The Role of Startups in Nation-Building

We see startups on the rise in the Philippines, as funding flows into the country and innovations surface!

Back in 2019, Philippine startups raised a total of USD 152 million. Two years later, total funds raised have reached up to USD 1.03 billion with USD 437.50 million funds raised in just the first half of the year. This increase in funding over the past years in the startup ecosystem has been a result of the rise of technology-enabled startups across the country.

[READ: Philippine Venture Capital Report 2022]

From 2019 to 2021, many startups have been closing their Series A, B, and C funding, where 184 funding deals have been made with Filipino startups, 92 of which coming from 2021. This goes to show that more and more opportunities for growth are arising in the Philippine startup ecosystem. Some claim that we are in the “golden era” of startups in the Philippines, due to the increase in funds raised, and the emergence of new innovations and startups.

The Philippine government has also passed new initiatives and laws supporting the Innovative Startup Act, like the CREATE law, the Revised Corporation Code, and the signing of the Joint Memorandum Order 001-2020 for the implementation of the Philippine Startup Development Program (PSDP). The PSDP intends to make the registration for startups easier and quicker by providing various program incentives and benefits such as full to partial subsidies when registering, using government office spaces and equipment, and travel expenses for international and local startup events, to name a few.

This is the season in the Philippine Startup Ecosystem that has long been awaited. One where startups are given the opportunities, resources, and spaces they need to contribute to the betterment of society and for Filipinos everywhere.

This is what we aim to do at PhilDev Foundation in partnership with the Department of Trade and Industry – to train technology-based startups to become investment and market-ready. Over the past couple of months, we have been mentoring and training 6 growth-stage startups through our ADVanCE Accelerator Program. They have gone through various masterclasses, mentorship programs, weekly check-ins, and brown bag sessions to further improve their services and their overall wellbeing.

[READ: DTI, PhilDev announce 26 tech startups joining ‘IDEA’ and ‘ADVanCE’]

Innovating as a Means to Solve Problems

In 2021, Gobi-Core was able to map over 700 startups in the Philippines, the majority of which are tech-based. The report estimates that the numbers are likely to be higher as early-stage and new startups join the market. The Philippine startup community is beginning to be part of the global technology ecosystem which in turn contributes to a growing economy. This growth is centered on creating solutions where innovation is used as a means to solve problems.

[READ: Philippine Startup Ecosystem Report 2021]

“If you are able to make a strategy that makes innovation the core, everyone would then in turn have a mindset wherein, if there is a problem, we can solve it with the minimal resources that we have. By being able to capacitate people to be problem solvers, then we can potentially have a large army of innovators,” Masaki “Maki” Mitsuhashi, Innovation and Strategy Consultant shared.

Solutions do not begin with huge startup ideas, rather, they are focused on practicing ideation, brainstorming, and creating new ways to simplify systems that would lead to bigger solutions.

“Startups are the ones that really innovate. That is why I like to encourage crazy ideas because there is always a hint of truth in it. They’re never truly crazy, you can pick up something from these that are doable,” shared Cristina Espiritu, one of our masterclass lecturers and co-founders from Emphorium.

This kind of thinking was seen especially during the pandemic. Despite having the longest lockdown globally, the pandemic pushed Filipi​​nos to reevaluate and think of creative and innovative ways to digitize and create systems to make our day-to-day lives better. More Filipinos found ways to make the lockdown less of a burden by opening up online stores to sell food, home essentials, clothing, and even online communities and spaces for people to gather and make virtual events similar to face-to-face events.

Creating Social Impact for the Well-Being of Filipinos

Before the startup ecosystem boomed in the Philippines, we have seen a rise in businesses from e-commerce, food and beverage, sustainable living, and the like. As time progressed into the pandemic, “social impact” became a buzzword as founders were beginning to become more conscious about their societal and environmental impact. According to the report by Gobi-Core, Philippine technopreneurs are heavily influenced by environmental and social issues and more startups will emerge in this space.

Czar Carbonel, Co-founder of Magwai, beautifully paints a picture of how startups contribute to social impact, “There are a lot of social ills in our society. I think that this is our form of bayanihan. The government can only provide so much, and as entrepreneurs, we see ourselves as helping to solve some of the problems, especially social enterprises.”

