PHILIPPINE startup founders are confident about their revenue growth prospects, results of a survey released on Wednesday show, but their worries are more centered on their capital needs.

Isla Lipana & Co./PwC Philippines in the “2020 Philippine Startup Survey” asked startup founders and investors about their current status as well as their plans.

The report, which surveyed 111 founders and 31 investors, said 96% of founders are confident about revenue growth over the next two years.

For 2020, the biggest challenge startup founders identified remained to be their capital requirements, with 77% of them citing this concern. The number, however, is lower than the 88% in the initial survey in 2017.

Challenges in market readiness came out next, with 46% of those surveyed citing this concern. Talent acquisition/retention (44%), and access to relevant networks/mentors (44%) followed.

In terms of areas where startup founders plan to innovate, 75% will focus on product development, 59% on new technology development, and 50% on customer experience.

While 8% of founders have no plans of raising external funding, 43% plan to raise more than $500,000.

The survey shows that 47% have not raised funding from external funders, while 32% raised less than $100,000, and 13% raised between $100,000 and $500,000.

Among the investors, family fund topped the investor type at 47%, followed by angel investors (34%), and personal funding (15%). Four percent have received grants or other types of funding.

Only 2% plan to see their startups go public in the next two years, while 44% are looking to have stable revenue and profit levels in this period.

“Many of them are thinking of gaining investors, partnerships but not really going public,” PwC Philippines Chairman and Senior Partner Alexander Cabrera said during the report’s launch.

He told reporters that the biggest change in the startup environment in the past three years is that partnerships with bigger companies have become stronger.

He said survival of the startups is at a higher rate when they have these partnerships “because you have a captive audience.”

There is a big opportunity to address the needs of big companies as their tech arm, allowing the startups more security to innovate.

“The environment is changing. [Startups] are pitching not just for investments but to be part of a larger value chain,” Mr. Cabrera said.

Both investors and startup founders have walked away from partnerships due to mismatch of personalities with the management team — 58% of investors have done so compared to founders 38%.

Investors who reported walking away from partnerships numbered 84%, compared to 48% of founders.

Investors’ key considerations in partnering with startups are the founding members (71%), business model (55%), and scalability (45%). On the lower side, 10% consider the distinct character of the company.

Up to 73% of investors plan to invest as much as $5 million in Philippine startups in the next three years.

Investors said financial technology is the top sector for success in the next two years, indicated by 45% of those surveyed. This is followed by e-commerce (19%) and medical and healthcare (16%).

In a press release, PwC and MAP said the Philippine startup ecosystem has changed over the past three years.

This year, members of the Management Association of the Philippines (MAP) participated in the survey, which is PwC’s second collaboration with QBO, a public-private initiative for startups, and IdeaSpace, a nonprofit organization supporting early-stage technology entrepreneurship.

“Charging ahead, the 2020 Startup Survey brings to fore the issues we need to address to strengthen and bring the ecosystem towards maturity. I’m glad to know that fewer founders mention that funding is an issue, it shows they are understanding how to address constraints and lessen risks,” IdeaSpace Executive Director Diane Eustaquio said.— Jenina P. Ibañez