Seven in 10 founders of startups find capital requirements as their biggest challenge in pursuing their ventures but this does not stop them from forging ahead.
Thanks to investors who bet on them.
Seven in 10 of respondent-investors in the 2020 Philippine Startup Survey by Isla Lipana & Co./PwC Philippines (PwC) plan to invest up to $5 million in Philippine startups in the next three years.
“This year, it is comforting that majority of the founders are scaling up. We are seeing that our founders want to do business, and stay in business,” said Alexander Cabrera, PwC Philippines chairman and senior partner.
The survey said fintech remains the most lucrative for startups, with 45 percent of investors who participated in the survey saying this sector will be successful in the next two years.
Other sectors seen to gain success are electronic commerce, medical and healthcare, enterprise services, real estate and household, transportation/automotive, logistics, online-to-offline commerce, travel, energy and education.
Investors are looking at these sectors for the next three years: fintech, medical and healthcare, education, logistics and enterprise services.
Thirty-eight percent of the investors are willing to pour in $1 million to $5 million investments in these sectors and 35 percent plan to invest less than $1 million.
However, 65 percent of the investors are planning to exit their investments in Philippine startups in the next three to five years with 55 percent of them citing “end of the investment horizon.”
The founding members are the top consideration of investors in putting in money in startups, with 71 percent of the respondents saying so.
This is evident when they decide to walk away from a possible investment.
Of those surveyed, 84 percent have backed out from a potential investment due to mismatch of personalities with the management team, 58 percent; weak management team, 46 percent; not getting enough market traction, 42 percent and high valuation expectations, lack of product validation and government issues, 39 percent each.
Nevertheless 78 percent are confident about the revenue of Phillippine startups over the next two years.
