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1、Table of Contents01.Investment Landscape102.Philippine 2024 Deal Activity603.The Rise of the Philippine Middle Class904.Reimagining Healthcare 1305.Enabling Small Businesses 2006.Unlocking Philippine Energy2707.Cultivating a Strong Agricultural Sector36Philippine Venture Capital Report 2025 1Investm

2、ent Landscape01With a 5.6%GDP growth rate,the Philippines is expanding faster than most Asian peers,reflecting a resilient economy and strong domestic demand.While the Philippines continues to have the lowest median age in the region,across Asia,ages have begun to rise.The Philippines has seen a sig

3、nificant reduction in poverty.In 2012,22.3%of the population lived below the poverty line,but that number has since dropped to 13.7%.Despite peaking in 2020 during COVID-19,unemployment and underemployment rates have significantly decreased,reaching lower points than pre-pandemic levels.GDP GROWTHPO

4、PULATIONMEDIAN AGESource:Philippine Statistics Authority,Government agencies,Press releases Source:World BankSource:World EconomicsHong KongGlobalSouth KoreaTaiwanSingaporeThailandChinaVietnamMalaysiaIndonesiaPhilippines46.830.545.144.235.740.139.632.930.530.125.7VietnamCambodiaPhilippinesSingaporeT

5、hailand7.1%Indonesia 5.0%China5.0%5.8%5.6%Malaysia5.1%4.0%2.5%201820192020202120222023 2024108.6M1 10.4M1 12.3M1 13.9M1 15.6M 1 17.3M1 19.1M+1.53%POVERTY REDUCTIONUNEMPLOYMENT&UNDEREMPLOYMENT RATESSource:Philippine Statistics Authority,Foxmont analysis Source:Philippine Statistics Authority201946810

6、%12141620202021202220232024Unemployment RateUnderemployment Rate22.3%13.7%20122023Philippine Venture Capital Report 2025 2Digital EconomyINFLATION RATESSource:e-Conomy SEA Report,Government websites,Press releases PhilippinesIndonesiaVietnam-40.0%Change-37.8%Change9.1%Change6.0%3.7%3.3%3.6%2.3%3.6%2

7、023202420%19%16%16%13%13%INCREASE OF GMV OF DIGITAL ECONOMYSource:e-Conomy SEA ReportPhilippinesThailandMalaysiaVietnamIndonesiaSingapore2023 vs.2024NUMBER OF INTERNET USERS AND INTERNET PENETRATION RATESSource:Data Reportal,World Bank 202073.9M76M85.1M87.0M99.8M202120222023202465.8%66.7%73.6%74.1%8

8、3.8%Philippine Venture Capital Report 2025 3The Philippines continues to surpass the global average of time spent using the internet and social media.The Philippines is the fifth largest market on TikTok Shop,with around USD 3.1B in GMV and 1 16%year on year growth.11.Tech in Asia27.5%GlobalaverageP

9、hilippinesTIKTOK ADVERTISING:ADULT REACH RATESource:Data Reportal Source:Data Reportal DAILY TIME SPENT USING THE INTERNETDAILY TIME SPENT USING SOCIAL MEDIA80.1%6hours38minutes8hours52minutes2hours21minutes3hours32minutesGlobal averagePhilippinesaged 16+potential reach of TikTok ads amongst users 1

10、8+compared with overall population aged 18+aged 16+VALUE OF THE E-COMMERCE MARKETSource:e-Conomy SEA Report,International Monetary Fund2019202420192024201920243210.8%4.5%38%67.7%7.0X5.6X1.8Xcontribution to GDPcontribution to GMV of digital economyvalue in USD BUSE OF DIGITAL HEALTH AND FITNESS SERVI

11、CESSource:Data Reportal BrazilVietnamWorldPhilippinesIndonesia31.0%29.0%23.3%22.1%20.4%internet users aged 16+who use a health or fitness website or mobile app each monthPhilippine Venture Capital Report 2025 4Digital FinanceSHARE OF DIGITAL PAYMENTS IN THE PHILIPPINESSource:Bangko Sentral ng Pilipi

12、nas2018by valueby volume2019202020212022202320.0%24.0%26.8%44.1%40.1%55.3%10.0%14.0%20.1%30.3%42.1%52.8%Source:e-Conomy SEA ReportSource:GCash,Press releases NUMBER OF GCASH USERS20222B+62%+19%20232024DIGITAL LOAN BOOK BALANCE%of total populationTotal number of GCash users in millions201920202021202

13、220232024203040506070802033557686941930506775792030405060708090Total number of GCash users in millions%of total population(up to)REGULAR USE OF ONLINE FINANCIAL SERVICESSource:Data Reportal 25.2%Vietnam28.2%Indonesia37.8%Worldwide91.3%Philippinesinternet users aged 16+who use a banking,investment,or

14、 insurance website or app each month Philippine Venture Capital Report 2025 5In November 2024,S&P Global Ratings raised the Philippines credit rating outlook to“positive”from“stable”on the back of the countrys fiscal reforms,improved infrastructure,and policy environment.This puts the nation closer

15、to its goal of an A rating.CREDIT SCORENPL RATIOSource:Trading EconomicsSource:Bangko Sentral ng Pilipinas 2009 2010201 1201220132014201520162017201820192024201920212024BB-B+BBBB+BBB-BBBBBB+A-S&P RatingMoodys Rating4.5%4.4%2.2%November 2024S&P changes outlook to“positive”meaning upgrade to A rating

