we can build an inclusive innovation and entrepreneurship ecosystem that can help in the development of MSMEs,” Department of Trade Industry secretary Ramon Lopez said.