A study has shown that Filipino startup founders face a challenging funding environment and must shift their focus toward profitability. This indicates a significant priority change due to the current economic climate by 2024.
According to the findings of the 2024 Philippine Startup Founders’ Outlook, conducted by Uniquecorn Strategies, a Philippine-based startup-focused communications firm and market research firm, The Fourth Wall, the funding environment for founders in the Philippines is currently pessimistic. The average outlook on funding opportunities scored 2.65 out of 5, attributed to the sharp 40% decline in local startup investments in 2023, as reported by Gobi-Core Philippine Fund.
The decrease in funding opportunities has affected the confidence of startup founders in their company valuations for 2024. On average, founders have assessed their own startups with a valuation score of 2.65 out of 5, which suggests they expect lower valuations compared to 2023.
Profitability Over Growth
Many startup founders prioritize profitability over growth due to the challenging funding climate. To reduce their dependency on investor funding, 75% of founders are opting for profitability. For the next 12 months, 70% have identified profitability as their top priority.
The focus on profitability is attributed to many startups’ short runway and the need to ensure financial sustainability. Along with profitability, improving customer experience and product development are also high on the agenda, with 55% of responses each.
Two Key Factors Impacting Funding Prospects
Startup founders recognize two critical external factors impacting their funding prospects: the Philippines’ economic growth performance and government investment regulations.
The founders of startups were asked about their thoughts on the helpfulness of current government policies for startups, and they rated them as average, with a score of 2.45 out of 5. It’s worth noting that 55% of them stated that they could not recognize any beneficial government policies, which indicates a negative perception of the government’s role in supporting the startup ecosystem.
When asked what the Philippine government could do to improve the funding environment, 70% of the founders suggested an increase in investment in digital infrastructure.
Startup founders in the country are somewhat optimistic about their economic prospects, with an average outlook score of 3.40 out of 5. However, those who launched their startups during the COVID-19 pandemic (2019-2020) have shown the least optimism. This group was particularly affected by the economic downturns and uncertainties of the pandemic, which likely influenced their cautious outlook.
According to the survey, founders face several key challenges in 2024. While 55% are worried about profitability, 50% struggle with raising funds, and 40% have difficulty acquiring talent. These challenges show that the startup community faces multiple issues, from financial sustainability to operational growth.
Despite the challenges, 55% of founders expect their startups to be profitable in 1-2 years, and 20% have already achieved it.
Most Filipino startup founders aim for international expansion, with 60% looking at Southeast Asia for new markets.
“While the immediate challenges in funding and valuation are evident, the founders’ focus on profitability and expansion indicates a proactive approach to navigating the complexities of the current economic climate,” explained Dean Bernales, Founder and CEO of Uniquecorn Strategies.
For the full report of the 2024 Philippine Startup Founders’ Outlook, visit www.uniquecornpr.com