16、is possible in the next 24 months.Over the past decade,traders have become younger and more gender-balanced,with a growing number of DEMOGRAPHIC OF PUBLIC MARKET TRADERSSource:Philippine Stock Exchange Total accounts in millionsOfflineOnlineOffline380.3K1.5MOnlineFemaleAged 18-29Income PHP 500K/annu

17、m(USD 8,620)42.1%49.4%1 1.9%19.5%37.3%70.9%0.61.978%22%20%80%20132023While the NPL ratio has not returned to pre-pandemic levels,it is beginning to decline since its peak in July and August of 2021.trades happening online and increased participation from lower-income groups.Philippine Venture Capita

18、l Report 2025 6Philippine 2024Deal Activity02YEARLY FUNDS RAISEDYEARLY DEAL VOLUMESource:Pitchbook,Crunchbase,Preqin,Press releases,Foxmont analysis201820212022202320241.030.441.1 10.961.12Source:Pitchbook,Crunchbase,Preqin,Press releases,Foxmont analysis 201820212022202320244892838896in USD BDEALS

19、BY INVESTMENT VALUEQUARTER ON QUARTER DEAL VOLUME50M0%5%10%15%20%25%30%35%20242023Source:Pitchbook,Crunchbase,Preqin,Press releases,Foxmont analysis Deal size in USD05101520253035Q1Q2Q3Q4number of deals2024 marked a record-breaking year for deal flow in the Philippines,reflecting the continued matur

20、ation of the countrys startup ecosystem.While 2023 saw an increase in smaller-ticket deals that drove overall deal volume,2024 had a larger share of growth-stage investments alongside steady deal flow across all quarters.Early-stage deals remained strong,showcasing a promising pipeline of fresh star

21、tups,but later-stage investments also gained traction as investor confidence deepened.While fewer players were active in the USD 10M to USD 20M range,appetite surged for larger tickets beyond that.The relative lack of investors in this range could be an opportunity for investors wanting to position

22、themselves as key stepping stones to later stage rounds.Philippine Venture Capital Report 2025 7Source:Pitchbook,Crunchbase,Preqin,Press releases,Foxmont analysisDEALS BY SECTORFintechCleantechLogistechD2CProp TechEd TechHR TechF&B TechInsurtechMedia&EntertainementEcommerceAIB2B SaasAgritechHealth T

23、echRetailUp vs 2023Down vs 2023Fintech remained the most active sector for deals in 2024,while e-commerce and B2B SaaS,both among the top-funded sectors last year,saw a decline.Meanwhile,direct-to-consumer(D2C)and cleantech emerged as fast-growing sectors,attracting increased investor interest.Banki

24、ng and finance play foundational roles for the Philippines in its economic development by lowering the cost of credit,increasing the velocity of money,and reducing the frictional cost of transactions.In a sense,fintech is almost“existential”for the Philippines now,given its stage of growth.Aaron Foo

25、,Chief Product Officer-Tyme GroupThe Philippines climate tech startup scene is rapidly gaining momentum,offering a prime opportunity for investors in sustainable innovation.Its urgent need for climate resilience drives rapid adoption,while supportive policies and a privatized electricity market acce

26、lerate competition and renewables.We believe the Philippines is positioned to be a climate tech hotspot in Southeast Asia.Helen Wong,Managing Partner-AC VenturesThere is growing maturity amongst the clean-tech venture space,investors and entrepreneurs alike.This new generation of climate and sustain

27、ability start-ups have a much stronger collective focus around tackling real-world problems,and creating businesses with robust unit economics.Guillem Segarra,Principal-Wavemaker ImpactClean technology is traditionally a hardware business,but we are seeing software-driven optimization opportunities

28、in established industries like commercial solar,energy efficiency,and energy trading.For the Philippine clean technology sector to broaden further,investors must be willing to take on early-stage risk in new verticals like electrification of commercial transport,supply chain digitization,among other

29、s.Coy Navarro,Principal Investment Associate-ADB VenturesPhilippine Venture Capital Report 2025 8In an exciting development,international private market investor interest in the Philippines has surged,with the share of funds raised through foreign investors increasing by 45%over the past year.While

30、mixed deals,those involving both local and foreign investors,dominated in 2023,foreign direct investments(FDI)now lead,signaling that startups are not only attracting international attention but also securing ticket sizes large enough to appeal to global investors.BREAKDOWN OF INVESTOR MIX 202120222

31、02320245%7%13%19%Source:GPCA(excl.secondaries,PIPEs,and IT infrastructure)2024202352.5%23.8%23.8%40.6%23.2%36.2%FDILocalMixedPHILIPPINE SHARE OF VENTURE CAPITALFUNDS RAISED AMONGST SEA COUNTRIES PUBLIC MARKET ACTIVITYnet foreign buying and average daily trading volume in USD MSource:Salisbury Securi

32、ties,Foxmont analysis Net foreign buying/(selling)Average daily turnover volume2019202020212022202320242018-2,5911411481831341 1 1103136-275-56-1,249-976289-1,159This growing interest from international investors extends beyond venture capital,spilling into the public markets as well.For the first t

