1.
A 15-min guide by World Startup Report
Lead Author: Ron Hose
Updated: Sept 26, 2013!

2.
Our Mission
Document
Document our world’s startup ecosystems through a series
of reports detailing the local culture, trends, key players and
challenges. Share these reports for free to benefit everyone
in the global startup community.
Connect
Identify and empower local startup activists to become the
ambassadors of each ecosystem. Leverage this network of
ambassadors to help connect people to each other and to
the global startup community.

3.
OUR TEAM
AUTHOR
Ron HoseCris Sarmiento
UP Dilliman ‘14
CO-AUTHORS
CONTRIBUTORS
Dennis Negron
Stanford ‘14
Ralph Wunsch
MetroDeal
Beryl Li
SeedAsia
Bowei Gai
World Startup Report
Silicon Valley Investor and Entrepreneur, now
based in Southeast Asia.
Founding Partner @ Eric Schmidt’s Innovation
Endeavors, an early stage VC firm based in Palo
Alto and Tel Aviv.
Founder @ Tokbox, funded by Sequoia Capital and
acquired by Telefonica
Masters degree from Cornell University

4.
WHY
PHILIPPINES?
Fastest growing economy in Asia
Investment grade (2013 upgrades: S&P, JCRA, Fitch Ratings)
Low operating costs
English speaking, western minded, heavy social users
Large local market, minimal competition






5.
105.7 M Population 313.9 M
7.8 GDP Growth Rate 2.2% (2012 est.)
US$ 2614
(2012 est.)
GDP per capita US$ 49,601
(2012 est.)
23 Median age 37
76% M Population under
40
40%M
5% Consumer debt (of
GDP)
81%
25MM Population
<$1 a day
-
PHILIPPINES USAVISAVIS
BY THE NUMBERS
PHILIPPINES USA

6.
PHILIPPINES USA CHINA
MOBILE PHONES 106MM (114%) 328MM (104%) 1.15b (87%)
SMART PHONES 19MM (18%, 17th) 219MM (58%, 2nd) 354MM (29%, 1st)
SMART PHONE
GROWTH
34% 28% 31%
MOBILE INTERNET 3.4% 81% 21.8%
OPERATOR ARPU $5/ month (mostly prepaid) $46.50 $46.50
INTERNET USERS 30MM (29%) 244MM 516MM
E-COMMERCE
REVENUE
$1.15b $343b $110b
E-COMMERCE
MARKET SHARE
<1% 6% 2.5%
CREDIT CARD
PENETRATION
7%
WEB & MOBILE

7.
“Social networking is so
popular among Filipinos, the
country has been nicknamed
‘The Social Networking
Capital of the World.’
-Jon Russel, asiancorrespondent.com
LET’S TALK
SOCIAL

8.
FILIPINOS ARE
SUPER SOCIAL.
SOCIAL MEDIA
PENETRATION
93.9%
53.8%
Prior to Facebook, Filipinos sent the
most SMS msgs per capita in the
world.
FACEBOOK
83%
49%
PHILIPPINES
USA
AMONG TOTAL
INTERNET USERS
USERS

9.
BROWSING
1
2
3
4
5
TOP 5
WEBSITES
TOP 5
LOCAL SITES
Facebook and
YouTube are
ahead of
Google search!
1
2
3
4
5
(classifieds)
(daily deals)
(classifieds)
(news)
(news)
MOST VISITED WEBSITES

10.
STARTUPS IN
THE PHILIPPINES
“The majority of the population in Asia
has limited access to healthcare,
education, and commerce. With the
penetration of mobile devices and social
networks, this population is now
reachable, and hence, addressable.”
- Ron Hose

11.
PAST EXITS CURRENT MOVERS UP AND COMING
STARTUPS TO KNOW
Chikka (Telco acq.)
Airborne (Telco acq.)
Sulit (Naspers)
iRemit (IPO)
Netbooster (WPP)
PinoyAutoTrader
(Sulit/Naspers)
Rappler (Social News)
AyosDito (Classifieds)
Metrodeal (DailyDeals)
Lazada (Amazon Clone)
Zalora (Zappos Clone)
CashCashPinoy (DailyDeals)
Kalibrr (YC 2013)
TwitMusic (500 Startups)
AVA (HBS founders)
AYANNAH (HBS founders)
PayRoll Hero (SV investors)

