Startup investments reached new heights in the Philippines in 2022, in a turn away from the general global funding downturn.
The majority of the early-stage private funding was allocated to Fintech companies, which secured 39% of all investments raised in 2021-2022.
Foxmont Capital Partners, a venture capital fund supporting Filipino entrepreneurs, published a report showcasing the sector’s importance in the local startup ecosystem.
The annual Philippine Venture Capital Report, looks at the state of venture funding in the Southeast Asian country, looking at key trends emerging as well as insights from industry stakeholders.
The report shows that startup funding in the Philippines rose to unprecedented levels last year, reaching a total of US$1.1 billion in 2022. This sum is an increase of nearly 7% from 2021’s previous record of US$1.03 billion.
These figures reduced with regards to global trends seen in 2022 as venture and growth investors slowed their investment pace due to market instability, geopolitical turmoil, and recession fears. Total venture funding last year amounted to US$415.1 billion, which was a 35% drop from 2021, according to business analytics platform CB Insights.
In the Philippines, the 2023 outlook is optimistic as data from Foxmont Capital Partners shows. In February 2023, the country had already recorded 17 startup deals, putting them on track to reach 23 deals by the end of the first quarter of 2023. This places Q1 startup investment at pre-COVID-19 levels, demonstrating investors’ interest in the prospect of technology and digital platforms in the nation.
In 2021 and 2022, fintech remained investors’ sector of choice in the Filipino startup landscape. Companies in the industry secured 39% of all early-stage startup funding raised those years, ahead of e-commerce, the second biggest startup category with a 23% market share, data from the report shows.
The startup funding activity in the Philippines comes with a booming digital ecosystem in which consumers increased their use of digital platforms to shop, order food and make payments.
According to the report, during the pandemic, Filipino shoppers increased their number of purchases by 57%. The value of the Philippines’ e-commerce market grew by more than 16%, rising from US$12 billion to US$14 billion between 2021 and 2022.
The fintech sector has grown in The Phillippines over the past years, and this has been driven by market inefficiencies and unmet needs. Other data providers like Trusting Social, Lenddo and FinScore have emerged to address the lack of proper credit scoring; companies such as Home Credit, Billease and Atome are providing accessible lending options; and startups like Xendit, PayMongo and Dragonpay are delivering seamless and convenient payment methods for the digital age.