33、ime in six years,foreigners were net buyers in the Philippine public market,marking a positive shift and signaling renewed investor confidence in the countrys economy.However,despite this encouraging trend,average daily trading volumes have once again declined,highlighting the need for fresh IPOs to

34、 spark market activity and attract further investment.Companies like GCash,which has long been preparing for an IPO,could play a pivotal role in generating excitement and driving trading momentum,helping to sustain this upward trajectory in investor engagement.The increase in retail activity should

35、also help.Philippine Venture Capital Report 2025 9The Rise of the Philippine Middle Class 03The middle class is an emerging force of consumers that fuels sustainable economic growth of a country.Serving as the cornerstone of many developed countries,the middle class amplifies human capital,consumpti

36、on,innovation,and the growth of various sectors across Although still a lower-middle income country where the low income social class makes up 37%of the population,the Philippines has experienced significant growth in its middle class over the last decade.This highlights a positive shift of Filipino

37、s moving out of poverty and advancing steadily toward the middle class.the Philippines.The rise of the Philippine middle class is reshaping economic and social landscapes,presenting transformative opportunities across healthcare,financial services,agriculture,and energy sectors.The combined middle-i

38、ncome groups grew from 42.0%of the population in 2012 to 47.5%in 2023,an increase of 13%despite a 20%rise in the total population during the same period.1 At the same time,the most significant progress has been seen in poverty reduction,where the Philippines has experienced a drop of 39%in that soci

39、al class over the last decade.2Source:Philippine Statistics Authority,Foxmont analysis PHILIPPINE SOCIO-ECONOMIC BREAKDOWN22%33%25%12%201220235%2%1%14%37%31%12%4%1%0%+13%-39%RichHigh incomeUpper middle classMiddle classLower middle classLow incomePoorAVERAGE PHILIPPINE POPULATION SAVINGS RATIOSource

40、:Philippine Statistics Authority,Foxmont analysis 16%2003201220182021202315%18%24%26%27%20091.World Bank,Philippine Statistics Authority,Foxmont analysis2.Philippine Statistics Authority,Foxmont analysisPhilippine Venture Capital Report 2025 10Source:Philippine Statistics Authority,Foxmont analysisS

41、ource:Philippine Statistics Authority,Foxmont analysis Source:Philippine Statistics Authority,Foxmont analysisSAVINGS RATIOSAVINGS INCREASECHANGE IN GINI-29%-6%1.4X5.5X18%36%20232003 vs.20232003 vs.2023Income and expenditure trends reveal a growing capacity for discretionary spending.As average fami

42、ly incomes rise faster than expenses,saving rates have nearly doubled over the last two decades.This suggests that the average Filipino can cover their basic needs while setting aside money for the future.This trend is evident across the Philippines,with Gini coefficientsa measure of income inequali

43、tydeclining by an average of 15%across all regions over the last two decades,underscoring the middle classs role in improving economic equity.However,the impact varies by region:savings ratios in the Visayas region have increased fivefold,while southern areas have seen only marginal gains.Philippine

44、 Venture Capital Report 2025 1 12012320230.511.531.432.265.590.952.913.579.371.84Source:Philippine Statistics Authority,Foxmont analysis EVOLUTION OF FILIPINO SPENDINGin PHP MSELF-ACTUALIZATIONESTEEMSAFETY NEEDSPHYSIOLOGICAL NEEDSLOVE AND BELONGINGConsumer behavior is evolving in response to this fi

45、nancial shift.A recent study by Boston Consulting Group(BCG)in the Philippines uncovers a noticeable shift towards commoditization,with consumers opting for affordable yet reliable brands for their necessities.With the increased availability of mass-market alternatives,Filipinos are given the option

46、 to choose more affordable brands without compromising on basic needs.Interestingly,other studies reveal a dual trend emerging:the middle class is embracing premiumization,showing a growing willingness to pay more for products and services that offer superior quality or a better experience.According

47、 to The Asia Food Challenge report by Pricewaterhouse Coopers(PwC),Temasek,and Rabobank,65%of the worlds middle class population will reside in Asia by 2030,driving greater demand for food supply chains to deliver highly nutritious,fresh,and safe produce with convenience and qualityneeds that consum

48、ers are willing to pay a premium for.Locally,this trend is already visible.Sherisa Nuesa,Chairperson of Metro Retail Stores Group,Inc.,one of the largest retail operators in the Philippines,noted that while mass-market consumers prioritize essentials,the rising middle class is aligning their purchas

49、es with their lifestyle values,fueling a demand for healthier,sustainable,and premium goods.1This shift reflects the evolving aspirations and rising purchasing power of Filipinos,particularly in areas where value is perceived as enhancing their quality of life.The trend toward premiumization is more

50、 evident in sectors such as health,services,communication,and education,where consumers are prioritizing investments in their well-being,connectivity,and personal growth.2 1.Business World2.Boston Consulting Group3.Adjusted for inflation to 2023 pricesPhilippine Venture Capital Report 2025 12Spendin

51、g patterns from 2012 to 2023,viewed through Maslows Hierarchy of Needs,reveal a shift beyond fundamental necessities,with increased expenditures on personal growth,aspirations,and well-being as economic circumstances improve.What can we expect from Philippine consumers as their disposable income gro

52、ws?Examining other countries that have undergone a similar shift to a more affluent middle class provides key insights.This Philippine Venture Capital Report explores four categories where demand is set to evolve:Health:With Filipinos now placing greater emphasis on health and wellness,there is incr

