Reviewing the FinTech Investment Landscape of the Philippines

Over the next few weeks, MEDICI brings you a series of articles, exploring FinTech in the ASEAN region. These articles, each focused on a different ASEAN country, provide comprehensive insights into the FinTech investment landscape in the region.

ASEAN in Figures

ASEAN (the Association of Southeast Asian Nations) is the third-largest region in Asia. It is home to more than 630 million people with one-fourth of the population living in urban areas. ASEAN has an annual growth rate of 4.7% and has USD 119.97 billion in FDIs; it is also one of the fastest-growing regions as well as the seventh-largest economy globally.

Its population is young and educated with a literacy rate of over 80%, phone-savvy with more than 0.5 phones per person, and enjoys a low-to-mid unemployment rate of 0.5–6.9%. ASEAN members also have an average to a high life expectancy of 69–82.7 years, and a gender parity of 49.9% males to 50.1% females.

Until now, we’ve taken a close look at the FinTech landscapes of ASEAN countries including Thailand, Singapore, Vietnam, and Indonesia. In this article, we examine another country in the region, from a FinTech investment perspective – the Philippines.

The Philippines in Figures

The Philippines’ population passed 100 million in 2014 with about 44% living in urban areas. With one phone per person and 40% of the population connected to the internet, the country shows high connectivity penetration. Adult literacy is also high at >95%. These growth drivers have set up a favorable environment in the country.

However, the unemployment rate is high at 6.5% with life expectancy is relatively low at 70.4 years. In terms of ease of doing business, if foreign ownership is allowed at the height of 100% and corporate tax at 30%, the country ranks at number 99 globally.

Macroeconomic Overview

The economic growth was moderated to 5.9% in 2015 amid weak external demand and damage to agriculture inflicted by typhoons & drought from El Nino. Besides, robust growth in overseas Filipino remittances continued to provide support to the country’s economy. Growth in private consumption, which accounts for nearly 70% of GDP, accelerated to 6.2% and made the most significant contribution to the overall increase.

According to the IMF, GDP went up by 5.8% in 2016 and by 6.2% in 2017, underpinned by growth in domestic demand and election-related spending. The country is forecasted to become a $1-trillion-dollar (USD) economy by 2030.

The Philippines Financial Sector: A Snapshot


Further growth is expected for the industry. The UITF regulator – Bangko Sentral ng Pilipinas (BSP) – hopes the Philippines’ macroeconomic position, including its strong economic growth, stable inflation, and sound external liquidity, to instill confidence in local financial markets and drive the expansion of the finance sector. From 2012 to 2016, the total assets of UITFs and MMFs have seen CAGRs of 14% and 20% respectively.

A second significant trend is the increasing prevalence of online fund distribution platforms. Although there were only two third-party online fund distributors in the market after 2016, two more firms are awaiting regulatory approval. The increased number of firms could drive down front-end fees for investors and boost competition.

A third trend is the expansion of the feeder fund market. Regulatory reforms will soon open the feeder fund market to mutual fund houses. Currently, only trust companies are allowed to offer feeder funds.


Fund managers need to provide better consumer protection and education for investments. According to BSP, fund managers need to provide better disclosures and more financial education to ensure that investors are aware of the risks associated with specific investment strategies. Many investors are unprepared for market fluctuations and need to be better informed about financial market volatility.

In parallel, mutual funds have reduced in the past four years. Net AUM growth peaked at 41.5% YoY during 2013 and declined to 7.8% YoY during 2016.

Another challenge is the high ETFs costs which have impeded their growth. Asset managers have cited high stamp duty charges, excessive setup costs, and low investor demand as crucial challenges. The current tax and regulatory structures are not conducive to ETF growth, and issuers are postponing further launch plans until reforms are announced.


High internet use among millennials offers opportunities. Millennials make up approximately 25% of the Philippines’ population of 103 million. Research from the Pew Research Center shows that 58% of Filipino millennials use the Internet for a variety of activities, including financial literacy. Opportunities exist for fund companies which enhance their social media presence and optimize their digital capabilities to reach millennials.