12.
INCUBATORS SEED VENTURE
CAPITALIDEASPACE
(First Pacific)
LAUNCH GARAGE
UP
(CEBUINIT, ENTERPRISE)
KICKSTART
HATCHD
JOJO FLORES
(PLUG AND PLAY)
WINSTON DAMARILLO
BERYL LI / SEEDASIA
ICCP
NARRA VENTURES
Jeffrey Paine- Golden Gate Ventures (Ayannah), John Tan (PayRoll Hero),
Benjamin Joffe (Payroll Hero), Dan Martell - Clarity (Payroll Hero), Ryan
Homes - Hootsuite (Payroll Hero), Blumberg Capital (Lenndo), 500 Startups-
Dave McClure (Payroll Hero, TwitMusic), Paul Santos, Seimer Ventures
(Ayannah), MIH- South African Group (Sulit, Multiply), New Leaf Ventures
(Payroll Hero)
FOREIGN
INVESTMENTS
ANGELS, INCUBATORS, VCS
Seed funding is limited and anything beyond that is virtually non-existent.

13.
LOCAL MEDIA EVENTS
CONFERENCES MEETUPS
the bobbery
webgeek
angelhack
startupweekend
hack2hatch
rootcon
y4it
dcom
geeks on the beach
techtalks.ph
techmanila
juangreatleap
founder's drinks
MEDIA
&
EVENTS

14.
NATURE OF STARTUP
49%
3%
38%
3%
8%
New
Product
57%
Adapted
to local
market
30%
Clone
13%
INDUSTRY
PLATFORM
LOCATIONFOUNDERS
PROFILE
MANILA
CEBU
DAVAO
*Survey is based on a 37 startup responses from startup.ph group

15.
SOURCE OF FUNDING
AMOUNT RAISED
NUMBER OF ROUNDS
Loan
6%
Self-funding
61%
Equity
19%
Service
exchange
8%
Grant
6%
62%
16%
5%
8%
5%
3% 3%
NONE  67.5%
ONE  22%
TWO  2%
THREE  2%
FOUR & ABOVE  5%
FUNDING
FOUNDERS
PROFILE

16.
Filipino
65%
Foreigner
22%
Balik
Bayan,
Studied
Aborad
13%
Female
8%
Male
92%
22%
38%
24%
8% 8%
PROFILE
AGE
GENDER
Corporate
33%
Serial
Entrepreneur
24%
Worked for a
startup
24%
Academic
19%
FOUNDERS
BACKGROUND

17.
4G/LTE network and
proliferation of smart phones
are paving the road for m-
commerce.
STATE OF
E-COMMERCE
est.
$1.2b
e-commerce
est.
$230b retail market 95% of e-commerce is
airline travel bookings
40%ACCESS THE INTERNET
TO SHOP 64%PURCHASED ONLINE
IN PAST 3 MONTHS
1 eBay (ph)
2 Sulit (classifieds)
3 MetroDeal (daily deals)
4 Cebu Pacific (airline)
5 Ensogo (daily deals)
6 Amazon (US)
TOP SITES
Payments, Logistics, and
consumer trust are the biggest
obstacles to overcome.
 

18.
PAYMENTS
Total Credit Cards 7.36 Million (7%)
Total Debit Cards 35.36 Million (33.7%) – mostly out of Visa/Masterard network
Total Remittances $24.453 BN (4th largest remittance receiving market in the
world behind China, India and Mexico)
Cash Transactions by volume 2012 90%
Mobile payments (GCash/Smart Money) are niche products.
The majority of e-commerce payments are done with CC, followed by
Paypal and DragonPay.
Over-the-counter payments for online transactions are still very common
(collection at 7/11, pawn shops, bank, etc.).
With 7000+ islands and vast rural (un-addressed) areas, shipping
outside of the metro areas can be very challenging.
Most e-commerce sites operate their own shipping logistics, in addition
to relying on outside providers.
DragonPay - local payment aggregator for over-the-counter payment
and online banking payments
XEND – shipping logistics for geared for e-commerce
2GO, LBC, AIR21 – local shipping and courier services

19.
Defunct: FoodPanda (competition from entrenched players)
Property Lazada
(Amazon)
Zalora
(Zappos)
OfficeFab*
(Staples.com
)
PricePanda EasyTaxi
Employees
Alexa Rank 43 112 6555 3181 in planning
Launched Q2 2012 Q1 2012 ? Q1 2013 Q34 2013
Local
Competitors
none none none Save22,
PricePrice,
Priceme
grabTaxi
* OfficeFab recently announced they will cease their operation in Southeast Asia.

