According to Foxmont Capital Partners and Boston Consulting Group’s Philippine Venture Capital Report 2022, Philippine-based startups raised a total of $1.03 billion USD in funding last year. The financial backing represents a significant increase from the 2020 and 2019 figures of $369 million USD and $152 million USD.

The Philippines’ VC trends continued in a positive direction for the startup ecosystem, with 92 deals recorded in 2021, representing a 41.5% increase over 2020. Many startups reached the Series A, B, and C funding stages, raising an estimated total capital of $437.50 million USD in the first half of last year. For the entire year, early-stage funding totalled $131.9 million USD, late-stage rounds totalled $776.7 million USD, and debt totalled $15.5 million USD.

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Several Filipino tech startups emerged and thrived in various sectors, especially the financial technology (fintech) industry, which saw a 65.77% increase in funding deal value The media and entertainment sectors came in second with 13.45%, while the blockchain sector came in third with 8.88%. eCommerce came in fourth place with 8.51%, and the remaining sectors included the food and beverage (F&B) and LogisTech sectors with 0.85% and 0.80%, respectively.

A bustling startup ecosystem

According to the Philippine Venture Capital Report, the fintech sector is driving the majority of deals in the country. There was a 74% increase in digital transactions, with transaction volumes expected to reach $19.77 billion USD in 2022. Mynt, a digital payments company, raised $300 million USD in funding from Warburg Pincus and other investors in order to reach a $2 billion USD valuation.

In the media and entertainment (M&E) sector, Kumu led the charge with Series B and C funding rounds. Yield Guild Games also propped up the M&E sector by raising $17 million USD through a token sale and receiving financial support from venture firm a16z.

The deal volume in eCommerce firms was 20%, and companies, such as Great Deals eCommerce, secured Series B funding as well.

How does 2022 look so far?

In the first two months of 2022, the Philippines’ startups have raised $310 million USD, which is more than at the same point last year. Most of the companies mentioned below received Series B funding. Billease, which raised $11 million USD from Burda Principal Investments, and BreederRoad, which raised $10 million USD from a16z, are two of the companies that have received funding.

Other startups included GrowSari, which raised $45 million USD from KKR, whilePeddlr received $4.3 million USD from Patamar Capital and Crestone. Mizuho Bank and Prosus Ventures contributed $131 million USD to Tonik while Tiger Global contributed $50 million USD to PDAX.

The country’s startup ecosystem global rank moved up to 52nd, and Manila, Cebu, Cagayan de Oro, Davao, and Baguio were among the 5 cities to make the list in the Global City rankings, which included 1,000 cities.

The shift to digital in the entire country is one of the reasons for the success of startup companies. Lockdowns and other trading restrictions led many businesses to digitise rapidly, while other startups emerged to fill the digital gaps in multiple sectors. The Central Bank Governor, Benjamin Diokno, described the digitising of financial transactions as vital in achieving the goal of “robust economic growth”.

More mobile wallet options, such as GCash, are now available and each of these startups is adding new members to their user base. Moreover, Generation Z’s demand for digital services, the emergence of mobile wallets, and the increase in online transactions are boosting eCommerce adoption, which rose from 76% in 2020 to 80% in 2021.

Emerging trends

The Philippine Venture Capital report 2022 identifies five trends that will reshape the supply landscape in the country. For starters, Filipinos are doing a lot more things from home than they were before the pandemic—exercising, working, interacting, and learning. In the last two years, 82% of Filipinos have adopted digital habits, which will continue to have an impact on commerce.

Secondly, challenges posed by the COVID-19 pandemic have brought people closer together, with 53% believing that the community has become closer and more supportive. Thus, home delivery services will improve as a result, and peer-to-peer solutions will become the norm.

Thirdly, health and wellness have been trending for some time, and Filipinos are likely to adopt healthier foods and solutions, which will benefit tech startups. The fourth and fifth trends revolve around going fully digital and adopting eFinance solutions. The current number of Filipinos transacting online is 40 million or more, which is more than double the number three years ago. This means that people can expecteCommerce to flourish and fintech options, such as digital lending and crypto trading, to thrive in the country.

As the country shifts to digital solutions, the Philippines VC trends bode well for Filipino tech startups. Because other Southeast Asian countries are also growing and attempting to adopt an online economy, Philippine-based startups should take capitalise on the influx of funding to ASEAN by striving to attract investors to fund their innovations and regional expansion efforts.