The Philippines Social Security System (SSS) represents a new opportunity via some mandates. The SSS plans to outsource three national mandates totaling PHP 9 billion (USD $180.02 million) to domestic fund managers in the hope that it will help boost returns for its Investment Reserve Fund – this may be extended to foreign fund managers in the future.

The New Personal Equity Retirement Accounts (PERA) scheme represents another opportunity which could generate more demand for retirement savings products. The new scheme was launched in December 2016.

Regulatory Developments

The collective investment schemes (CIS) are likely to come under one regulatory system. Two bills have been submitted by the Philippines’ legislators advocating for a common tax and regulatory framework for all CIS’. The changes could offer more investment options for middle-to-low-income investors and facilitate greater investor protection as well as higher standards of governance.

The SEC plans to remove the PHP 5,000 (USD $100) minimum threshold for mutual fund purchases to encourage greater investor participation in the market. Fund companies can impose a minimum if desired.

The regulations for feeder funds are under review, allowing trust companies which issue UITFs to offer a broader range of feeder funds. The changes will enable UITFs to invest in derivatives and facilitate the growth of feeder funds.

Key Themes of the Philippines’ Banking Sector

The Philippines’ banking sector is underpenetrated with a low credit-to-GDP ratio (49%), despite experiencing a rapid credit expansion (CAGR 2007–2015: 15%) and strong macroeconomic fundamentals. President Benigno Aquino III removed restrictions on foreign ownership in September 2014, allowing foreign banks to own 100% of the domestic Filipino banks (universal and thrift bank). The BSP also reopened the foreign bank branch (FBB) mode of entry with foreign banks being allowed to establish up to five sub-branches.

The banking sector is also at the beginning of a credit cycle with potential growth supported by (i) well-capitalized banks (CAR16.0% as of 2015); (ii) low loan-to-deposit ratio (<70%); and (iii) rising deposits due to significant remittance inflow in the banks. Long-term prospects for loan demand in the Philippines remains strong underpinned by a robust and stable macro, as well as universally low penetration.

Furthermore, there is a nascent consumer loan sector (consumer loans are <20% of total loans), which is mostly driven by private consumption. Real estate loans account for 42% of the total consumer loans. As the household sector has significant scope to leverage, growth in consumer lending could be a major driver of loan growth over the next three to five years.

Besides, small commercial and thrift banks are facing stiff competition from large players. With the upcoming ASEAN economic integration, the continuing challenge for local banks is to develop sufficient scale to compete with the larger banks in the region. Intense competition, mounting regulatory compliance, and operating costs are putting pressure on the rural banks as a multitude of players enters the market.

FinTech Investors – The Philippines

As we’ve seen before with many ASEAN countries, both FinTech-focused VC funds and sector-agnostic funds investing in FinTech have invested regionally in the Philippines.

FinTech-Focused Funds

Accion is the only FinTech-focused investor among the 10 most active investors in the financial technology industry in the Philippines. 500 Startups, Kickstart Ventures, and Spiral Ventures dominate the market in several financial services deals. In terms of value, the largest fundraisings, such as MoneyMax with a USD $50-million ticket, see the involvement of large international financial institutions among which are IFC, SBI Holdings, and Goldman Sachs.\ \ Strong Local Investors

In terms of volumes, local players Kickstart Ventures, Future Now Ventures, IdeaSpace Foundation, and Hatchd Digital dominate with 75% of the cross-industry market share. In the FinTech sector, foreign companies 500 Startups and Spiral Ventures are strong contenders. Similar to Singapore and Indonesia, in terms of values, foreign investors are actively involved in the market with investments in MoneyMax (USD $50 million), PawnHero (USD $10 million), and Ayannah (USD $8 million) – mostly ran by global players such as Alibaba, IFC, Goldman Sachs, 500 Startups, Spiral Ventures, Golden Gate, Beenext, or Wavemaker.