20.
Saturated Mature Semi-mature Infancy Non-existent
PHILIPPINES OPPORTUNITY MAP
DEALS
MetroDeal
CashCashPinoy
Ensogo Philippines
Beeconomic
(Groupon)
COMMUNICA-
TION
Facebook
Viber
whatsapp
WeChat
SEARCH
Google
Yahoo
LISTING
Sulit
AyosDito
OLX Philippines
BLOGGING
Blogspot
Wordpress
Tumblr
Blogger
LiveJournal
JOBS
Sulit
Jobstreet
Odesk
WorkAbroad.ph
JobsDB
SOCIAL NEWS
Rappler
Reddit
Istorya
Mashable
PinoyAko.info
COMMUNITY
Pinoy Exchange
Istorya.net
PinoyAko.info
Female Network
Tristan Café
LOCAL DISCOVERY
Spot.ph
Click the City
looloo
WhenInManila
MUSIC
Videokeman
Mp3 Skull
iMesh
SoundCloud
TwitMusic
GAMING
Y8
R2 Games
Game 321
IGN
Garena.ph
ONLINE RETAIL
Ebay Philippines
Zalora
Lazada
CashCashPinoy
DATING
Skout
DateInAsia
Filipino Cupid
SOCIAL DISCOVERY
Pinterest
We Heart It
Flipora
PAYMENT
Paypal
Asiapay
Dragonpay
SmartMoney
gCash
REAL ESTATE
Sulit
AyosDito
TICKETING
Ticketnet
Ticketworld
SMtickets
Sureseats
EVENTS
EventBrite
FINANCE
Lenddo
NETWORKING
LinkedIn
RENTAL
Sulit
AyosDito
DINING
MunchPunch
looloo
TRAVEL
TripAdvisor
Agoda
AUTO
Sulit
AyosDito
PinoyAutoTrader
TRANSPORTA-
TION
GrabTaxi
tripid.ph
EDUCATION MICROWORK SUBSCRIPTION
RETAIL
Saturated Mature Semi-mature Infancy Non-existent
A map of Philippines’ current market leaders in 28 commodity internet business models

21.
BAMBIKES
are light, sturdy bicycle
frames made out of bamboo
LOCAL
INNOVATIONS
SMART TXTBKS
uses inactive sim cards to
deliver electronic textbooks
to students readable on any
feature phone
LITER OF LIGHT
uses a plastic bottle, water
and glue to light up homes
without using electricity.
APPTIVATE
lets iPhone users buy iOS
apps without a credit card
“Innovation for SEA will
come from local
entrepreneurs - those who’ve
gotten their feet dirty riding a
habal-habal are best
equipped to address the
needs of the 99%”
- Ron Hose

22.
DOING BUSINESS
IN THE PHILIPPINES
“While the Philippines continues to
improve its macroeconomic
environment and sets pace-setting
growth in gross domestic product, it lags
in the implementation of regulatory
reforms that [make conducting business
easier].”
Doing Business 2013 Report
World Bank

23.
Government
Incentives
PEZA – 100% corporate tax holiday for
the first 4-6 years, tax and duty free
importation of equipment and parts, VAT
exemption of local purchases,
withholding tax exemption
Government
Restrictions
60% local ownership and board control
are required for certain industries (real-
estate, banking, press, etc.)
Legal Framework Largely based on the US legal system.
Contracts are generally written in
English.
Internet
Connectivity
Works, but can be unreliable.
Corruption Rank 105 of 176 globally
Burn Rate Parity* 8 months
Number of Days to
Incorporate
36 Days
BUSINESS
ECOSYSTEM
& POLICIES

* How long does $100k last (2 founders, 2
engineers, 2 general employees)

24.
ELECTRICITY
Most expensive power in Asia at $.23 per Kilowatt hour. Blackouts are periodic
and usually isolated.
WATER
92% of population has access to improved water sources. Sewage and sanitation
are still a challenge.
ROADS
Still being built. Mainly owned by private entities.
INTERNET
Fixed line & mobile internet are widely available but connectivity is spotty. One
of the first in SEA to deploy LTE.
HEALTHCARE
Public hospitals carry approximately 5 hospital beds per 10,000 people (global
average is 30).
INFRASTRUCTURE

25.
Top schools to hire from: Ateneo, La Salle, UP Diliman,
UST
Fresh graduates require substantial on-the-job training.
Filipinos are creative, but work culture does not
always provide an outlet for creativity.
Brain Drain - Engineers, nurses, etc. are often lured for
higher paying jobs abroad once trained.
Labor laws provide for 6 months probationary
period, after that it’s hard to let go of employees.
EDUCATION
“Top-class talent is
not always hard to
find, and not
everyone is built for
this type of culture -
but when you find
them, they'll do
wonders.”
-Timothy Go , Juan Store
AND TALENT

