MANY STARTUPS in the Philippines remain optimistic about their prospects despite facing talent and capital challenges, according to industry players.

“The startup ecosystem is persisting amid these headwinds,” Katrina R. Chan, executive director at IdeaSpace Investments and QBO Innovation Hub, told BusinessWorld on the sidelines of the Philippine Startup Week 2023 press conference on Tuesday.

“The people and the government are already paying attention, but in times like these, it’s really about synergistic collaboration and executing plans, policies, and incentives,” she added, emphasizing the importance of opening access for all local startups.

Ms. Chan noted strengthening business education, funding mechanisms, mentoring programs, and international exposure opportunities as key ingredients for growing the local industry.

“We want more people driving the future of the economy,” she said, emphasizing the expansion of investors’ valuations and advocating for multiple kalabaw, not just one unicorn.

Startup investment in Southeast Asia declined after an uptick in 2021, as reported by Deal Street Asia and Kickstart Ventures. The first quarter of 2022 recorded about $5 billion in deals, down from a peak of $8 billion in the fourth quarter of 2021.

Startup tech fundraising declined this year due to adverse market conditions, according to Gobi-Core Philippine Fund, which provides early-stage venture capital.

In its Philippine Startup Ecosystem Report, Gobi-Core said that the year-to-date fundraising in the Philippines is running 40% below the year-earlier level.

“It was super high during the pandemic, given the urgent demand for digital solutions,” Ms. Chan said regarding the current decline in investments, causing a conservative stance for investors.

“It has become more level-headed now, and it’s not something to be scared about,” she added.

Gobi-Core identified the five biggest challenges that founders or startup owners face as inadequate infrastructure, talent and manpower shortages, government and regulatory hurdles, access to funding, and cultural challenges.

Ana Yang-Calubad, founder of enterprise software-as-a-service (SAAS) startup Britana, urged the government to make it easy for aspiring and existing startups to run their businesses through streamlined processes and tax incentives.

Dennis Velasco, founder and chief executive officer of the real estate SAAS startup Prosperna, said fostering global partnerships among startups is one of the vital strides the local industry needs to take. “This is going to make the Philippines an exciting [investment] place in the next 10 years.”

Beyond top-down support, Mr. Velasco added the need for bottoms-up initiatives at the local government unit (LGU) level. “We need to help them understand programs and initiatives for business sustainability and give them access to our tools and services.”

Lorena Flores, founder of the digital community hub startup Hey Roomie, said startups should be seen as an opportunity or an extra arm for LGUs to extend their services. — Miguel Hanz L. Antivola