Exactly how large the startup ecosystem is in the Philippines has yet to be fully measured, but many experts and key industry players have said that it has grown rapidly in the past few years.
Perhaps the most comprehensive recent mapping of the ecosystem’s size comes from the 2017 Philippine Startup Survey, the first-ever industry-wide study that aimed to profile the country’s startup community. Published by accounting firm PwC Philippines in partnership with startup incubator QBO Philippines, the report estimated that there are over 300 startups in the country today.
That’s more than triple the 100 startups identified in the Philippine Roadmap for Digital Startups, which was published in 2015 by the Department of Science and Technology's Information and Communications Technology Office (the predecessor of the current Department of Information and Communications Technology). It is also more than halfway through the roadmap's aim of having 500 Philippine startups by 2020.
The PwC survey further revealed that the ecosystem includes over 50 angel investors and venture capitalists that invest in these startups; at least 20 incubators and accelerators that provide mentorship, training and networks; and more than 30 co-working spaces, which are often used by startup teams in lieu of a traditional office.
Again, these numbers paint a more vibrant and active startup scene compared to what it was like just five years ago. According to the 2013 Philippine Startup Report prepared by a team of researchers led by Philippine startup pioneer Ron Hose of Coins.ph, there were only around 10 local incubators, seed funders and venture capital (VC) firms in the country, and another 10 international VCs investing in local startups.
“Seed funding is limited and anything beyond that is virtually non-existent,” claimed the 2013 report.
The past few years have also seen a rise in pitching competitions and startup conventions sponsored by both local and foreign organizations such as the Department of Trade and Industry’s annual Slingshot event, local startup gathering Geeks on a Beach and QBO Innovation Hub’s Techtonic Summit, which have become platforms for many startups to raise awareness of their brands.
Indeed, the last few years have been more conducive to the rise of startups in the Philippines.
In an effort to help document the growth of startups in the country, Entrepreneur Philippines is publishing what we believe is a first-ever online ranking of the country’s top 50 startups by revenue. Apart from data on the startup companies’ founding dates, line of business and latest gross revenue and net income or loss in any of the last three years, we also show how much these have changed from the previous year.
The picture that emerges is a dynamic one. Of 47 startup companies on which data is available for at least two years, 38 posted higher revenues while 27 recorded improvements in net income or loss position.
The average growth in revenues is 2,327 percent in a possible sign of rapid expansion in volume of business. However, on average, the startups’ net income or loss position also deteriorated by 342 percent, an indication that many of them are still burning cash as they expand their market base.
But the list also shows some of the weaknesses of startups in the Philippines, most notably, the modest number of high-value startups in the country. The eight highest-ranking startups in this list are either local subsidiaries of foreign companies, have already exited or are the innovation arms of the country’s two major telcos. Only one homegrown startup established in the past 10 years has reported revenues of over Php100 million (according to available data), with only two others breaching the Php50 million mark.
In a 2017 report on the Philippines’ startup founders, online shopping aggregator iPrice Group identified only 31 local startups that have completed at least one funding round with a venture capital firm. Much less are startups that have exited, or have either listed in the Philippine Stock Exchange or sold its business to a larger company.
Moreover, the Philippines has so far only produced one unicorn, or a startup with a valuation of at least $1 billion—real estate firm Revolution Precrafted. A study by Malaysia-based firm Catcha Group, which owns video streaming service iflix, said that there are still no locally based tech companies with a valuation of over $100 million, a fact unique only to the Philippines when compared to startup ecosystems in other large Southeast Asian countries.
As well, a recent study by financial market analyst ValuePenguin showed that the Philippines is not as conducive to startup development as neighboring countries.
While there is still a long way to go before the Philippine startup community catches up with other ecosystems in neighboring countries, it is clear that it is growing at a rapid pace. Efforts from both the private and public sector are beginning to bear fruit, and more and more innovative companies are getting recognized both locally and internationally. While VC funding is still scarce, there is no way to go but up in terms of creating more high-value startups and unicorns.
“Because of collective efforts of various organizations, there are now more technology entrepreneurs and entrepreneur support organizations,” said Diane Eustaquio, executive director of startup incubator IdeaSpace Foundation, in the foreword of the 2017 Philippine Startup Survey. “Some dots are not too far apart as they were in the past.”
Sources and methodology
As there is no official list of startups available, we gathered these startups from various sources, including a list that the Department of Science and Technology (DOST) used in drafting its roadmap for startups in 2015; online startup databases and catalogs such as e27, Tech in Asia, Crunchbase, TechShake and AngelList; websites of various local and foreign venture capital firms, incubators and accelerators that have invested in Philippine startups; and other sources such as news reports and press releases.
After compiling a list of over 150 names, we then gathered available financial information from the Securities and Exchange Commission (SEC). Unfortunately, most of the startups either do not have financial statements on file with the SEC or have submitted quite dated reports. To ensure a broad coverage, we compiled financial data on companies that have submitted reports in any of the last three years from 2015 to 2017, and picked out the latest figures. These were then ranked and the 50 startups with the largest revenue figures are listed here.
Note: This article was edited on June 25, 2018 to add links to cited studies as well as to correct the average percentage values of year-on-year changes to the startups' revenues and net income or loss positions
Lorenzo Kyle Subido is a staff writer while Roel Landingin is editor-in-chief of Entrepreneur PH