Accelerators & Incubators

  • PASSPORT by A Space: PASSPORT is the first FinTech accelerator in the Philippines; the program lasts up to three months. It includes a series of interrelated events or ‘stopovers’ designed to educate, connect, and elevate those who are interested in the disruptive technology opportunities for financial services. These stopovers include a foundational boot camp, workshops, debates, and other events & activities – all designed to teach how to launch or grow a FinTech business or understand the impact of FinTech.

  • IdeaSpace: IdeaSpace is a six-month program offering up to $120k. It is supported by telcos, hospitals, F&B, and infrastructures conglomerates. It has more than $10 million available to run operations for the next five years.

  • Kickstart: Kickstart is wholly owned by Globe Telecom. Mentors provide funding over the six-month incubator period. Notable investments: Kalibrr.

  • Launchgarage: Launchgarage is the partnership of Kickstart and Proudcloud. It offers $30K to startups to launch their MVP into the market.

  • AccelerAsia

  • WeCube: WeCube is a French startup accelerator that has opened a working space in the financial district of Makati. It provides mentorship, coaching, and networking advisory on fundraising.

  • AIM: AIM was founded by the father of semiconductor and aims to become a hub for founders, angel investors, and venture capitalists from ASEAN.

  • QBO: QBO offers the JPMorgan incubation program throughout the year to high-potential – and especially underserved – startups and entrepreneurs. Startups can expect to receive dedicated mentorship, advanced professional services, curated workshops, exclusive exposure, and networking opportunities in the Philippines (as well as globally, to fostering the next generation. It provides investor pitches, workshops, co-working space, networking, and consulting events.

Associations & Angel Networks

  • ManilaAngels: Co-founded by Christian Besler, ManilaAngels is a Philippines-based private network of angel investors. The group was established in November 2013 to facilitate networking and investment in the high-tech space. According to the group, its members are innovators, business leaders, venture capitalists, and high-net-worth individuals with an eye for backing disruptive technologies. The group runs Angel Dinners in which it facilitates business opportunities between startups and angels. Entrepreneurs are invited to submit their best ideas in a two-to-three-minute video pitch. The four startups which receive the highest scores are then invited to pitch live in front of the angels. Investors should also commit to investing at least USD $25,000 and participate in at least one transaction per year.

  • 1000 Angels: 1000 Angels was launched on November 26, 2014. More than just an angel club, 1000 Angels Manila was formed to address the innovation funding gap between the Philippines’ tech startups and investors. 1000 Angels is also a startup ecosystem enabler. The founding team devotes their time mentoring and curating tech startups before introducing them to angel investors. It engages with the Philippines’ Ministry of Science & Technology and the Ministry of Trade & Industry under the Startup Ecosystem Development Program (SEDP) along with the Intellectual Property Office of the Philippines, and the Office of Senator Paolo Benigno Bam Aguirre Aquino IV (the proponent of the Philippines Startup Bill as well as the Asian Development Bank.) Target market: Traditional Filipino investors that are genuinely interested and supportive of tech startups.

Key Individuals

  • C. Bundik

  • G. McFall

  • Dat Pham

  • Anh Ngoc Vu

  • M. Truong

  • A. Everhart

  • H. A. Tran

AngelList’s Most Active Individuals

  • W. Bao Bean (SOSV)

  • M. Pui (PwC)

  • J. Chan (Neoteny Labs)

  • V. Lauria (Golden Gate Ventures)

  • J. L. C. Yau (Kyosei Ventures)

  • Z. Piester (Intrepid Ventures)

  • B. Jones (Angel Investor)

  • D. Chang (MindWorks Ventures)

  • T. Soichi (Genesia Ventures)

  • B. Chew (Strategia Ventures)