53、eased demand for healthcare services,products,preventive care solutions,and insurance options.As Chinas middle class grew more affluent over the past decades,there was a corresponding increase in healthcare utilization,enhanced preventive care,and improved financial protection for households.One sig

54、nificant driver of this has been that out-of-pocket(OOP)healthcare expenses for the average Chinese household have significantly decreased from approximately 60%to under 30%over the past two decades,as a result of healthcare reforms and improvements in budget allocations.1Financing:As more Filipinos

55、 move towards prioritizing their aspirations,with entrepreneurship being the second most common shared goal with more than one in two Filipinos aiming to start their own business,according to a recent BCG report,access to financing will become critical to support this wave of small business creation

56、.Power:The rise in discretionary spending,paired with aspirations for higher living standards such as the use of large appliances and air-conditioning,will drive greater demand for reliable electricity,necessitating advancements in power generation and distribution infrastructure.The electricity con

57、sumption per capita has grown fivefold in China over the past two decades.2 With the Philippines having only experienced a 1.6x growth over the same period,this surge in power demand could be an indication of what is to come for the country as it aims to become an upper-middle income country.Agricul

58、ture:The focus on wellness and premium-quality consumption underscores the need for the agricutural sector to keep pace by enhancing food supply chains,scaling production of high-quality options,and adopting sustainable farming practices to ensure produce supply meets the growing demands of Filipino

59、s.In a survey conducted by Temasek,PwC and Rabobank in 2021,90%of Chinese consumers and 69%of Indonesian cosumers said they are“likely”or“highly likely”to pay more for better quality,healthier foods.A similar trend in the Philippines,where only 46%of respondents answered the same in 2021,will have a

60、 significant impact on the agricultural sector.As these consumer preferences continue to evolve,the startup ecosystem in the Philippines will witness significant opportunities.Entrepreneurs and businesses that can tap into these changing needswhether through health-focused innovations,premium consum

61、er goods,new solutions in financial services and insurance products,or experience-driven offeringsare well-positioned for success.1.British Medical Journal2.International Energy AgencyPhilippine Venture Capital Report 2025 13Reimagining Healthcare04Over the past few decades,the Philippines has made

62、strides in improving the health and well-being of its people.Healthcare coverage has expanded,and protections against health emergencies have strengthened.However,with the countrys population growing by approximately 10%since 2018,the demand for quality healthcare has surged,underscoring the need fo

63、r continued focus and innovation in the sector.1The State of Healthcare PROJECTED INCREASE INHEALTHIER POPULATIONINFANT MORTALITY RATESource:World Health OrganizationPROJECTED INCREASE INUNIVERSAL HEALTH COVERAGE14.2M0203010-10Source:World Health OrganizationPROJECTED INCREASE INHEALTH EMERGENCIES P

64、ROTECTION28.9M40200-20Source:World Health Organization1990 1994 1998 2002 2006 201020142018 202221.8040102030Source:World Health Organization13.7M015105201820192020202120222023202420252018201920202021202220232024202520182019202020212022202320242025in deaths per 1000 live birthsin millionsin millions

65、in millionsInfant mortality rate has almost halved since 1990,a growing portion of the population is anticipated to experience improved health and overall wellbeing,health coverage is growing at an accelerated pace,and protection against health emergencies has been steadily improving.Boston Consulti

66、ng Group(BCG)found that financial stability to address health scares was the number one shared dream of Filipinos in 2024,and as such,healthcare remains one of the most critical sectors in the Philippines.Despite improvements in the overall well-being of the Filipino population,shifting demographics

67、,increasing prioritization of health,and increased prevelance of disease underscore the urgency of building resilient and equitable healthcare infrastructure.1.World BankPhilippine Venture Capital Report 2025 14The expanding middle class is driving greater demand for quality healthcare.Since the COV

68、ID-19 pandemic,the populations focus on health has particularly increased.Take Goodies Nutrition,a Foxmont portfolio company,as an example.Since launching just over a year ago with four types of gummy supplements,they have doubled their lineup to eight products in order to address growing consumer d

69、emand.Their traction has been remarkable,selling over 150,000 bottles since launch,with the majority coming from repeat customers,thanks to their high retention rates.This shift indicates that Filipinos are moving away from reactive healthcare,choosing instead to invest in In 2024 versus 2023,spendi

70、ng on health products has risen,with an increasing number of Filipinos opting for preventative checkups and supplements as shown below.preventative care.Although helpful in the long-term,these services do still put further strain on the already overburdened healthcare infrastructure and manpower.Onl

71、y around 40%of Filipinos with a healthcare plan believe that their plan prepares them for a healthcare emergency,illustrating the lack of quality of existing plans.The problem is worse for those in rural and economically disadvantaged areas.Opportunities in Shifting Demographics36%32%32%31%28%24%33%

72、SupplementsMedicinePreventivehealthcarecheckupChronicdiseasecarePhysicalfitnessactivitiesFitnesstrackerPersonal health maintenance organisation(HMO)/healthinsurancePERCENTAGE OF RESPONDENTS WITH INCREASED SPEND ON HEALTH PRODUCTS2023 vs.2024Source:Boston Consulting Group65132033601020306114153145Poo

