The success stories of Facebook, Apple, and Google have inspired the growth of the startup ecosystem, not least in the Philippines, where aspirants dreamed of growing a garage business to one that would disrupt traditional business models, and bring in tons of money and popularity.
While there are thousands of earth-shaking ideas, only a few hundred are able to actually enter the incubation stage for startups, where they eventually will be able to come face to face with potential investors or buyers.
Even those who are able to successfully get on the road to commercialization attest to the arduous route they had to take, sometimes even abandoning chunks of their original idea, to survive in the real world.
The Philippine startup system is undeniably in its infancy stage, with only about 500 startups that are being watched over by some 50 angel investors, 40 venture capitalists, 35 incubators and accelerators, and 120 co-working spaces.
Other than Revolution Precrafted, which received unicorn status after receiving a valuation of $1.85 billion in 2017 with its successful Series B funding round co-led by Silicon Valley venture capital firm K2 Global, no Filipino startup has yet received the distinction.
(Note: Revolution Precrafted reportedly is going through some rough patches, with its idea of making available couture pre-fabricated homes to anyone in the world not taking flight.)
Path to unicorn status
Still, in the local startup ecosystem, committed incubators and accelerators are working hard with potentially promising startups in the hope that a couple or more will break through to become truly successful unicorns.
Transformation startups, unlike small businesses, are recognized for their immense contribution to the economy. They produce ripple effects that quickly stir up the pond, and in the process, dramatically change the way that people live.
Such successful startups, which champion cutting-edge technologies and innovations, are able to open new huge markets, often radically boosting production of goods and services, and become significant employment avenues.
Unicorns often have the ability to easily expand to other countries, thus extending operations to a larger user base, or partner with big companies that see a shift in the scope of business interests with the coming of the Fourth Industrial Revolution.
Southeast Asia, with already more than 300 million people connected to the internet, represents fertile ground for startups. The region takes pride in its six unicorns, three from Indonesia and three from Singapore, that have gained recognition in just a few years.
The Philippines can draw inspiration from these six unicorns. Go-Jek headquartered in Jakarta, and Singapore-based Grab are leaders in ride-hailing transport services. Lazada, also based in Singapore, is an online shopping and selling portal; Tokopedia, in Indonesia, is also an online marketplace. Sea, originally in Singapore only, has Shopee and digital payments AirPay. Indonesia also has Traveloka, an online travel services provider, that has now gained popularity among users throughout Southeast Asia.
If there is one takeaway from these startups is that the Philippines can compete even in a world that is dominated by US- and China-based companies that have successfully found commercial footing, largely with support from their own incubator environments.
Navigating the future
The Philippine government has been mindful of the role that transformational startups could bring to the economy. Support has come with the Innovative Startup Act, whose implementing rules and regulations had been signed only last December.
The National Development Co. has promised to set aside P250 million next year to provide business incubation services, mentorship, industry matching, and international linkages to identified startups through a recognized startup accelerator and global venture capital firm.
Philippine startups need lots of help to succeed, starting with acquisition of capital, to mentorship in navigating market readiness, acquiring talent, gaining access to networks, and going through regulatory requirements, although the Revised Corporation Code, which now allows one person corporations, provides some help.
We’re seeing a handful of startups surging ahead like fintech PayMongo, which just recently raised $12 million in a Series A funding round led by online payment processing Stripe. But again, it is only part of a handful, including Voyager Innovations and Coins.ph.
The country still has a long way to go in terms of attracting angel funding and venture capital for its startups, and the last eight months under a lockdown regime has been distracting. As the economy looks to regain its productivity, we may hopefully see some traction gaining on the side of our startups.
In an emerging economy with 110 million Filipinos, the Philippines needs meaningful innovative ideas and technology startups in sectors like health services (like Caresharing, Clinicko, Lifetrack Medical Systems, Medix), agriculture (like Cropital, iHarvest+, iCPA), and education (like Edukasyon.ph, Klaseko, PassExams.ph, OrangeApps, TomTaps) that can truly deliver benefits that will improve Filipinos’ living standards.
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