How would you describe the Philippine startup ecosystem relative to other Southeast Asian countries?
The Philippine startup ecosystem is young compared to its neighbours. I’d say it is five years behind Indonesia and three years behind Vietnam. While the tech boom has occurred in other neighbouring countries, it’s strange why it hasn’t yet happened in the Philippines especially when one can leverage the population’s proficiency in the English language and its innate technology affinity.
One interesting theory I’ve come across recently is that the slower technological adoption may be due to the relative verticality of conglomerates in the Philippines compared to countries like Indonesia. Wider conglomerates abroad may have invested in tech earlier resulting to their applications spreading faster. Today, we are seeing Filipino conglomerates diversifying more, as well as investing in tech. Interestingly, COVID-19 has positively accelerated adoption of technology among corporates.
Another explanation may be drawn from the limited growth opportunity of startups in the Philippines. In the past, a typical Filipino founder’s promise would be a 2-3x multiple in five years. This multiple is not as attractive as compared to other SEA neighbors. VCs are dependent on tail-end returns, investing in startups having a 50-60% failure rate, and holding just a 15-20% stake across companies. For that multiple to increase, we need Filipino entrepreneurs to think bigger. Thankfully, we’re seeing more entrepreneurs dreaming beyond Metro Manila. We need more of these entrepreneurs who can say “I want to create something that will fundamentally impact business and society, not just in the Philippines, but in the world.”