Filipino startup founders are heading into 2024 with a stark outlook on challenging funding environment, according to a new study.
“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,” said Uniquecorn Strategies founder and CEO Dean Bernales.
The 2024 Philippine Startup Founders’ Outlook, conducted by Uniquecorn Strategies and The Fourth Wall, found that founders are pessimistic about funding, scoring their outlook an average of 2.65 out of 5. This pessimism stems from the 40-percent decline in local startup investments in 2023, as reported by Gobi-Core Philippine Fund.
The funding winter also dampened founders’ confidence in their company valuations. Their average assessment score was 2.65 out of 5, indicating expectations of lower valuations compared to 2023.
Given these conditions, 75 percent of founders are prioritizing profitability over growth to reduce dependence on investor funding. For the next 12 months, 70 percent identified profitability as their top priority. This shift in focus is largely driven by the dry funding climate and the short runways faced by many startups.
The survey, co-presented by The Fourth Wall, Bossjob and Launchgarage, highlights two key external factors impacting founder concerns: the Philippines’ economic performance and government investment regulations.
Founders rated current government policies for startups at a middling 2.45 out of 5. Notably, 55 percent said they could not identify any beneficial government policies, reflecting a negative perception of the government’s support for the startup ecosystem.
When asked what the government could do to improve the funding environment, 70 percent of founders suggested an increase in investment in digital infrastructure.
Startup founders are moderately optimistic about the country’s economic prospects, with an average outlook score of 3.40 out of 5. Those who launched their startups during the COVID-19 pandemic (2019-2020) showed the least optimism, likely due to the pandemic’s economic downturns and uncertainties.
The survey also identified the primary challenges facing founders in 2024. While profitability remains a significant concern for 55 percent of them, raising funds is a close second at 50 percent, and 40 percent struggle with talent acquisition.
Despite these challenges, there is a silver lining. A significant 55 percent of founders expect their startups to become profitable within the next 1 to 2 years, and 20 percent of the respondents said they have already achieved it.
Looking towards the future, a majority of Filipino startup founders are setting their sights on international expansion, with 60 percent of them particularly looking at neighboring Southeast Asian countries as a new geographic market.
Bernales said the overall tone is one of cautious pragmatism. “The pandemic’s lingering economic impact continues to shape strategic decisions, with founders navigating a tightrope between growth aspirations and the harsh realities of funding. As 2024 unfolds, the Filipino startup ecosystem shows signs of balancing immediate pressures with long-term strategic goals.”
