Manila Moves Up in 2024 Global Top 100 List of Emerging Startup Ecosystems
Story by Paul John Caña
Esquire Philippines
10 June 2024
Despite funding challenges and a general air of uncertainty, Manila’s startup ecosystem is bouncing back and is showing signs of recovery. The biggest proof is that the country’s capital has moved up in the annual ranking of the world’s Emerging Startup Ecosystems. From last year’s 91-100 spot, Manila is now at 81-90, driven mainly by growth in the fintech, e-commerce and gaming sectors.
Manila shares the 81-90 spot with global startup ecosystem heavy hitters like Las Vegas (Nevada, USA), Columbus (Ohio, USA), Kansai Region (Japan), Bucharest (Romania), San Bernardino and Santa Barbara (California, USA), Turin (Italy), Madison (Wisconsin, USA), and Ho Chi Minh City (Vietnam).
Manila placed higher in the list than cities like Rio De Janeiro (Brazil), Leipzig (Germany), Cape Town (South Africa), Valencia (Spain), and Adelaide (Australia).
According to the ecosystem focus page, the GSER estimates Manila’s total startup ecosystem value at $6.4 billion (about P375 billion) as of the second half of 2021 to 2023. This is up significantly from last year’s estimate of $3.5 billion but still far from the global average of $29.4 billion.
"In 2023, startups in the Philippines raised $960 million across 96 deals," the report said. "In mid-2023, Manila-based VC Kaya Founders closed $12 million in new funds, aiming to broaden their investment focus across pre-Seed to Series A stages."
Kaya Founders is one of the country’s most prominent investment firms focusing on early-stage startup companies. It has invested in many of the country’s top startups, including Etaily, GoRocky, Kindred, Kraver’s Canteen, Locad, Netbank, Plastic Credit Exchange, Paymongo, Peddlr, Toki, and many more.
By the numbers
Manila’s startup ecosystem value grew a hefty 72 percent between the periods of the second half of 2021 to 2023 versus the second half of 2019 to 2021. For comparison, the global average in ecosystem value growth was only 46 percent last year.
Total early-stage funding in the country (also from the second half of 2021 to 2023) was at $371 million (vs global average of $655 million), while total venture capital funding was at $1.1 billion between 2019 to 2023 (vs global average of $4.6 billion).
Manila also ranked in the GSER’s Top 15 of the Asia Ecosystem in Bang for Buck, Top 20 in Asia Ecosystem in Funding, and Top 30 in Asia Ecosystem in Performance.
"The Philippines is rising steadily in the Global Innovation Index, from #100 in 2014 to #56 in 2023, with plans to break into the top 50 by 2028 as outlined in the 2023-2028 Philippine Development Plan," the report said. "The Department of Trade and Industry (DTI), Department of Science and Technology, and Department of Information and Communications Technology lead efforts to support the country’s tech startup ecosystem. The National Innovation Council leads in developing the country’s innovation goals, priorities, and long-term national strategy."
Looking at the sub-sector strengths, the GSER highlighted the 38 percent growth, from 216 companies to 299, between 2021 to 2023 in fintech. Thanks to the Bangko Sentral ng Pilipinas Digital Payments Transformation Roadmap, digital retail payments soared from just one percent in 2013 to 50 percent of all transactions in 2023.
In e-commerce, the Philippines ranked fifth in the region for e-commerce traffic thanks largely to the extreme popularity of online marketplaces Shopee and Lazada, whose combined user bases is expected to balloon to 60.41 million by 2027.
And in gaming, the country is still the world’s undisputed leader in Web3 gaming interest for the third year in a row. The report made special mention of the Web3 Gaming Summit hosted by YGG last year and the launch of the country’s first esports course at Lyceum Philippines University.
In some ways, the GSER made many of the same points highlighted in the 2024 venture capital report released by Foxmont Capital Ventures and Boston Consulting Group. That report acknowledged the slowdown in funding for startups over the past year but still chose to shine a light on other bright spots in the startup ecosystem, including the country achieving a record number of deals, and how much the country is growing its share of regional capital.
Finally, the GSER put the spotlight on some major players in the country’s startup ecosystem, including the Gobi-Core Philippines Fund, Plug and Play Tech Center, Ideaspace, Launchgarage Innovation Hub, Brainsparks, and Startup QC.
"The Philippines invests in its startup ecosystem to create opportunities for a more prosperous and sustainable future, enhance quality of life, bolster global competitiveness, and foster innovation by addressing the critical challenges of our society and changing market needs," the report quoted DTI Usec. Rafaelita M. Aldaba of the agency’s Competitiveness and Innovation Group as saying.
Regional rankings
This year’s GSER report also includes a ranking of startup ecosystems by region. In Asia, Manila made it to the 21-25 ranking, tied with Bangkok (Thailand), Wuhan (China), Kansai Region (Japan), and Ho Chi Minh City (Vietnam).
Asia’s top startup ecosystem this year is Singapore followed by Beijing, Seoul, Tokyo, and Shanghai.
For other Southeast Asian cities, Jakarta was at 12th place, second only to Singapore. The Indonesian capital was followed by Kuala Lumpur at 16th, Manila, Bangkok and Ho Chi Minh, and Hanoi at 26-30.
State of global startups
The GSER recognized the global downturn in startup metrics, including VC funding, and exit deal value, saying that both fell below the 2019 levels but, as in the Foxmont-BGC VC report, chose to look at the bright spots.
"While global Series A funding fell 46 percent in 2023 compared to 2022, average Series A deal size increased in H2 2023 compared to H2 2022," the report said. "Q1 2024 shows signs of further improvement. The Cleantech and Generative AI (GenAI) sub-sectors offer another positive note, demonstrating that frontier innovation can still attract investor enthusiasm regardless of global funding conditions."
The top 3 in the global top 40 ecosystems retained their positions from last year, with Silicon Valley still at number one and New York and London tied at second place. Tel Aviv has moved up one rank and is now tied with Los Angeles at number 4, while Tokyo has entered the Top 10 for the first time, moving up to number 10 from number 15 last year.
The GSER 2024 is the 12th edition of the report that "provides insights into the world’s leading startup ecosystems, emerging trends, and key challenges facing entrepreneurs." Startup Genome says the report is based on an extensive study of more than 4 million companies across over 350 startup ecosystems.
