Last week, the Philippines government, specifically the Department of Trade and Industry (DTI), announced a new USD 5M fund to support local startup establishment and expansion. The news is part of a continuing initiative that started with the country’s Innovative Startup Act. Although the guidelines are not yet final, the venture fund aims to provide equity financing to qualified, innovative startups with high-growth potential and supports product R&D, manufacturing, and sales & marketing initiatives.
The Senate introduced the Innovative Startup Act (RA1137) in 2017, but President Rodrigo Dueterte didn’t officially sign it into law until 2019. The bill aims to strengthen, promote, and develop an innovative and entrepreneurial ecosystem and culture in the Philippines. Three government agencies lead the program:
- The Department of Science and Technology (DOST)
- The Department of Information and Communications Technology (DICT)
- The Department of Trade and Industry (DTI), which serves as the inaugural chair of the steering committee
The three groups have worked together by aligning their respective programs for startups and implementing initiatives to pursue the law’s objectives.
A primary component of the bill was creating the Philippine Startup Development Program (PSDP), composed of various programs, benefits, and incentives for startups and startup enablers. This program provides incentives for “any person or registered entity in the Philippines that aims to develop an innovative product, process, or business model.” Along with these incentives, the bill provides access to capital funding, subsidized business registration, subsidies for training and R&D, startup visas, and specific tax breaks. More details on what the bill provides are here.
The new Startup Venture Fund was part of the original bill to support venture funding and access to capital alongside a startup grant fund that provides grants-in-aid for R&D, training, and expansion plans for entrepreneurs. The fund is a partnership between the DTI and the National Development Company (NDC) and will provide between USD 100K – 500K for each qualifying startup. Although modest compared to other venture funds in the country, such as the USD 180M ACTIVE Fund, the government initiatives show broad support for its entrepreneurial ecosystem.
Beyond this news, the DTI is also currently working to establish the Startup Business One-Stop Shop, an initiative to facilitate end-to-end registration of startups and serve as a portal for maintaining startup-related information. The DTI is also working on an ecosystem mapping project to provide a complete overview of the Philippine startup ecosystem that generates insights to help the government craft effective policies and programs. The World Bank recently released Covid-19 recovery projections for the region, predicting the Philippines output to remain below pre-pandemic levels until 2022. With initiatives such as this one and the recent “Make it Happen in the Philippines” campaign, the country can help its startup ecosystem and potentially speed up its recovery process.