73、rAspirantEmerging Established AffluentAffluent+1515156610243258151034Yes,through spouse or parentYes,through employerYes,through personal purchaseSource:Boston Consulting GroupCONSIDERATION IN PURCHASINGA HEALTHCARE PLANRuralMost rural consumers still are not keen on purchasing healthcare plans35%65

74、%YesNoacross income segments,in%HEALTHCARE PLAN PENETRATION2023,in thousandsNCD RELATED DEATHS2023,aged 30-70PROBABILITY OF MORTALITY FROM NCDs10%SGTH14%OECD1 1%MY18%VN21%PH25%ID25%Preventative careReactive care36%32%32%31%28%24%33%SupplementsMedicinePreventivehealthcarecheckupChronicdiseasecarePhys

75、icalfitnessactivitiesFitnesstrackerPersonal health maintenance organisation(HMO)/healthinsurancePERCENTAGE OF RESPONDENTS WITH INCREASED SPEND ON HEALTH PRODUCTS2023 vs.2024Source:Boston Consulting Group65132033601020306114153145PoorAspirantEmerging Established AffluentAffluent+151515661024325815103

76、4Yes,through spouse or parentYes,through employerYes,through personal purchaseSource:Boston Consulting GroupCONSIDERATION IN PURCHASINGA HEALTHCARE PLANRuralMost rural consumers still are not keen on purchasing healthcare plans35%65%YesNoacross income segments,in%HEALTHCARE PLAN PENETRATION2023,in t

77、housandsNCD RELATED DEATHS2023,aged 30-70PROBABILITY OF MORTALITY FROM NCDs10%SGTH14%OECD1 1%MY18%VN21%PH25%ID25%Preventative careReactive careSource:Boston Consulting GroupPhilippine Venture Capital Report 2025 15Less than half of the poor population have healthcare plans,and only three in ten indi

78、viduals in rural areas who do not have existing healthcare plans would consider purchasing one.In contrast,healthcare plan coverage improves among the middle class,with about six in ten having plans.Interestingly,among affluent individuals,reliance on healthcare plans decreases as they have a higher

79、 ability to pay for medical expenses out of pocket.Simultaneously,nearly 50%of Filipinos still feel unprepared to handle medical emergencies financially,and the increase in demand for healthcare services is exposing and amplifying gaps in infrastructure,workforce capacity,and affordability within th

80、e healthcare system.Lastly,while the Philippines is traditionally known for its young population,the number of individuals over 60 is projected to reach about 27million by 2055,comprising around 20%of the population.1 This aging demographic will create greater demand for accessible healthcare,as old

81、er individuals are more susceptible to illnesses and require more frequent medical attention.Advancing Prevention&CareThere is a rising incidence of noncommunicable diseases(NCDs)in the Philippines that has been driven by lifestyle changes,which puts further strain on the health sector.Navigating He

82、althcare Roadblocks36%32%32%31%28%24%33%SupplementsMedicinePreventivehealthcarecheckupChronicdiseasecarePhysicalfitnessactivitiesFitnesstrackerPersonal health maintenance organisation(HMO)/healthinsurancePERCENTAGE OF RESPONDENTS WITH INCREASED SPEND ON HEALTH PRODUCTS2023 vs.2024Source:Boston Consu

83、lting Group65132033601020306114153145PoorAspirantEmerging Established AffluentAffluent+1515156610243258151034Yes,through spouse or parentYes,through employerYes,through personal purchaseSource:Boston Consulting GroupCONSIDERATION IN PURCHASINGA HEALTHCARE PLANRuralMost rural consumers still are not

84、keen on purchasing healthcare plans35%65%YesNoacross income segments,in%HEALTHCARE PLAN PENETRATION2023,in thousandsNCD RELATED DEATHS2023,aged 30-70PROBABILITY OF MORTALITY FROM NCDs10%SGTH14%OECD1 1%MY18%VN21%PH25%ID25%Preventative careReactive careSource:Boston Consulting Group4202017432201845120

85、1945420204662021+1 1%+11%Source:World Health Organization,Philippine Health Insurance Corporation,Institute for Health Metrics and Evaluation,Boston Consulting Group analysis2023,%of registered deathsCAUSE OF DEATHSIschaemic heart diseasesNeoplasms(oncology related)Cerebrovascular diseasesDiabetes m

86、ellitusPneumoniaOthers23%of alladults smoke50%of all adultsare physically inactive2x WHO recommendedconsumption of sodium48%6%6%10%10%19%100%Source:World Health Organization,Philippine Health Insurance Corporation,Institute for Health Metrics and Evaluation,Boston Consulting Group analysis1.Philippi

87、ne Statistics AuthorityPhilippine Venture Capital Report 2025 16The Philippines,along with Indonesia,has the highest probability of mortality from NCDs in Southeast Asia.If this upward trend in NCD related deaths continues,the need for healthcare to treat those who experience NCDs or help those who

88、want to prevent NCDs will further intensify.Strengthening Infrastructure The Philippines lags behind its regional peers in hospital bed density,with only 0.96 beds per 1,000 people.1 The majority of these beds are concentrated in the National Capital Region(NCR),as well as the regions within the vic

89、inity of Metro Manila.This falls short of An increased focus on preventative care by the population,particularly younger generations who are more likely to adopt the use of IoT,supplements,and a healthy diet,may help curb this trend.the Department of Healths(DOH)recommendation of one bed per 1,000 p

