Philippine Startups Need More People in Tech to Grow, Says Gobi-Core Philippine Fund
Over the last few months, the Philippine startup ecosystem has been quiet as the tech industry faces a global economic downturn. This comes after the Philippines’ experienced its best decade for local tech. Big brands like GCash, PayMaya, and Lazada established themselves in the early 2010s, while venture-backed startups like Kumu, PDAX, and Billease managed to secure their Series B and C funding rounds before the headwinds slowed down VC investments. While 2021 was the strongest year for Philippine investments, 2022 isn’t as lucky. However, according to the latest report from the Gobi-Core Philippine Fund, a joint-venture partnership between Gobi Partners and Core Capital, “Tech adoption has persisted, suggesting the future of the ecosystem remains bright.”
Gobi-Core Philippine Fund’s State of Talent in Tech report analyzed industry data to determine the future of Philippine tech, particularly in the talent area. What they found was that despite the tech slowdown, the Philippine startup ecosystem will weather through these headwinds.
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“We will continue to see exponential growth in digital consumption as we move forward into a post-pandemic world. This will translate into escalating demand for new digital products and services, which will herald the emergence of new entrepreneur-led startups operating in emerging industries beyond the formidable ‘Iron Triangle’ of fintech, e-commerce, and logistics,” said Gobi-Core General Partner and Gobi ASEAN Circular Economy Head Carlo Delantar.
“Even as today’s macroeconomic environment shows signs of a slowdown, we foresee growing potential in the flow of venture capital into these new startups. However, their growth will be tempered by the lack of talent—the lifeblood of every startup ecosystem.”
The Talent Pool
According to Gobi-Core’s report, the profile of the typical Filipino startup founder starts with working abroad before bringing their experience to Philippine startups. Among the founders who raised over $500,000 in venture funding, 61 percent studied or worked abroad, 75 percent have at least 10 years of professional experience, and 71 percent of those startups have at least one founder with previous tech or startup experience.
The tech-savvy Gen Zs could be the solution to this problem. The generation makes up 30 percent of the Philippine population and comprised 40 percent of the new members of the labor force from 2019 to 2021. By 2025, over 28 million Gen Zs are expected to be part of the Filipino workforce.
Tech professionals have always been needed to support fintech, e-commerce, and logistics startups, but with the growth of the gaming, blockchain, crypto, and web3 industries, they’ve never been in more demand.
“The local talent pool has the potential to grow, especially with the digitally native Gen Z entering the workforce,” said Delantar. “We recommend adopting long-term, yet cost-efficient talent acquisition strategies, such as coding bootcamps, internship programs, and university competitions.”
A Resilient Startup Ecosystem
Despite economic uncertainties, the Philippine startup ecosystem managed to raise $503 million in venture capital investments for non-corporate startups, which is almost double the previous year’s $279 million. The Philippine internet economy is now valued at $20 billion, which is forecasted to grow five times by 2023 to $125 billion. Meanwhile, $1.3 trillion worth of electronic banking transactions were recorded in 2022, 10 times that of pre-pandemic levels.
The Philippine startup and tech ecosystems are showing resilience, and it will be the “camel” startups that survive and possibly grow in these austere conditions. According to Gobi-Core, these cautious and customer-focused startups will go on to “build a stronger local tech talent pipeline and, ultimately, prepare the Philippines for a digital tomorrow.”
“In venture capital, it takes a community to nurture a startup; it will take an ecosystem to help that startup grow wings,” said Gobi Partners cofounder and chairman Thomas G. Tsao.
Read Gobi-Core Philippine Fund’s State of Talent in Tech report here.