FOXMONT Capital Partners and Boston Consulting Group (BCG) said the Philippine startups are expected to number 1,000 each year, possibly signaling a rebound from the 2023 decline in venture capital funds raised.

“We’re very, very bullish on the market in the Philippines. We see 1,000 startups a year, and we see existing portfolio companies of ours mature to a stage where they’re ready for growth funding,” Foxmont founding partner Jelmer Ikink said at the launch of the Philippine Venture Capital Report 2024 on Wednesday.

“We see a maturation of early-stage deals going into the growth stage, and that means bigger tickets. So I think there’s very much a demand from the Philippine startups for that,” Mr. Ikink said.

He also noted growing interest from regional and global investors to invest in and allocate more capital to the Philippines.

“In principle, that should result in growth… it’s hard to really predict, but the fundamentals are there. And I think that’s also the key takeaway of the report, that we believe that the fundamentals are there for continued momentum,” he said.

Foxmont and BCG’s Philippine Venture Capital Report 2024 indicated that venture capital deal volume rose 16% to 96 deals last year.

However, total funds raised last year fell 14% to $960 million.

“In line with the global trend given prevailing macroeconomic conditions, total deal value in the Philippines experienced a decline in 2023 when compared to its record year in 2022,” according to the report.

“The decline was relatively modest at 14%, especially when compared to a decline of 62% in Southeast Asia, with Indonesia and Singapore feeling the largest drops at 68% and 73%, respectively,” it added, citing the Global Private Capital Association.

Despite the decline, Foxmont and BCG said that the Philippine share of funds raised in Southeast Asia grew to 13% in 2023 from 7% in 2022.

They said that the share growth was the result of maiden investments made by DSG Consumer Partnership, Softbank Ventures Asia, Cercano, HSR Ventures, ACA Investments, and SK Capital.

“These (maiden investments), on top of the record high deal volume in 2023, underscore sustained interest in Philippine startups,” according to the report.

Fintech and e-commerce remained among the top three sectors funded in 2023, while startups in the business-to-business software-as-a-service (B2B SaaS) industry, an up-and-coming sector, received major funding as well during the period.

The fintech sector accounted for 22 deals out of the 96 booked last year. Other sectors that received funding were B2B SaaS (14), e-commerce (13), direct to consumer (5), health (4), agriculture (4), media (4), property technology (4), food and beverage technology (3), education technology (3), artificial intelligence (2), and Web 3 (1).

BCG Managing Director and Senior Partner Anthony Oundjian said that the e-commerce industry will continue to grow even if a large number, or 64%, of Filipinos still prefer offline purchases.

“The whole e-commerce industry continued to grow even last year, albeit at a slower rate of growth than the previous year,” Mr. Oundjian said. — Justine Irish D. Tabile