2025 marked a cooler year for Philippine startup funding, with total capital raised falling 32 percent and deal volume down 54 percent year-on-year from 2024, Gobi Partners said Wednesday.
The fund said in its “Philippine Startup Ecosystem Report 2025: The Next Wave of Innovation” report that in response, founders have shifted focus towards profitability, operational discipline, and sustainable growth.
While tighter global liquidity contributed to the slowdown, the report also highlights governance lapses and corruption scandals as key factors eroding investor confidence.
It recommends policy “green lanes,” institutional safeguards, and targeted fiscal incentives for firms that adhere to strong sustainability and environmental, social, and governance (ESG) standards to rebuild trust and accelerate high-quality capital formation.
Despite the slowdown, Filipino founders continue to demonstrate resilience, according to the report.
Startups now contribute an estimated 3 percent to nominal gross domestic product (GDP) and have created close to 200,000 jobs nationwide.
Activity is expanding beyond Metro Manila, with growing clusters in Cebu, Davao, Iloilo, and Cagayan de Oro.
Because most ventures remain early-stage and private-investment-reliant, the report notes that public support and scale-up financing can significantly multiply impacts on national growth and employment.
According to the report, “The Next Wave of Innovation” traces three waves in the Philippines’ startup journey: the Early Builders (2010–2014), Resilient Builders navigating the post-pandemic cooldown, and the emerging “Intelligent Era,” defined by artificial intelligence (AI) adoption, automation, and intelligent data use across industries.
Sectors poised for transformation include Fintech (broader account ownership paves the way for digital cross-selling of
savings, micro-insurance, and credit); logistics & healthtech (AI-powered forecasting, diagnostics, and workflow tools enhance efficiency and access; creative industries (generative tools and data-driven distribution can expand reach and monetization; business process outsourcing (BPO) & knowledge services (as a major GDP driver, the industry is positioned for AI-augmented upskilling toward higher-value, knowledge-based services).
The transition calls for coordinated national investments in reskilling, talent pipelines, and policy alignment to preserve the country’s competitive edge in a rapidly
evolving digital economy.
The report also urges collective action among founders, investors, academia, and policymakers to strengthen the Philippines’ position in ASEAN’s technology economy.
It opined that with the right support, the country can take a leading role in AI and digital transformation.
“At Gobi, we view innovation as a force for inclusive growth across Asia,
“The Philippines has the talent, resilience, and creativity to shape the next chapter of Southeast Asia’s innovation story,” said Thomas G. Tsao, Co-Founder and Chairman of Gobi Partners.
Carlo Chen-Delantar, Partner and Head of ESG & Circular Economy at Gobi Partners (Gobi-Core Philippine Fund), added that this report is a call to action.
“The Philippines stands at a crossroads; the choices made today in policy, capital, and talent will define whether we lead or lag the region’s digital transformation,” he added.