90、eople and is significantly below the World Health Organizations(WHO)benchmark of five beds per 1,000 people,underscoring a critical shortfall in healthcare infrastructure.NUMBER OF BEDS2021,per 1,000NUMBER OF DOCTORS2021,per 1,000NUMBER OF SPECIALISTS2021,per 1,000US:2.7EU-5:4.4CN:4.51.11.02.51.92.1

91、1.7SGTHMYVNIDPHHigh-quality public/private facilities are concentrated in the Metro Manila region.Rural provision is inadequate.2.81.80.50.61.11.1SGTHMYVNIDPHEU-5:3.9CN:2.0US:2.70.11.00.40.30.40.6SGTHMYIDPHVNSource:Economist Intelligence Unit,World health Organisation,Asian Development Bank,National

92、 statistics agencies,Boston Consulting Goup analysisSource:World Bank,Government agencies,Boston Consuluting Group analysis20152020101(14%)8(83%)1 12(14%)10(83%)+3%+3%+4%Singapore201520195914(23%)45(77%)6417(27%)47(73%)+2%+1%+6%Malaysia2015202115034(23%)1 18(77%)16039(25%)121(76%)+1%+.5%+3%Thailand2

93、01520192811 15(41%)166(59%)317129(41%)188(59%)+2%+2%+2%Indonesia201020201337(5%)126(95%)16731(19%)136(81%)+3%+1%+20%Vietnam2015202010249(48%)53(52%)1 1057(52%)52(48%)+1%+0%+3%PhilippinesNUMBER OF BEDSpublic vs private hospitals,in thousands0951.1-316.0-125.8-16.0493.3Total registered nursesEmigrated

94、 nursesInactiveNurseDeployement ProgramFull timeactive nursesREGISTERED VS.ACTIVE NURSESSource:Inquirer,Philippine News Agency,Foxmont analysis 2021,in thousandsPublic hospital bedsPrivate hospital beds%CAGR in no.of public beds%CAGR in no.of private beds%CAGR in total no.of beds1.World Health Organ

95、izationPhilippine Venture Capital Report 2025 17Prioritizing Talent RetentionWhile the healthcare worker(HCW)ratio(HCW/1,000)has improved over the last decade,there continues to be room for better optimization in converting registered HCWs into active HCWs.Healthcare workers,specifically in the case

96、 of nurses,complete schooling in the Philippines but subsequently migrate to other countries or other sectors in the Philippines with a goal of having better working conditions.In 2021,only 51.8%of total registered nurses became active nurses in the Philippines,with many migrating abroad or joining

97、other industries like the BPO sector.Source:World Bank,Government agencies,Boston Consuluting Group analysis20152020101(14%)8(83%)1 12(14%)10(83%)+3%+3%+4%Singapore201520195914(23%)45(77%)6417(27%)47(73%)+2%+1%+6%Malaysia2015202115034(23%)1 18(77%)16039(25%)121(76%)+1%+.5%+3%Thailand201520192811 15(

98、41%)166(59%)317129(41%)188(59%)+2%+2%+2%Indonesia201020201337(5%)126(95%)16731(19%)136(81%)+3%+1%+20%Vietnam2015202010249(48%)53(52%)1 1057(52%)52(48%)+1%+0%+3%PhilippinesNUMBER OF BEDSpublic vs private hospitals,in thousands0951.1-316.0-125.8-16.0493.3Total registered nursesEmigrated nursesInactive

99、NurseDeployement ProgramFull timeactive nursesREGISTERED VS.ACTIVE NURSESSource:Inquirer,Philippine News Agency,Foxmont analysis 2021,in thousandsSimilarly,rural areas face a disparity in hospital distribution.Metro Manila and adjacent areas collectively house 36%of the countrys hospitals,while the

100、Visayas region accounts for only 16%,leaving many rural communities underserved.1Moreover,a survey by the Philippine Institute for Development Studies(PIDS)reveals severe resource deficiencies in many hospitals.Some facilities lack essential medical equipment such as X-ray machines,ECG machines,and

101、ultrasound devices.Approximately 37%of hospitals report unreliable electricity despite it being their primary power source,while 28%lack access to clean drinking water,with most of these being local government unit(LGU)owned facilities.Furthermore,97%of LGU hospitals and 80%of private hospitals repo

102、rt shortages of essential drugs,further limiting their capacity to provide adequate care.The significant disparity between the number of registered and active nurses in the Philippines stems primarily from poor working conditions for local nurses.Even after efforts by the government to raise their s

103、alaries by 20%by 2027,government nurses are legally entitled to a base salary of approximately USD 620 per month.2 This is anywhere from 1.5 to 6.0 times lower than the salaries of nurses in neighboring countries.3Congress,through House Bill 5276,is exploring more ways in which they can continue to

104、increase nurses salaries by up to 75%.Although nurses salaries are closely tied to the countrys GDP per capita,and so the lower pay in the Philippines when compared to neighboring countries is somewhat understandable,this explanation does little to retain nurses within the Philippines and the Philip

105、pines still lies below the average when adjusting for GDP per capita.1.Philippine Institute for Development Studies2.Presidential Communication Office3.Business WorldPhilippine Venture Capital Report 2025 18Source:iPrice,World Bank,Foxmont analysisThailandSingaporeMalaysiaPhilippinesVietnamIndonesia

