A 15-min guide by World Startup Report
Lead Author: Ron Hose
Updated: Sept 26, 2013!
Document our world’s startup ecosystems through a series
of reports detailing the local culture, trends, key players and
challenges. Share these reports for free to beneﬁt everyone
in the global startup community.
Identify and empower local startup activists to become the
ambassadors of each ecosystem. Leverage this network of
ambassadors to help connect people to each other and to
the global startup community.
Ron HoseCris Sarmiento
UP Dilliman ‘14
World Startup Report
Silicon Valley Investor and Entrepreneur, now
based in Southeast Asia.
Founding Partner @ Eric Schmidt’s Innovation
Endeavors, an early stage VC firm based in Palo
Alto and Tel Aviv.
Founder @ Tokbox, funded by Sequoia Capital and
acquired by Telefonica
Masters degree from Cornell University
Fastest growing economy in Asia
Investment grade (2013 upgrades: S&P, JCRA, Fitch Ratings)
Low operating costs
English speaking, western minded, heavy social users
Large local market, minimal competition
105.7 M Population 313.9 M
7.8 GDP Growth Rate 2.2% (2012 est.)
GDP per capita US$ 49,601
23 Median age 37
76% M Population under
5% Consumer debt (of
<$1 a day
BY THE NUMBERS
PHILIPPINES USA CHINA
MOBILE PHONES 106MM (114%) 328MM (104%) 1.15b (87%)
SMART PHONES 19MM (18%, 17th) 219MM (58%, 2nd) 354MM (29%, 1st)
34% 28% 31%
MOBILE INTERNET 3.4% 81% 21.8%
OPERATOR ARPU $5/ month (mostly prepaid) $46.50 $46.50
INTERNET USERS 30MM (29%) 244MM 516MM
$1.15b $343b $110b
<1% 6% 2.5%
WEB & MOBILE
“Social networking is so
popular among Filipinos, the
country has been nicknamed
‘The Social Networking
Capital of the World.’
-Jon Russel, asiancorrespondent.com
Prior to Facebook, Filipinos sent the
most SMS msgs per capita in the
MOST VISITED WEBSITES
“The majority of the population in Asia
has limited access to healthcare,
education, and commerce. With the
penetration of mobile devices and social
networks, this population is now
reachable, and hence, addressable.”
- Ron Hose
PAST EXITS CURRENT MOVERS UP AND COMING
STARTUPS TO KNOW
Chikka (Telco acq.)
Airborne (Telco acq.)
Rappler (Social News)
Lazada (Amazon Clone)
Zalora (Zappos Clone)
Kalibrr (YC 2013)
TwitMusic (500 Startups)
AVA (HBS founders)
AYANNAH (HBS founders)
PayRoll Hero (SV investors)
INCUBATORS SEED VENTURE
(PLUG AND PLAY)
BERYL LI / SEEDASIA
Jeffrey Paine- Golden Gate Ventures (Ayannah), John Tan (PayRoll Hero),
Benjamin Joffe (Payroll Hero), Dan Martell - Clarity (Payroll Hero), Ryan
Homes - Hootsuite (Payroll Hero), Blumberg Capital (Lenndo), 500 Startups-
Dave McClure (Payroll Hero, TwitMusic), Paul Santos, Seimer Ventures
(Ayannah), MIH- South African Group (Sulit, Multiply), New Leaf Ventures
ANGELS, INCUBATORS, VCS
Seed funding is limited and anything beyond that is virtually non-existent.
LOCAL MEDIA EVENTS
geeks on the beach
NATURE OF STARTUP
*Survey is based on a 37 startup responses from startup.ph group
SOURCE OF FUNDING
NUMBER OF ROUNDS
FOUR & ABOVE 5%
Worked for a
4G/LTE network and
proliferation of smart phones
are paving the road for m-
$230b retail market 95% of e-commerce is
airline travel bookings
40%ACCESS THE INTERNET
TO SHOP 64%PURCHASED ONLINE
IN PAST 3 MONTHS
1 eBay (ph)
2 Sulit (classifieds)
3 MetroDeal (daily deals)
4 Cebu Pacific (airline)
5 Ensogo (daily deals)
6 Amazon (US)
Payments, Logistics, and
consumer trust are the biggest
obstacles to overcome.
