What tech investors are betting on in the Philippines nowadays?

F(DEV)’s Innovation Day invited tech business leaders to discuss the importance of how new developments in technology are impacting industries. It also became a space for Filinvest executives and managers to glean insights and strategies from industry thought leaders on how to be equipped to take advantage of the emerging tech trends.

Juancho Jimenez of Openspace Ventures said that we are experiencing a “golden age” in the Philippine startup ecosystem. Jimenez noted that from 2021 to 2022, large funding rounds are to be carried over, and that the PH Startup ecosystem is finally getting some love from foreign and local investors. Moreover, many have started to move their businesses online, whether they are consumers or entrepreneurs, from food, commerce, and other services due to the pandemic, and probably more so because of the growing trust and convenience digitalization offers.

The E-commerce industry and growth factors, data collected by the Department of Trade and Industry, 2020.

Jason Gaisano of Gobi Core Fund echoed what industry observers have noted in 2021, and even the year before – investors will continue to invest in Fintech. He said,

“With the rise of eCommerce, quick commerce, and the like, we see that the biggest growth stage in investments will come from FinTech. Digital banking, wealth management, credit ratings, lending tech. As long as there is no clear winner, there are opportunities for growth that we can take advantage of.”

There will still be challenges for the Philippine startup ecosystem as the country enters into a bear market. And because a bear market often goes hand in hand with a slowing economy, industry experts at the Innovation Day noted key things that the local startup ecosystem should consider in order to continue investment progression and create a positive investor behavior. Gaisano said,

“There’s (still) a fundraising supply and demand gap. (For example), only 12% of startups in the PH today are funded by VCs. Most are self-funded or funded by angels and families… (But) what we saw in China, we believe we will see in the PH. We are leveraging our relationships with exclusive partners like Alibaba to learn more about how we can grow our startups and tech ecosystems.”

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Shawn Dehpanah of Plug and Play Tech Center added,

“In this industry, we get to practice what we preach. If we believe in what we want to do, we start by taking the leap of faith and try to disrupt ourselves.”

Watch the recorded session here.

The Year Ahead

In a joint effort with venture capital fund Foxmont Capital Partners (FCP) and global management consulting firm Boston Consulting Group, the 2022 Philippine Venture Capital Report said investor interest was phenomenally better than the $369 million raised back in 2020 – which makes sense considering that it was the year the pandemic hit. To put in perspective, the $1.03 billion raised by the Philippine startup ecosystem last year was from 92 deals, which was significantly higher than the 65 closed in 2020.

By sector, fintech startups continued to drive the majority of deal activities in the country last year. Fintech deals last year represented 77 percent and 65.77 percent of deal value and volume, respectively. Experts believe that this is due to the pandemic as more and more people find the importance (and benefit) of digital financial services.

The latest Fintech Philippines Report identified over 220 companies, with 27% in the lending segment, 20% in payments, followed by e-wallet (at 13%), blockchain and cryptocurrency (12%), and remittances (12%).

Media and entertainment came in second and third respectively, with media garnering a 13.45 percent share in deal value, while e-commerce accounted for 8.51 percent. This comes as no surprise, considering the fact that online shopping and streaming are popular, and continue to be so because of convenience and competitive pricing.

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