BOOSTING investment interest from foreign venture capitalists and accelerators is crucial for the expansion of the local startup ecosystem, startup accelerator Archipelago Labs (A-Labs) said.
“The hope is really that we could also roll up our sleeves, help support these startups, and hopefully generate investment interest coming outside the Philippines,” said Lance Uriel F. Pormarejo, executive director at A-Labs, in an interview with BusinessWorld.
“If we’re able to accommodate or support startups at the earliest stages, it gets easier as we progress their journey further in terms of exposure,” he added.
The Philippines slipped two places, now ranking 59th out of 100 countries in the 2023 edition of the Global Startup Ecosystem Index by the research center StartupBlink.
With a score of 2.469, the Philippines retained its position as the seventh-lowest scoring country among its peers in the Asia-Pacific region.
However, the investment landscape in the Philippines expanded to 201% of the 2020 deal value in 2022, up from 179% in 2021, according to a venture capital report by Foxmont Capital Partners. The Philippines’ share of venture capital funds within Southeast Asia grew to 9% in 2022, from 5% in 2021.
Venture capital firms remain the primary investment source for local startups, with at least 40 such firms operating in the country. Investments are particularly focused on mature digital sectors, such as fintech, media and entertainment, and e-commerce, according to the Asian Development Bank (ADB).
“Investors need to understand a sector before they feel comfortable. If they don’t know a sector, it’s considered higher-risk, and they are less likely to engage,” said Paul Vadenberg, ADB economist, on the group’s 2023 study about the local ecosystem for tech startups in a press statement.
Mr. Pormarejo said that the local startup ecosystem has grown since he entered the space nine years ago. “A lot of these startups already have a great baseline understanding of how to do business and scale, as well as how to really work together with stakeholders,” he said.
However, the ecosystem would benefit more from external investments supplementing accelerators in providing the necessary resources, guidance, and funding to aspiring entrepreneurs, Mr. Pormarejo noted.
“Founders should also consider addressing problems in a more global perspective, seeing use cases in and beyond the Philippines,” he said on attracting regional and global players to invest in Filipino startups.
A-Labs recently concluded its 12-week ALAB Incubation Program with a culmination day for its first cohort of five early-stage tech startups. They were selected from a pool of over 100 applicants and provided with the opportunity to secure funding of up to P1 million. Additionally, they were granted exclusive membership to A-Labs’ network of entrepreneurs and investors.
The first batch of startups included Synthillate, a fintech startup that converts intellectual properties into financial assets; Ridge, a plug-and-play artificial intelligence (AI) platform that empowers the food and beverage industry to leverage advanced analytics for operational efficiency, optimized menu and promotions, and maximized profits; Gamer Points, an ad tech integrated game platform that allows gamers to passively earn while playing video games; Nexhire, a community-driven talent marketplace that connects individuals with the surging demand for next-gen jobs; and Twine, an AI-powered decentralized social layer that allows its users to monetize their personalities and own their social circles.
A-Labs provided the first cohort with mentorship and expert advisory, open office sessions, and networking opportunities, it said in a press statement.
Applications for the ALAB Incubation Program’s second cohort has been opened with no definitive date to the program’s start.
A-Labs also plans to support startups outside the program through capital, advisories, and networking.
“I think it’s the best time to keep your eyes and ears out for promising startups, mostly because the next wave would more or less help address any key concerns,” Mr. Pormarejo said. — Miguel Hanz L. Antivola