Total Credit Cards 7.36 Million (7%)
Total Debit Cards 35.36 Million (33.7%) – mostly out of Visa/Masterard network
Total Remittances $24.453 BN (4th largest remittance receiving market in the
world behind China, India and Mexico)
Cash Transactions by volume 2012 90%
Mobile payments (GCash/Smart Money) are niche products.
The majority of e-commerce payments are done with CC, followed by
Paypal and DragonPay.
Over-the-counter payments for online transactions are still very common
(collection at 7/11, pawn shops, bank, etc.).
With 7000+ islands and vast rural (un-addressed) areas, shipping
outside of the metro areas can be very challenging.
Most e-commerce sites operate their own shipping logistics, in addition
to relying on outside providers.
DragonPay - local payment aggregator for over-the-counter payment
and online banking payments
XEND – shipping logistics for geared for e-commerce
2GO, LBC, AIR21 – local shipping and courier services
Defunct: FoodPanda (competition from entrenched players)
Alexa Rank 43 112 6555 3181 in planning
Launched Q2 2012 Q1 2012 ? Q1 2013 Q34 2013
none none none Save22,
* OfficeFab recently announced they will cease their operation in Southeast Asia.
Saturated Mature Semi-mature Infancy Non-existent
PHILIPPINES OPPORTUNITY MAP
Click the City
We Heart It
EDUCATION MICROWORK SUBSCRIPTION
Saturated Mature Semi-mature Infancy Non-existent
A map of Philippines’ current market leaders in 28 commodity internet business models
are light, sturdy bicycle
frames made out of bamboo
uses inactive sim cards to
deliver electronic textbooks
to students readable on any
LITER OF LIGHT
uses a plastic bottle, water
and glue to light up homes
without using electricity.
lets iPhone users buy iOS
apps without a credit card
“Innovation for SEA will
come from local
entrepreneurs - those who’ve
gotten their feet dirty riding a
habal-habal are best
equipped to address the
needs of the 99%”
- Ron Hose
IN THE PHILIPPINES
“While the Philippines continues to
improve its macroeconomic
environment and sets pace-setting
growth in gross domestic product, it lags
in the implementation of regulatory
reforms that [make conducting business
Doing Business 2013 Report
PEZA – 100% corporate tax holiday for
the first 4-6 years, tax and duty free
importation of equipment and parts, VAT
exemption of local purchases,
withholding tax exemption
60% local ownership and board control
are required for certain industries (real-
estate, banking, press, etc.)
Legal Framework Largely based on the US legal system.
Contracts are generally written in
Works, but can be unreliable.
Corruption Rank 105 of 176 globally
Burn Rate Parity* 8 months
Number of Days to
* How long does $100k last (2 founders, 2
engineers, 2 general employees)
Most expensive power in Asia at $.23 per Kilowatt hour. Blackouts are periodic
and usually isolated.
92% of population has access to improved water sources. Sewage and sanitation
are still a challenge.
Still being built. Mainly owned by private entities.
Fixed line & mobile internet are widely available but connectivity is spotty. One
of the first in SEA to deploy LTE.
Public hospitals carry approximately 5 hospital beds per 10,000 people (global
average is 30).
Top schools to hire from: Ateneo, La Salle, UP Diliman,
Fresh graduates require substantial on-the-job training.
Filipinos are creative, but work culture does not
always provide an outlet for creativity.
Brain Drain - Engineers, nurses, etc. are often lured for
higher paying jobs abroad once trained.
Labor laws provide for 6 months probationary
period, after that it’s hard to let go of employees.
