The Philippines’ startup ecosystem is gaining momentum as global investors turn their attention to the archipelago, drawn by a growing middle class and a thriving digital economy, according to the 2025 Philippine Venture Capital Report from Foxmont Capital Partners and Boston Consulting Group.
Released today at the BUILD Startup Festival in Manila, the report highlights a country in the midst of economic acceleration. With a GDP growth rate of 5.6% in 2024, the Philippines is outpacing many of its regional neighbors and demonstrating the resilience of its domestic economy.
“The Philippines has seen a marked reduction in poverty, and with the youngest population in the region — a median age of 25.7 years — we are witnessing a demographic ready to shape the future,” the report said.
A Digital-First Nation
The Philippines’ digital economy continues to expand at a rapid clip, driven by a deeply engaged online population. Filipinos now spend nearly nine hours a day on the internet, far above the global average, and social commerce is fueling much of this growth. The country is the fifth largest market on TikTok Shop globally, with sales exceeding USD 3.1 billion in 2024, marking a 116% increase from the year before.
This shift has helped the e-commerce sector grow sevenfold since 2019, contributing 4.5% to national GDP. Nearly 100 million Filipinos are now online, with internet penetration reaching 83.8%.
“The rising middle class is balancing affordability with a growing interest in premium goods,” said Sherisa Nuesa, Chairperson of Metro Retail Stores Group, Inc., one of the country’s largest retailers. “There’s a clear movement towards healthier, sustainable, and higher-quality products.”
Deal Activity Breaks Records
The startup scene in the Philippines saw record deal activity in 2024, according to the report. Investors backed a steady pipeline of early-stage companies while also showing increased appetite for larger growth-stage rounds. Notably, foreign direct investment surged, now accounting for more than half of all capital raised by startups, a sharp increase from 2023.
Fintech continues to be the leading sector, but cleantech and direct-to-consumer (D2C) startups are gaining traction, reflecting shifts in both consumer behavior and investor focus.
“The Philippines is primed to become Southeast Asia’s next hub for climate tech,” said Helen Wong, Managing Partner at AC Ventures, citing policy reforms, competition in the renewable energy market, and the country’s pressing need for climate resilience.
Still, gaps remain. Investments in the USD 10 million to USD 20 million range are relatively scarce, signaling an opportunity for investors willing to step into this under-served middle stage of financing.
Public Markets Seek Fresh Catalysts
While international capital is pouring into private ventures, public markets are still in need of catalysts. The Philippines recorded net foreign buying on its stock exchange for the first time in six years, yet average daily trading volumes have slipped. Market watchers say long-anticipated IPOs, such as that of fintech giant GCash, could help reignite enthusiasm.
“The next wave of IPOs will be key to sustaining the renewed interest from foreign investors,” the report noted.
Expanding Middle Class
At the center of the story is the rise of the Philippine middle class. From 2012 to 2023, the middle-income population grew by 13%, while poverty levels fell by nearly 40%. The shift has fueled broader changes in consumer patterns, with Filipinos spending more on health, education, and well-being.
The trend is playing out in both mass-market segments, where commoditized products remain popular, and premium sectors, where consumers are increasingly willing to pay more for quality and sustainability.
A Healthcare System Under Pressure
The report devotes significant attention to healthcare, an area facing growing strain. Despite progress in expanding coverage and improving key health indicators, the country suffers from infrastructure and workforce shortfalls. The Philippines has just 0.96 hospital beds per 1,000 people, far below global benchmarks.
The country also struggles to retain healthcare workers, particularly nurses, many of whom migrate abroad in search of higher wages. Nearly half of all registered nurses are not actively practicing in the country.
Demand for health services is growing fast. Preventive care and wellness spending increased across all income brackets in 2024. Yet only 40% of insured Filipinos believe their healthcare plans are sufficient to cover medical emergencies, the report found.
MSMEs Still Face Credit Barriers
Micro, small, and medium enterprises (MSMEs), which represent 99.6% of registered businesses and employ two-thirds of the workforce, remain underfunded. MSMEs receive just 4.1% of total bank loans, well below the 10% mandated by Philippine law and far behind regional peers.
Banks, citing perceived risks and collateral requirements, have long shied away from MSME lending. At the same time, many MSMEs lack the documentation or financial literacy to navigate formal credit systems. Fintech lenders such as First Circle and Salmon are stepping in to fill the gap with digital loan products tailored to smaller businesses.
A Market at a Crossroads
While the report highlights challenges — from healthcare gaps to limited credit access — it also points to a country on the brink of major economic change. Foreign investors are taking notice, with global capital now playing a larger role in shaping the next generation of Philippine startups.
As sectors like digital health, cleantech, and financial services continue to mature, the Philippines’ emerging middle class and vibrant entrepreneurial landscape are laying the groundwork for long-term growth.