106、Average pay for registered nurse in PHPGDP per capita50,000100,000150,000200,000250,000100,00010,0001,000Moreover,this salary requirement is still frequently bypassed by placing nurses under contractual arrangements or the Nurse Deployment Program(NDP),which exempts them from receiving the mandated

107、salary and denies them essential work benefits like overtime pay.2 The situation is even more challenging for nurses in private hospitals and rural areas:Private hospitals:there is no legally mandated minimum pay,leading some to earn less than their counterparts in government hospitals.Rural areas:r

108、esources are scarce here,so nurses often migrate to urban areas in search of better working conditions,leaving rural hospitals understaffed and contributing to the centralization of healthcare resources in metropolitan areas.With much of the world already struggling with an aging population,foreign

109、demand for Philippine healthcare workers,particularly in countries such as the United Kingdom,Germany,and Singapore,will only increase in the coming decades,risking further deterioration in the already sub-par HCW ratios in the country.3Making Healthcare More AffordableHealthcare costs remain a sign

110、ificant challenge in the Philippines,driven by inefficiencies in resource allocation and the limited availability of adequate insurance coverage.The country faces rapidly rising medical costs,with a medical inflation rate of 19.3%in 2024,the second-highest in the region,trailing only Vietnam at 20.5

111、%.4 This is not only driven by the inability to optimize resources,but also by the limited availability of adequate insurance coverage.1.The Nurse Deployment Program is a government initiative that aims to improve the healthcare system by hiring nurses and deploying them in underserved areas.These n

112、urses are contractually hired.2.Philippine Star3.Statista4.Willis Towers WatsonIn 2023,the annual healthcare expenditure in the Philippines was USD 81 1 per household.While healthcare expenditure increased since 2021,government healthcare funding schemes have slightly decreased as household out of p

113、ocket expenses continue to rise.Source:World Health Organization,Government websites PhilippinesVietnamIndonesiaThailand 44.4%39.6%33.0%8.8%HOUSEHOLD OUT OF POCKET EXPENDITUREPhilippine Venture Capital Report 2025 19Compared to its regional peers,the Philippines out-of-pocket healthcare expenditure

114、remains high.Additionally,health maintenance organizations(HMOs)are under pressure with the rising medical costs,experiencing an average net margin of approximately-6.3%,a tripling net loss versus 2022.2Advancing Healthcare ForwardWhile the system faces numerous challenges,these gaps are expected to

115、 widen as the population demographic shifts,creating a prime opportunity for new players to enter the market.Strategic investments and policies will be essential to address gaps in access,affordability,and quality while capitalizing on emerging trends such as digital health and private sector partic

116、ipation.PROVIDERSINSTITUTIONS:HOSPITALS AND CLINICSInvest in hospital modernization(e.g.,modular hospital systems,healthcare real estate projects by KKR and GIC).Offer innovative care formats(e.g.,Nhi Dong 315 maternity and pediatric clinics in Vietnam).Enhance collaboration on digitized patient dat

117、a(e.g.,Telstra Healths EMR and telehealth expansion model).Invest in healthtech platforms offering remote diagnostics,AI-powered diagnostics and insurance claims solutions,digital therapeutics,and wearables.Reverse brain drain of HCW by offering better pay,benefits,and retention programs(e.g.,Metro

118、Pacific Healths initiatives).Implement digital training tools like AI-powered decision support to reduce HCW time per patient.PAYERSPRIVATE HMOSGOVERNMENT:PHILHEALTHSupplement UHC(Universal Health Coverage)with private sector add-ons,such as micro-health insurance models(e.g.,RuralNet,Indonesias OJK

119、).Partner with private insurers to expand coverage with innovative,affordable products.A healthy and insured Philippine workforce will also result in a more productive workforce,and so the Philippines stands at a pivotal moment in its healthcare journey.As the countrys middle class and geriatric pop

120、ulation grow,and building upon recent advancements,the Philippines is poised to address existing challenges.1.2023 census uses 2020 data on number of households as that is the most recent census.2.Insurance Commission(Philippines)1,000100,00010,000GDP per Capita100,000Average Pay for Registered Nurs

121、e in PhP250,00050,000Source:iPrice,World BankBREAKDOWN OF HEALTHCARE EXPENDITURE PER HOUSEHOLDHousehold-of-pocket paymentVoluntary health care payment schemesGovernment schemes and compulsorycontributory health care financing schemes in USD2014202120231100200300400500600700Source:Philippine Statisti

122、cs AuthorityPhilippine Venture Capital Report 2025 20Enabling Small Businesses05Micro,small,and medium enterprises(MSMEs)are vital to the Philippine economy,accounting for 99.6%of business enterprises,generating 67%of total employment,and contributing to 40%of the national GDP.1 However,despite thei

123、r economic significance,MSMEs receive only In an effort to promote MSME growth,RA 9501,the Philippine Magna Carta for MSMEs,requires lenders to allocate 10%of their loan portfolios to MSMEs-8%for micro and small enterprises and 2%for medium 4.1%of overall banking loans.While the government has made

124、efforts to encourage MSMEs to receive a larger share of loans,reluctance from both supply-side and demand-side stakeholders explain the limited share of banking loans that are allocated to MSMEs.enterprises.2 Loans to MSMEs in 2023 however totaled just over USD 9 billion,representing only 4.1%of ove