“Top-class talent is
not always hard to
find, and not
everyone is built for
this type of culture -
but when you find
them, they'll do
-Timothy Go , Juan Store
Entry Engineer US$ 700-1200
Senior Engineer US$ 1400-2800
Doctor US$ 600-1000 US$ 4500-18200
Teacher US$ 430-500 US$ 2500-5900
US$ 300-700 US$ 2500-3200
Secretary US$ 250-500 US$ 2000-3900
income per month
- Fort Bonifacio and Makati offer western standard living and
amenities. Typical 1BR in skyrise/doorman building starts at
- Hiring household staff is very common and affordable (live-in maid
or nanny: $150/month).
- Food options are abundant – from major international chains to fine
TRAVEL & TRANSPORTATION
- Traffic jams are common in major roads.
- Cost of owning a Car + Driver = $400/month
- 7000 islands to explore – from partying on Boracay to relaxing in
Palawan and diving in Cebu – all within an hour flight range. Local
flights are inexpensive.
- Healthcare is inexpensive ($10 consultation at a private clinic).
- Private hospitals are on a par with US standards.
PHILIPPINE’S BIGGEST EXPORT IS ... LABOR!
o More than 2MM Filipinos work abroad.
o $21.3b total remittances in 2012, constituting 30% of national export -
3rd largest destination in the world
o BPOs - $11b industry (4% of GDP) employing 640k Filipinos
o World’s largest exporter of nurses and second largest exporter of
CASH FLOW ECONOMY
o Earn today, spend today - many Filipinos don't save or have bank
o “Tingi culture” from toothpaste to mobile load - Filipinos prefer to
purchase in single serve packets (sachets)
o Small stores typically extend micro credit to customers (“Gives”)
MALL CULTURE IN THE BIG CITIES
o Three of Asia’s 10 biggest shopping malls are in the Philippines.
o Filipinos frequent malls to socialize, cool down in the A/C, use free
WIFI, and sometimes shop.
BUSINESS IS RELATIONSHIP DRIVEN
o The majority of big businesses is family owned.
o Inter-family relationships often span 2-3 generations.
o “Latin Feel” - Spanish colony for 333 years, cultural influence is
o Only formal US colony in SEA – Education and legal system are
modeled after the US. (NBA, Starbucks, and other American
brands are huge).
o English is widely spoken as first or second language.
o Only Catholic country in Asia
TOURISM RESOURCES ABOUND, BUT STILL RELATIVELY
o Some of the nicest islands (7107) and beaches in the world,
world class diving, surfing, kite-surfing
o Very little information on where to go!
o Children live home until married
o Extended family - grandparents to grandchildren live under the
Get to know the local culture, environment and players first. The
Philippines has a lot of Western elements and South East Asian
influences, though as an archipelago - it is quite diverse within
itself & carries distinct culture.
Anticipate that to get things done the way you want them, it will
take a little longer here.
Very few funding options, especially post seed stage - plan
Find a local you trust to help you, or ask the local community.
Everyone here is very ready to help!
Find local partners who can work closely with founders.
Late stage funding and liquidity are scarce. Focus on
investments that can generate cash early.
Not enough quality deals for setting local presence.
If you indicate any form of interest in the local market, the good
deals will find a way to come to you.
The Philippine Startup ecosystem is still
in its infancy – funding is scarce, experienced
talent is hard to find, payment, delivery and
internet infrastructure is poor.
But for all those challenges, opportunities are
abound – the local market is big and competition
is still very low.
Widely spoken English and a super-friendly culture
makes the Philippines a great first base for
startups aspiring to tackle Southeast Asia.
- Ron Hose, August 2013
Special thanks to:
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Christian Besler, Tony Pio de Roda, Jojo Flores, Stephen Jagger, Frederic Levy, Minette
Navarrette, Paul Pajo, Runar Petursson, Diego Jose Ramos, Paul Rivera, Angelo
Romasanta, Paco Sandejas, Dan Siazon, Andrew Syling, Earl Valencia, Jay Yao