Research & Insights · Philippine Venture Capital

Fewer Bets, Bigger Cheques: The Narrowing of Philippine Venture Capital

Headline funding recovered in the first half of 2026, but the structure beneath it did not. This paper reviews what the data show, where the prevailing narratives fall short, and what founders, corporates, investors and policymakers should do next.

Bull Run ConsultingResearch & InsightsOctober 202615 min read

On the surface, Philippine startup funding had a good first half. Disclosed equity funding reached US$81 million in the six months to June 2026, a 145 percent increase on the US$33 million raised in the second half of 2025.¹ Coming after two years of contraction, the figure was widely read as a turning point.

We read it differently. The funding total moved up, but every structural indicator we track moved the other way. Fewer companies raised capital than in any half-year since 2019. Two firms took nearly nine of every ten dollars. And while Southeast Asia staged its strongest half-year since 2022, the Philippines' share of regional capital fell to about one percent. Our conclusion is that the market has not recovered. It has narrowed. Those are different conditions, and they call for different strategies.

This paper reviews the evidence from regional deal trackers, private capital research, development institutions and government program evaluations. It then critiques five assumptions in the prevailing narrative and sets out recommendations for each group of actors in the ecosystem. The analysis and conclusions are our own.

1. Reading the numbers correctly

Venture markets are usually reported in dollars, but dollars are a poor guide to the health of a small ecosystem. A single large round can swing the total by a multiple and say nothing about the hundreds of companies below it. Andi Haswidi, head of research at DealStreetAsia, has made a similar point: deal volume, not investment value, is the more reliable indicator of market stability.² On that measure, the trend is clear and negative (Exhibit 1).

Exhibit 1. Deal volume has fallen by 72% in eighteen months

Disclosed Philippine startup equity deals, by half-year

Disclosed deals fell from 25 in the second half of 2024 to 14 in the first half of 2025, nine in the second half and seven in the first half of 2026, a decline of 72 percent in eighteen months.^1,3 (The H1 2025 count is 14 in the full-year 2025 report and 15 in the earlier half-year edition; we use the later figure throughout.) No late-stage round was recorded in the whole of 2025. The first since the second half of 2024, a private-equity investment in healthcare, came in the first half of 2026.^1,3,5 The value series looks better only when the comparison is chosen carefully. Against the same period of prior years, rather than the trough of late 2025, first-half funding has fallen from US$191 million in 2024 to US$86.4 million in 2025 and US$81 million in 2026 (Exhibit 2).⁴ On a like-for-like basis, 2026 is the weakest first half in the series.

Exhibit 2. Like-for-like, first-half funding is down 58% in two years

Philippine startup equity funding, first half of each year, US$ millions

Composition tells the rest of the story. Digital lender Salmon accounted for US$50 million of tracked equity, about 62 percent of the total. (Salmon itself announced a larger US$100 million package in April 2026, comprising US$60 million of equity and a US$40 million bond under its Nordic bond programme. Trackers exclude debt, and the difference in the equity figure may reflect how tranches were dated and recorded.)^1,18 Together with Sprout, the period's other large round, two companies accounted for roughly US$70 million, or 86 percent (Exhibit 3).¹ The tracker does not describe Sprout's business, but the arithmetic places its round outside fintech; it should not be confused with the AI company Sprouts.ai, whose US$9 million round was announced in July 2026 and so falls in the second half.¹⁹ The remaining five deals averaged a little over US$2 million each. This is a seed-stage market that contains two growth-stage outliers.

Exhibit 3. Two companies took 86% of the money

Composition of US$81M raised by Philippine startups, H1 2026

2. A regional recovery that bypassed Manila

The Philippine figures look worse in regional context. Southeast Asian startups raised US$7.25 billion across 217 deals in the first half of 2026, the highest half-year total since 2022 and more than the full-year figures for 2024 and 2025.⁵ The Philippines took 1.1 percent of the value and 3.2 percent of the deals. In the 2025 full-year table it ranked fifth of seven markets, behind Vietnam, Indonesia and Malaysia, and ahead only of Thailand and Cambodia (Exhibit 4).³

Exhibit 4. Fifth of seven: the Philippines in the 2025 regional table

Startup equity funding by country, FY2025, US$ millions. Singapore (US$4.2B) omitted for scale.

This is not simply a venture capital story. Foxmont Capital Partners' 2026 Philippine Private Capital Report estimates private capital at about 0.3 percent of GDP and gross fixed capital formation at about 21 percent of GDP, against 30 to 40 percent in faster-growing peer economies. It puts the annual investment shortfall at US$40 billion to US$90 billion.^6,7 The report does find that private capital overall grew by 34 percent in 2025, driven by larger deals and more varied structures. Read alongside the venture data, that suggests capital is reaching the Philippines through private equity, credit and structured vehicles, but not through early-stage equity.

