Philippine startups lag behind Southeast Asian counterparts in 2018 funding, but 2019 looks rosy

Based on publicly available data, there were less than 20 VC deals reported in the Philippines from January to December.

Philippine skyline photo by JC Gellidon on Unsplash

With a population of 640 million and a consumer base that is rapidly coming online, Southeast Asia is a hotbed for technology startups, attracting venture capital (VC) firms that are racing to fund the region’s next unicorns.

VC investments in Southeast Asian startups totaled US$3.16 billion in the first eight months of 2018—a record high, according to a Reuters report citing data compiled by the Singapore Venture Capital and Private Equity Association.

Not counting deals that took place from September onward, this already marks a 16% bump compared to funding for Southeast Asian startups in the entirety of 2017 (US$2.72 billion).

It is, however, a different story in the Philippines. While other Southeast Asian markets are cornering massive VC funds, only a meagre portion went to the country’s startups this year, based on publicly available data.

KrASIA’s research shows that Philippine startups have only managed to secure less than US$50 million in VC funding this year. There were also less than 20 VC deals reported in the Philippines in 2018, based on publicly available data.

The trend, however, could change in 2019 as a growing number of VC firms parachute in. Among the more optimistic investors is Singapore-based Golden Gate Ventures, which aims to fund more Filipino startups.

Justin Hall, a partner at Golden Gate Ventures, said that while the Philippine startup scene is a bit tricky, it offers a lot of potentials.

“In the beginning, we didn’t see too many investible companies there. But I’ve seen more investible companies coming out in the Philippines in the last six months than we have observed in the last six years,” Hall told Philippine-based media on the sidelines of the Maybank Invest ASEAN Conference held in March in Singapore.

Gobi Partners also partnered with Core Capital to set up a new US$10 million early-stage fund that will target seed and Series A investments in the Philippines. Known as the Gobi-Core Philippine Fund, the new investment vehicle will first focus on B2B e-commerce, platform-as-a-Service (PaaS), health tech, and logistics companies. Going forward, the fund will expand into other sectors, including travel, entertainment, and retail tech.

Here are some most notable VC deals that were reported in the Philippines in 2018:

Fintech firm First Circle secures US$26m in Series A

First Cirle, a Philippine-based lending platform dedicated to small and medium enterprises (SMEs) raised US$26 million in its Series A funding led by Venturra Capital, an Indonesia-based venture capital firm. The company intends to use the funds to extend its position in the Philippines.

Backed by 500 Startups, First Circle uses new and alternative data points to provide supply chain and trade financing to SMEs in the Philippines, most of whom have no prior credit history. It was launched in 2016.

Mober secures undisclosed funding from 2GO Group

Two-year-old, delivery-on-demand startup Mober secured an undisclosed amount of funding in February from 2GO Group Inc, the largest logistics firm in the Philippines. Mober said it will use the investment to enhance its Mober app and expand its business.

Founded in 2015, Mober has been described as the “Uber for logistics.” Using a mobile application, Mober allows users to book vans that can transport big items around Metro Manila, Laguna, and Bulacan.

Property solutions platform Qwikwire raises US$400,000

Philippine startup Qwikwire, one of the leading cross-border property development solutions providers in the country, raised US$400,000 in February to expand its operations overseas. The round, which is the company’s biggest so far, was led by First Asia Venture Capital and Cerebro Labs. The company had previously raised over $460,000 from 500 Startups, JFDI, and Manila Angel Investors Network.

Qwikwire was founded in the United States four years ago by Ray Refundo and Scott Yu as a payroll platform. The company has pivoted into providing electronic management tools for cross-border real estate developers.

Car rental platform Graventure secures funding from Pacquiao

In April, Philippine boxing hero Manny Pacquiao funded the seed round of local car rental platform Graventure, marking the boxer’s first investment in his home country’s tech startup scene. Financial details of the investment were not made public.

Founded in late 2017, Graventure aims to simplify and automate the process of renting a car in the Philippines. Using web and mobile platforms, the service connects car owners and automobile rental agencies with renters.

Sprout Solutions corners US$1.6 million in seed round

Payroll and HR software provider Sprout Solutions closed a US$1.6-million seed round in April to expand its AI products for enterprise-level companies in the Philippines. The round was led by Kickstart Ventures and backed by Wavemaker Partners.

Sprout’s two products are developed for human resource management, one of which uses artificial intelligence to provide predictive analytics. Since its founding in 2015, Sprout has bootstrapped its way to more than 200 clients, including some of the nation’s largest corporations by headcount.

Edukasyon.ph raises undisclosed amount in pre-Series A funding

Manila-based education technology startup Edukasyon.ph announced in May that it has raised an undisclosed amount for its pre-Series A financing round from Asian and European investors, including KSR Ventures and French Partners.

The startup said it will use the funds to expand across the Philippines, add new verticals, and integrate data science for its growing user base. Edukasyon.ph was founded in 2015.

Health application AIDE secures funding from AC Health

Home medical care mobile app platform AIDE secured an undisclosed investment from Ayala Healthcare Holdings (AC Health), a wholly owned subsidiary of Philippine-listed conglomerate Ayala Corporation.

AIDE, established in 2016, provides a forum for patients to locate competent medical professionals, and for medical professionals to offer specialized services.

Live streaming app Kumu raises US$1.2 million

Filipino live streaming and mobile content app Kumu raised US$1.2 million in a seed round led by Summit Media. Kumu CEO and Co-Founder Roland Ros shared that part of the funds will go toward supporting the app’s growing community of content creators.

While the live streaming and content space has been a hotbed for venture capital in larger markets such as the United States or China, Kumu is one of the first notable investments in this category in Southeast Asia. The app launched in February 2018.

Other VC deals that were reported this year include Jazzypay Inc (US$120,000), Black Arrow Express (US$7 million), FindWork (US$2 million), SafeCloud (undisclosed), and U-Hop (undisclosed).

Note: The story has been updated to include other deals that were not previously covered.

Editor: Brady Ng & Ben Jiang