It is not only the role of the government to provide platforms and solutions that address the needs of the country, but it is a joint effort where we also ideate and develop ways to solve social issues. This then makes the role of a startup heavier, where the problem trying to be solved is much bigger than creating innovations for profit, but they now take into account the well-being of others.

Another startup founder, Stephanie Naval from Empath, shared how her mindset was set on addressing the mental health care issues in the Philippines.

“Just recently we were featured in CNN and Lifestyle Asia. When people have heard about us, 55–to-60-year-olds have come up and reached out to me about how they have suffered from mental health conditions. They were glad that platforms such as Empath are able to provide the mental health care that they wished they had years ago,” Stephanie shared.

Startups like Empath are examples of how technology-based startups are acting towards the growth and development of the country and changing the narrative and perception of mental health in the Philippines.

“People right now are more aware. They aren’t who they were before where they would simply be accepting because things are the way they are. Right now, people want to actually take an active stand on what they truly want and believe in. Social impact is being able to have a long-lasting change within that person,” says Maki.

Seeing Opportunities Through Difficulties

Even in the most difficult situations, it’s important to go back to the reason why we need to continue pushing forward. During our discussion with Czar Carbonel, she shared how Magwai was in a position wherein their flagship product was their reef-safe sunscreen. But with the lockdown in place, there was less of a need for sunscreen given the work-from-home setup. During such times, entrepreneurs like Czar and her team are put at a spot where they have to rethink their choices and make the important decision of whether or not to pivot. And this decision to pivot has opened more doors for Magwai.

“We had to really think about our “why” which is to champion marine advocacy through personal care products. Apart from chemical pollution, we noticed that there was also a plastic pollution aspect, this is how we came up with the shampoo bars. It was such a challenge, but this paved the way for us to think about other products, and now we are offering our shampoo bar in Watsons Pharmacy,” Czar shared.

On Empath’s experience, Stephanie Naval cited that 3.6 million Filipinos suffer from a psychological situation, and in recent studies, it was announced that this spiked to 17 million during the COVID-19 pandemic. This showed the need for Empath to provide their services, improve them, and reach more Filipinos that need them.

[READ: 17 million Filipinos suffer from depression – lawmaker]

“There are a lot of difficulties when running any kind of startup. Whether it’s pivoting, realizations, new market insights, or knowing what works or doesn’t work. But then from there, I think that was when I was able to fall in love with the problem even more rather than the solution. I really had the passion and grit with the mindset that no matter what, I want to address the problem of mental healthcare here in the Philippines,” Stephanie shared.

In these instances, it is important to revisit the objectives of your startup and go back to innovating and ideating new ways for your product or service to fit your market’s current needs.

Shaping the Entrepreneurial Mindset in Filipinos

More than 9 out of 10 startups fail within their first 10 years. A common statistic that is thrown at us in some startup event, talk, or conference. But even knowing this statistic, several still launch their startups because we embrace failure in this community. The faster we fail, the more we learn; the more we innovate, the faster we succeed.

“As startups, we are really pushed to build something from scratch without the fear of failure, and be able to take the risks before reaping the rewards,” Cristina shared.

We have more than 700 startups in the Philippines and more to come in the next few years. It begs the question, how might we create an environment where startups can practice innovating and brainstorming? How can they push for innovation without fearing failure, and rather embracing it? There are still barriers that Philippine-based startups face and hold them back. 

Cristina from Emphorium also emphasizes that startups should also consider themselves to be global brands. Focus not only on scaling up nationally but also on expanding internationally.

“Startups need to learn that their products are scalable. I think there are two kinds of businesses, one that is a lifestyle business, “I want to do this but I want to keep it small.” But the majority of startups want to go into a business because they want to build a brand, they want to build a legacy and expand. Part of the expansion is going international,” says Cristina.

What do you think? Are we in the golden era of startups? The startup community has gone further than where we were years ago, but there is still a lot of work to be done to provide Philippine startups with what they need to thrive in this growing economy. We need all players in the Philippine Startup Ecosystem from the government, academe, private sector, organizations, and investors, to help pave the way for Filipino startups to compete both locally and globally.

“I think there is still a lot of push that needs to be made from a startup perspective. What is good is that we have already started, we have the building blocks already, the ecosystems are here, accelerators and incubators are available, but there is still a long way to go,” Czar shared. Indeed, a long way to go to keep the ball rolling.