Top Investors

  • 500 Startups: 500 Startups is a Silicon Valley incubator, venture capital, and accelerator that specialize in seed investments in small-and-medium-sized startups, early-stage, post-seed, pre-Series A, and late-stage in FinTech. It prefers to invest $0.05–$1 million for a 5–10% equity stake. 500 Startups has raised more than half a billion USD from its limited partners (LPs). The company has participated in four FinTechs funding rounds in the Philippines, which raised over USD $21 million raised from investors. Close to half of 500 Startups investments in the Philippines have been made in the financial sector. 500 Startups has taken part of two of the largest fundraisings in the Philippines, being part of the PawnHero and Ayannah raise, which amounted to USD $9.7 million and USD $8.3 million respectively. The firm is most active FinTech investor locally and also one of the most active investors across industries.

  • Kickstart Ventures: Kickstart Ventures is the investment arm of Globe Telecom. It seeks to invest in incubation, startups, and seed/early-stage companies. Kickstart targets companies operating in digital technology including infra-light web and mobile software, applications & services, digital communications domain, the Internet of Things, financial services, health, education, IT security, and energy. The firm has participated in three FinTechs funding rounds in the Philippines, which have raised over USD $10 million from investors. About 15% of Kickstart Ventures investments have been made in the FinTech industry locally. The firm has co-invested with multiple investors in (USD $10 million) and Kalibrr (USD $9.6 million), which have been some of the largest funding rounds in the country. The fund firm is the second-most active FinTech investor and the most active investor across industries with more than 20 investments.

  • Spiral Ventures: Formerly known as IMJ Investment Partners Pte. Ltd., Spiral Ventures is the venture capital arm of Japanese firm IMJ Corporation. Spiral Ventures specializes in seed-stage, early-stage, and growth-stage investments. It primarily invests in mobile, internet and software companies in Southeast Asia, Japan, and the United States. The firm has participated in three FinTechs funding rounds in the Philippines, where the companies raised over USD $21 million. Half of Spiral Ventures’ local investments have been made in the financial sector. The fund has co-invested in some of the country’s largest funding rounds – PawnHero (USD $9.7million) & Ayannah (USD $8.3 million) in the financial services, and Kalibrr (USD $9.6million) – across industries. Spiral Ventures is one of the most active FinTech investors in the Philippines.

  • Accion: Founded more than 50 years ago in the US, Accion is a non-profit microfinance & FinTech impact investor. The firm has participated in two FinTechs funding rounds in the Philippines, which have raised over $13 million USD from investors: (USD $10 million) and First Circle (USD $2.5 million). Accion focuses on the finance sector and has only invested in FinTech companies in the Philippines.

  • BEENOS: Established in 1999 and previously known as, BEENOS is a Japanese e-commerce services provider. It has participated in two FinTechs funding rounds in the Philippines, where over USD $8 million was raised from investors: Ayannah (USD $8.3 million) and Paynamics Technologies. All BEENOS investments in the Philippines have been made in the FinTech industry.

  • Hatchd Digital: Established in 2010, Hatchd Digital is an incubator based in the Philippines which specializes in technology and service sector investments. The firm has participated in two FinTechs funding rounds in the Philippines, which have raised over USD $18 million from investors: PawnHero (USD $9.7 million) and Ayannah (USD $8.3 million). Hatchd Digital has allocated half of its local portfolio to the financial technology sector in the Philippines. The firm is the sixth-most-active investor in the country.

  • Wavemaker Partners: Singapore and Silicon Valley-based venture capital firm Wavemaker specializes in seed/early-stage, startup, bridge, and growth funding. The firm has a fund’s size of USD 180 million and invests up to USD $5 million per company with initial investment ranging between USD $0.1–$0.75 million with a follow-up of USD $1–$1.25 million. Wavemaker has participated in two FinTechs fundraising in the Philippines, where over USD $18 million was raised from investors: (USD $10 million) and Ayannah (USD $8.3 million). One-fourth of Wavemaker’s investments were made in the FinTech industry in the country. Wavemaker is one of the most active investors across sectors in the Philippines.