26.
LABOR
Philippines USA
Entry Engineer US$ 700-1200
US$ 4300-9600
Senior Engineer US$ 1400-2800
Doctor US$ 600-1000 US$ 4500-18200
Teacher US$ 430-500 US$ 2500-5900
Call Center
Employee
US$ 300-700 US$ 2500-3200
Secretary US$ 250-500 US$ 2000-3900
income per month
COSTS

27.
QUALITY HOUSING
- Fort Bonifacio and Makati offer western standard living and
amenities. Typical 1BR in skyrise/doorman building starts at
$700/month.
- Hiring household staff is very common and affordable (live-in maid
or nanny: $150/month).
FOOD
- Food options are abundant – from major international chains to fine
dining.
TRAVEL & TRANSPORTATION
- Traffic jams are common in major roads.
- Cost of owning a Car + Driver = $400/month
LEISURE
- 7000 islands to explore – from partying on Boracay to relaxing in
Palawan and diving in Cebu – all within an hour flight range. Local
flights are inexpensive.
HEALTHCARE
- Healthcare is inexpensive ($10 consultation at a private clinic).
- Private hospitals are on a par with US standards.
OF LIFE

28.
PHILIPPINE’S BIGGEST EXPORT IS ... LABOR!
o More than 2MM Filipinos work abroad.
o $21.3b total remittances in 2012, constituting 30% of national export -
3rd largest destination in the world
o BPOs - $11b industry (4% of GDP) employing 640k Filipinos
o World’s largest exporter of nurses and second largest exporter of
doctors.
CASH FLOW ECONOMY
o Earn today, spend today - many Filipinos don't save or have bank
accounts.
o “Tingi culture” from toothpaste to mobile load - Filipinos prefer to
purchase in single serve packets (sachets)
o Small stores typically extend micro credit to customers (“Gives”)
MALL CULTURE IN THE BIG CITIES
o Three of Asia’s 10 biggest shopping malls are in the Philippines.
o Filipinos frequent malls to socialize, cool down in the A/C, use free
WIFI, and sometimes shop.
PHILIPPINES SURPRISES

29.
BUSINESS IS RELATIONSHIP DRIVEN
o The majority of big businesses is family owned.
o Inter-family relationships often span 2-3 generations.
UNIQUE CULTURE
o “Latin Feel” - Spanish colony for 333 years, cultural influence is
everywhere.
o Only formal US colony in SEA – Education and legal system are
modeled after the US. (NBA, Starbucks, and other American
brands are huge).
o English is widely spoken as first or second language.
o Only Catholic country in Asia
PHILIPPINES SURPRISES

30.
Ecosystem Ratings

31.
TOURISM RESOURCES ABOUND, BUT STILL RELATIVELY
UNDEVELOPED
o Some of the nicest islands (7107) and beaches in the world,
world class diving, surfing, kite-surfing
o Very little information on where to go!
FAMILY-ORIENTED CULTURE
o Children live home until married
o Extended family - grandparents to grandchildren live under the
same roof
PHILIPPINES SURPRISES

32.
advice for
ENTREPRENEURS
Get to know the local culture, environment and players first. The
Philippines has a lot of Western elements and South East Asian
influences, though as an archipelago - it is quite diverse within
itself & carries distinct culture.
Anticipate that to get things done the way you want them, it will
take a little longer here.
Very few funding options, especially post seed stage - plan
accordingly!
Find a local you trust to help you, or ask the local community.
Everyone here is very ready to help!

33.
Find local partners who can work closely with founders.
Late stage funding and liquidity are scarce. Focus on
investments that can generate cash early.
Not enough quality deals for setting local presence.
If you indicate any form of interest in the local market, the good
deals will find a way to come to you.
advice for
INVESTORS

34.
CONCLUSION
The Philippine Startup ecosystem is still
in its infancy – funding is scarce, experienced
talent is hard to find, payment, delivery and
internet infrastructure is poor.
But for all those challenges, opportunities are
abound – the local market is big and competition
is still very low.
Widely spoken English and a super-friendly culture
makes the Philippines a great first base for
startups aspiring to tackle Southeast Asia.
- Ron Hose, August 2013

35.
THANK YOU!
QUESTIONS?
Ron Hose
@ronhose
www.ronhose.com

36.
Special thanks to:
Dave McClure
Brad Feld
Want to be a World Startup Report sponsor? Email us: hello@worldstartupreport.com
Christian Besler, Tony Pio de Roda, Jojo Flores, Stephen Jagger, Frederic Levy, Minette
Navarrette, Paul Pajo, Runar Petursson, Diego Jose Ramos, Paul Rivera, Angelo
Romasanta, Paco Sandejas, Dan Siazon, Andrew Syling, Earl Valencia, Jay Yao

37.
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