“The next phase of growth will depend on productivity, capital formation, and stronger firms.”

Jelmer Ikink, Managing Partner, Foxmont Capital Partners⁶

The paradox is that demand-side conditions are strong. The e-Conomy SEA 2025 report by Google, Temasek and Bain & Company projects the Philippine digital economy at about US$36 billion in gross merchandise value, growing 16 percent a year, with transport, food delivery and digital payments each expanding about 20 percent.⁸ Bangko Sentral ng Pilipinas data show that digital transactions now exceed half of retail payment volume.⁹ The market is there. The risk capital to build companies that serve it is not arriving at a comparable rate.

3. The investor's filter: three tests a startup must now pass

If capital is scarce but not absent, the question is what determines who receives it. From the pattern of 2025 and 2026 transactions and the public statements of active investors, we infer that Philippine venture capital now applies three tests.

Test one: regulated, provable revenue

Fintech accounted for about US$72 million of the roughly US$120 million raised in 2025, close to 60 percent, across nine transactions (Exhibit 5).³ We attribute this less to enthusiasm for the theme than to economics. A lending or payments licence slows competitors, and the revenue model produces measurable unit economics early in a company's life. Investors can price a regulatory moat. Most other Philippine categories give them nothing comparable to underwrite.

Exhibit 5. A fintech monoculture

Philippine startup equity funding by sector, FY2025, US$ millions (total about US$120M)

Test two: distribution borrowed from a corporate

Corporate venture arms and conglomerate-linked investors have long been the backbone of Philippine startup funding. The Asian Development Bank's 2023 ecosystem study identified them as the earliest and still a primary source of capital.¹⁰ What has changed is that their value now lies as much in customer access as in capital. In an archipelagic market where reaching customers is expensive, a telco's subscriber base or a bank's account holders can matter more than the cheque.

“One of the reasons startups stall is that they can't reach the customers that would prove the business.”

Jecky Pelaez, Partner, Kickstart Ventures¹

Test three: survival without the next round

With no late-stage round recorded in 2025, only a single late-stage healthcare deal in the first half of 2026, and no reliable domestic listing route for venture-backed companies, investors are underwriting companies that can become self-sustaining, not companies that depend on a growth round eighteen months later. Kickstart Ventures general partner Joan Yao has observed that capital is returning "selectively, increasingly to later-stage, higher-conviction opportunities."³ Her colleague Dan Siazon was more direct about the year ahead:

“The Philippine startup landscape in 2026 will reward discipline, not hype.”

Dan Siazon, Managing Partner and Co-founder, Kickstart Ventures¹¹

4. Five assumptions we think are wrong

Our reading of the evidence leads us to dispute five assumptions that recur in commentary on the Philippine ecosystem.

4.1 That a rising total means a recovering market

As shown above, the headline growth comes from one or two rounds layered over a shrinking base of transactions. Treating the total as the scoreboard rewards announcements rather than formation. An ecosystem in which seven companies raise money in six months is not producing enough new firms to feed its own future late-stage pipeline, whatever the dollar total says.

4.2 That we know how much capital the ecosystem is raising

We do not, with any precision. A 2024 report by the Gobi-Core Philippine Fund put Philippine startup funding that year at more than US$1 billion.¹² Kickstart and DealStreetAsia data for the same year imply a figure several times smaller, with US$191 million in the first half. Both may be internally consistent, because trackers differ on almost every boundary that matters: whether debt and private equity count as startup funding, whether a company is classified by headquarters or by holding-company domicile, and whether a round is dated by announcement or by close. Totals from different trackers should therefore never be compared directly. For founders and limited partners, this matters less than it seems. For policymakers trying to evaluate programs, it is a real handicap, because a target cannot be managed if it is measured three ways.

4.3 That fintech's dominance is a sign of strength

It is a sign of where moats exist, but it is also a concentration risk. A portfolio weighted 60 percent toward one regulated sector is exposed to a single regulator's licensing cycle and to a single credit cycle. Meanwhile, sectors where the Philippines has acute needs remain almost unfunded. Agritech raised about US$1 million in 2025, and green technology about US$200,000, in one of the world's most climate-exposed countries.³ The ADB study identified the same gap three years earlier, and its explanation still holds.

“Investors need to understand a sector before they feel comfortable.”

Paul Vandenberg, Economist, Asian Development Bank¹⁰

The problem, in other words, is not only a shortage of capital but a shortage of sector-specific investment knowledge. Money alone will not fix it.

