People capital: Philippines’ best resource

Many of us may be completely unaware that the majority of the digital technology or apps we use are developed by startups. They have redefined how we consume media (Kumu), link job seekers to potential employers (Kalibrr) and provide us with a wide range of financial services in the Philippines (MoneyMax). Other tech-enabled apps that succeed in different sectors include e-sports and gaming (Tier One Entertainment), a community selling platform (SariSuki) and an ed-tech platform that connects students to their academic goals (Edukasyon.ph). These are just a few of the tech startups in the Philippines that are benefiting from the present digital technology ecosystem. The number of ideas and entrepreneurs making use of this digital space is continually expanding.

Because of its large number of digital users, a growing middle-class population that supports the economy through purchasing power, a competitive pool of talent and business-friendly legislation, the Philippines is a suitable petri dish for startup creation.

To encourage more business owners and attract foreign investments, the government has enacted laws and policies that seek to increase efficiency by reducing processing time, eliminating red tape, curbing corrupt bureaucratic practices, providing incentives to specific industries and assisting business research and development to support innovation and the creation of new products and services.

Every business or company begins with someone’s idea. And in most cases, this eureka moment is a solution to a particular problem: A pain point. The higher the pain point, the more lucrative the solution. The more people are affected by that pain point, the bigger the market.

Personally, it brings me joy when it strives to better the lives of communities or solve a unique challenge to facilitate development.

Ideas need money and funding brings your ideas into reality.

According to the e-Conomy SEA 2022 report, venture capital in Southeast Asia remains vested with $15 billion in 2021 to support deals. In 2021, the Philippines barely received close to $1 billion in investment. Singapore and Indonesia remained the most popular investment destinations in the area, with $12 billion and $9 billion, respectively, in the same year.

It is worth mentioning that, although having similar consumer demographics to the Philippines, Indonesia has become a magnet for investments (albeit now nearing saturation which is great news for us).

Vietnam has gotten $2.6 billion in investments due to the region’s fast-growing market as a result of the developing e-commerce sector, while Thailand has a transaction value on the ascent with $600 million in investments.

Looking at figures as indicators, I hope that the Philippines will continue to push forward and attract more investments based on our ideas, talents, potential and problem-solving nature. This, in turn, will propel our countrymen and the economy ahead.

We are also seeing significant growth in Southeast Asia’s digital economies, indicating robust growth and further development of our economies. According to the same report, the Philippines’ gross merchandising value (GMV) is still on the rise, standing at $20 billion last year, with e-commerce boosting it to $35 billion by 2025.

Now there is a paradigm shift. Today, countries ridden with inefficiencies and problems may literally be where the most opportunities are to make money.

This makes emerging markets a target for companies that have innovated abroad but have already saturated their own developed markets. There is now a gold rush to deploy their innovation in places like the Philippines and Southeast Asia.

Filipinos can take advantage of this and take our inefficiencies into moneymaking opportunities and more startups can be used to provide solutions for our every day problems.

This is the time our country can support local entrepreneurs and work together to attract billions of dollars of possible investment to fund our great ideas.

We have two options: (1) import innovation to make our lives better, or (2) use foreign investment to fund local solutions that we can later export to other countries.

Though option 1 is by far the easiest path, I’m an advocate of option 2 and I’d like all of us to bet on the Filipino startup instead.

Many industries have benefited from this early stage protectionism. Our telco and retail industries have created strong local players because of this. And today, as we liberalize these industries, Filipino companies remain competitive against any global entrant.

We’ve also seen many industries where local players did not fully develop because of too much reliance on imported products and services.

Now just like everything, we should strike a good balance with our policies. One that can benefit foreign investment but also ensure we cultivate local champions and be competitive in the global arena.

The technology wave is the next revolution that has historically been dominated by Silicon Valley in the US but have now also emerged new market leaders coming from our Southeast Asian neighbors. I, for one, would like to take a piece of the action and start exporting Filipino innovation as well. That starts with our startups developing scale in the local markets.

When this happens, our startups generate interest from foreign venture capital. We can attract foreign investment by ensuring we present favorable market ideas and execution. This can be bolstered through aligning common aims of the government, commercial partners (local and international), community sectors and business owners.

Even the smallest amount of support from stakeholders can have a significant impact on business growth. And I am optimistic that the current digital business environment has the same ambition of ensuring that unicorns appear among us, allowing the country and its people to thrive even more.