Despite setbacks due to Covid-19, startups remain a catalyst for innovation. Leveraging on our strengths, the Philippines will continue supporting startups by reducing barriers to entrepreneurship, providing the right conditions, and boosting their entrepreneurial potential.
The Philippine startup ecosystem is rapidly developing with stronger government support particularly in high-growth services, such as AI, Big Data, and fintech, among others. Enabling policies such as the Philippine Innovation Act and the Innovative Startup Act aim to boost the country’s innovation and entrepreneurship ecosystem through harmonized government support measures and policy reforms. These laws are consistent with the country’s science and technology-based industrial policy, Inclusive Innovation Industrial Strategy (i3S), which aims to nurture innovative startups, especially those that can introduce new ideas, products, processes, and business models using Industry 4.0 technologies, like AI. In May 2021, the Department of Trade and Industry (DTI) launched the National AI Strategy Roadmap to position the Philippines as an AI center of excellence, a big data processing and analytics hub providing high-value services to the world. It will focus on building robust digital connectivity and data infrastructure, nurturing STEM-related professions, institutionalizing AI-related regulations, cybersecurity measures, and accelerating investments in AI R&D. Through a National Center for AI Research, the country aims to grow more AI startups by providing specialized incubation and commercialization support, fiscal incentives, linkages to multinational corporations, and targeted R&D grants. The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act has enhanced the country’s attractiveness for investments by making its incentives more competitive and innovation focused. Under CREATE, the highest level of incentives (up to 17 years of combined Income Tax Holiday and Special Corporate Income Tax/Enhanced Deductions) will be provided to support innovative economy-stimulating activities.
Ecosystem by the numbers
The fast-growing use of mobile banking, an enabling regulatory environment, and a high number of unbanked and underserved Filipinos allowed more fintech startups to prosper in the Philippines. Amidst the pandemic, several local fintech startups managed to increase volume of transactions and raised funding for expansion. PayMongo secured USD 12 million in a Series A financing round. Squidpay secured USD 2 million in Series A. NextPay has raised $1.6 million (around P80.6 million) in a seed round of funding.
The acceleration of digital transformation paved the way for the growth of E-commerce in the Philippines. The country’s revenue in e-commerce is estimated at over USD 5 million in 2021, with market volume projected to reach USD 8.8 million by 2025. Taking advantage of this momentum, the DTI launched the eCommerce Philippines 2022 Roadmap in January 2021, providing strategic direction to accelerate the sub-sector’s growth. Great Deals E-Commerce, riding on the opportunity, raised a total of $41.3 million in funding.
Reasons to move your startup to Manila
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