4.4 That corporate venture capital is a substitute for independent venture capital

Corporate capital has kept the Philippine ecosystem alive through two difficult years, and we do not underrate it. But it is a different instrument. Corporate investors tend to favour companies that complement the parent, can be slower to follow on outside their strategic perimeter, and sometimes negotiate rights of first refusal or exclusivity that discourage other investors. The academic evidence is nuanced. Gompers and Lerner found that corporate venture investments perform about as well as independent ones when there is a clear strategic fit between parent and portfolio company, and worse when there is not.¹³ The implication is not that corporates should invest less, but that they should invest with more discipline about fit and less restrictive terms.

4.5 That public programs are filling the gap

The Innovative Startup Act (Republic Act 11337) created the legal basis for grants, venture funds and support programs, and agencies have acted on it. But the scale and speed are modest. A policy brief from the DOST's Philippine Council for Industry, Energy and Emerging Technology Research and Development reports that its Startup Grant Fund had supported 43 startups with cumulative funding of about PHP 226 million, or roughly PHP 5 million each. Some grantees took more than six months to clear local government and regulatory requirements, by which time, in the brief's words, "the startup's financial resources have already been exhausted." Of 37 grantees in one cohort, 26 were from Luzon.¹⁴

The international evidence on public venture programs is sobering. Harvard Business School's Josh Lerner, whose book Boulevard of Broken Dreams examines why many public efforts to boost entrepreneurship have failed, has argued that governments can play "a very positive role as a catalyst," but that "successful programs... have clear, well-defined investment processes" and let "the market provide direction."^15,16 Slow, document-heavy grant processes run directly against that advice.

5. The missing middle and the cost of thin experimentation

The deeper consequence of the current pattern is structural. Economists William Kerr, Ramana Nanda and Matthew Rhodes-Kropf describe venture capital as a process of staged experimentation: investors fund many small, cheap experiments and commit larger sums only to those that produce evidence of success.¹⁷ That model depends on a credible supply of follow-on capital. When the next round is uncertain, a rational investor runs fewer experiments and demands more proof before running each one.

This, in our view, is the best explanation for the Philippine data. The decline in deal count is not mainly a loss of investor interest. It is a rational response to the near-absence of local Series A and Series B capital. Companies that do succeed at seed stage face three exits from this gap: raising abroad and often moving their holding company to Singapore, selling early to a local corporate, or growing slowly from their own cash flow. Each choice is reasonable for the company. Collectively, they mean that much of the value created by Filipino founders is captured outside the country.

Lerner's observation that "entrepreneurship is a business in which there are increasing returns" makes the point sharper.¹⁵ Ecosystems compound. Each successful company produces experienced operators, angel investors and second-time founders. An ecosystem that funds seven companies a half-year does not compound. It slowly loses momentum.

6. Recommendations

For founders

• Sequence distribution before capital. Secure a signed commercial pilot or distribution agreement with a corporate partner before opening a priced round. In the current market it is the strongest evidence a founder can offer.
• Lead with contribution margin. Present unit economics before growth rates. Investors are underwriting survival, so show the path to self-sufficiency on the existing round.
• Make the moat explicit. If the business has no regulatory, data or distribution advantage, expect to be asked why a funded regional competitor cannot replicate it within a quarter, and prepare a credible answer.
• Plan the holding structure early, and deliberately. A Singapore holding company may ease fundraising, but the decision should rest on the capital plan, not on habit.

For corporates and family groups

• Treat the missing middle as an opportunity. With little competition at Series A, strategic minority positions can secure strong teams at reasonable valuations.
• Invest on strategic fit, and say so. Consistent with the Gompers and Lerner evidence, define in advance which capabilities of the parent the startup will use, and measure them.
• Avoid terms that deter co-investors. Broad rights of first refusal and exclusivity clauses protect the parent in the short term but make it harder for the startup to raise the next round from anyone else.
• Standardise the commercial pilot. A template pilot agreement with a defined decision date would remove months from the time it takes a startup to prove its business.

For investors and limited partners

• Build Series A syndicates across funds. No single local fund can carry the middle alone; pre-agreed co-investment arrangements among local and regional funds can.
• Develop sector expertise outside fintech. Agriculture, climate adaptation, health and logistics need investors who understand them. Partnering with operators and development institutions is a faster route than building that knowledge from scratch.
• Expand non-dilutive and hybrid instruments. Venture debt and revenue-based financing suit the self-sustaining companies the market is now selecting for.

For policymakers

• Adopt a single official measure. DTI, DICT and DOST, with the Philippine Statistics Authority, should publish one annual series of startup formation, funding and domicile, using a stated definition.
• Change the scoreboard. Track the number of companies that close a second institutional round and the share that remain domiciled in the Philippines, not only total capital raised.
• Match private capital rather than pick companies. In line with Lerner's principles, public money is best deployed through a fund-of-funds that co-invests alongside privately selected managers, with clear criteria and time limits.
• Set service standards for grants. Commit to decision and disbursement timelines, release funds in milestone-based tranches, and use the regional technology business incubators to widen access beyond Luzon.

7. Outlook: what to watch

Our base case is that full-year 2026 funding will finish broadly in line with 2025, in the range of US$110 million to US$150 million, with concentration remaining high and deal counts staying in single digits per half. This estimate assumes no further large round in the second half. One additional growth round would move the total above that range without changing the structure beneath it, which is precisely why the total is the wrong measure. Industry participants share the cautious view. Paulo Campos III of Kaya Founders expects "a selective but constructive funding environment, rather than a broad-based rebound."¹¹

There are reasons for measured optimism. Demand is strong, the talent base is deep, and adoption of artificial intelligence by Filipino workers and consumers is among the fastest in the region.⁸ Anthony Oundjian of Boston Consulting Group has noted that corporate investment in automation is still limited, but that the market is "at the cusp of a change there."⁶ If that change arrives, it will create demand for exactly the kind of business-to-business software and services startups that corporates are well placed to buy from and invest in.

Three indicators will tell us whether the market is broadening or merely producing occasional large rounds: the number of companies raising a second institutional round, the share of new funding outside fintech, and the number of venture-backed companies that remain domiciled in the Philippines. Until those move, the most accurate description of Philippine venture capital remains the one in our title: fewer bets, bigger cheques.

Notes and references

1. Context.ph, "Philippine startup funding doubles as deal activity falls," 15 October 2026, reporting Kickstart Ventures and DealStreetAsia, Southeast Asia Startup Funding Report: H1 2026.
2. Daily Tribune, "Southeast Asia startup funding rebounds, Philippines lags," 14 October 2026 (paraphrasing A. Haswidi, DealStreetAsia).
3. Kickstart Ventures and DealStreetAsia, Southeast Asia Startup Funding Report: Full Year 2025, as reported by BusinessWorld (11 February 2026), Context.ph (10 February 2026) and MEXC News.
4. Philstar, "Philippines startup funding reaches $86 million in H1," 18 September 2025; BusinessWorld, 7 January 2026.
5. Kickstart Ventures and DealStreetAsia, Southeast Asia Startup Funding Report: H1 2026, as reported by Daily Tribune and Manila Bulletin, October 2026.
6. Foxmont Capital Partners, Philippine Private Capital Report 2026, as reported by The Independent Investor, March 2026.
7. Context.ph, "Philippines needs capital surge to unlock growth," 23 March 2026.
8. Google, Temasek and Bain & Company, e-Conomy SEA 2025; Philippine figures as reported by BitPinas and Newsbytes.PH, November 2025.
9. E. M. Remolona, "Digital, sustainable, inclusive," speech on the 32nd anniversary of the Bangko Sentral ng Pilipinas, Manila, 3 July 2025 (BIS Central Bankers' Speeches).
10. Asian Development Bank, The Philippines Ecosystem for Technology Startups, Manila, May 2023; ADB news release, 26 May 2023.
11. BusinessWorld, "Philippine startups face tighter funding in 2026," 7 January 2026.
12. Newsbytes.PH, reporting the Gobi-Core Philippine Fund ecosystem report, 13 November 2024.
13. P. Gompers and J. Lerner, "The Determinants of Corporate Venture Capital Success: Organizational Structure, Incentives, and Complementarities," in R. Morck (ed.), Concentrated Corporate Ownership, University of Chicago Press, 2000.
14. DOST-PCIEERD Policy Coordination and Monitoring Division, Policy Brief on the Implementation of the Innovative Startup Act (fieldwork 2023).
15. S. Silverthorne, "Government's Positive Role in Kick-Starting Entrepreneurship," HBS Working Knowledge, 7 December 2009 (interview with J. Lerner).
16. J. Lerner, Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed—and What to Do About It, Princeton University Press, 2009.
17. W. R. Kerr, R. Nanda and M. Rhodes-Kropf, "Entrepreneurship as Experimentation," Journal of Economic Perspectives 28(3), 2014, pp. 25–48.
18. FinTech Global, "Salmon raises $100m to fuel Philippines expansion," 21 April 2026.
19. Context.ph, "Sprouts.ai secures $9 million to simplify B2B sales with AI," 15 July 2026.

Funding figures are disclosed equity rounds as tracked by the cited sources, exclude debt unless stated, and may be revised by the trackers in later editions. Company-announced totals may differ from tracked figures because of scope and timing. Derived figures, including Sprout's implied round size, shares, averages, period comparisons and the 2026 outlook range, are Bull Run Consulting calculations. Forward-looking statements reflect our judgement at the date of publication and are subject to change. This paper is for information only and does not constitute investment or legal advice.