125、rall banking system loans.3 This is a drop from 8%in 2010.The State of MSME LendingCONTRIBUTION OF MSMES TO THE PHILIPPINESSource:Philippine Statistics Authority,Asian Development BankBusinessesEmploymentLoans99.6%67.0%4.1%MSME BANK LOANSSource:Asian Development BankMSME bank loans outstanding in US

126、D B%MSME bank loans of total200820092010201 1201220132014201520162017201820192020202120222023MSME bank loans outstanding in USD B%of MSME bank loans to total024681012465789101 1121.Department of Trade and Industry 2020 estimate2.Senate of the Philippines3.Asian Development BankPhilippine Venture Cap

127、ital Report 2025 21Despite total bank loans increasing since 2019,access is still less than half of the mandated requirement and 10 x below the real funding gap of around USD 221B.This situation reflects a broader issue highlighted in a 2017 World Bank and International Finance Corporation(IFC)repor

128、t,which identified the Philippines as having the largest relative MSME funding gap amongst the 128 countries reviewed in the study.1The Philippines total loan allocation to MSMEs stands out as significantly lower compared to its regional MSME FUNDING GAPSource:World Bank,International Finance Corpor

129、ation,Bangko Sentral ng Pilipinas,Philppine Statistics Authority,Foxmont analysis Current formalcredit supply91319922221Supply at mandatorycredit allocationReal funding demandof Philippine MSMEsin USD BREGIONAL MSME FUNDING GAPSource:Asian Development Bank,Nomura Foundation MSME loans as a%of total

130、loan portfolio(2024)Financing gap as a%of GDP(2017)20.1%20.6%16.7%4.1%-10.0%-19.0%-7.0%-76.0%ThailandIndonesiaMalaysiaPhilippinespeers like Thailand,Indonesia,and Malaysia.A low percentage of MSME loans in the Philippines could suggest more stringent lending requirements,less mature financial system

131、s catering to small businesses,hesitation from MSME owners to borrow,or higher perceived risks from banks when lending to smaller enterprises.1.World Bank and International Finance CorporationPhilippine Venture Capital Report 2025 22With banking assets highly concentrated among the top 20 banks,only

132、 9%of assets are distributed across more than 1,800 smaller institutions,which have better collective coverage in underserved areas but less capacity to offer credit to MSMEs.Smaller institutions,which are often closer to MSMEs in rural or underserved areas,lack the resources to provide significant

133、credit due to their limited asset base.Larger banks,despite holding the majority of assets,may prioritize larger corporate clients or more secure borrowers,further restricting MSMEs access to financing.From the lenders and borrowers perspective,several factors contribute to the funding gap for MSMEs

134、.MSMEs do not face a complete lack of access to bank loans;rather,the primary challenge lies in the misalignment between loan products and the operational realities of MSMEs:Existing loan structures are often designed for larger enterprises and fail to meet the unique needs of MSMEs,whose cash flows

135、 and operational models are inherently different.Rural banks will continue to have to play an important role to Philippine MSMEs given that the top priority for smaller businesses when deciding on a bank are proximity of branches,trust,and customer service.1 For most rural banks,proximity and trust

136、are already embedded for the MSME business owners in their vicinity as they often use the same bank for personal and business services.2 Yet,what sets an average bank apart from a top-performing bank in the small business segment is an end-to-end digital client experience.Understanding the Funding G

137、ap Banks have a limited appetite for MSME lending,driven by risk and operational concernsMSME profiles face a fundamental mismatch with formal loans banks currently offerThe stringent regulatorylandscape intensifies the challenges of MSME lending Perceived high risk:Banks often opt to pay regulatory

138、 fines for not meeting MSME lending quotas rather than risking defaults,as MSMEs are high-risk borrowers.The PHP 500,000(USD 8,532.1)fine for non-compliance is roughly equivalent to an MSME defaulting on a single monthly interest payment of a USD 1 million loan.Cost-to-profit issues:Processing MSME

139、loans requires significant resources,yet the ticket sizes are smaller,reducing bank profitability.Demanding documentation requirements:MSMEs are deterred by complex requirements,often disproportionate to their financing needs(e.g.,many MSMEs lack audited financial statements or established bookkeepi

140、ng,hindering proper creditworthiness checks).Rigid loan structures:Loan terms(e.g.,high collateral requirements and strict repayment schedules)are designed for larger enterprises with stable cash flow.Financial literacy gaps:A significant number of MSME owners struggle with financial know-how,which

141、makes the borrowing process seem overwhelming,thereby discouraging them from pursuing formal financing options.Risk-based capital requirements:Banks must allocate higher capital reserves for riskier loans,making MSME lending less attractive compared to safer,large corporate loans.Collateral requirem

142、ents:Bangko Sentral ng Pilipinas(BSP)guidelines emphasize collateral-backed lending,but most MSMEs lack sufficient assets to meet these requirements.STAKEHOLDERCURRENT BARRIERS 1.Finalta2.Bank Administration InstitutePhilippine Venture Capital Report 2025 23Bridging the Gap for MSME Success%of firms

143、 using banks to financeBANKS PLAY A LESS PROMINENT ROLE IN MSME FINANCING NEEDSSource:World Bank,International Finance Corporation,Bangko Sentral ng Pilipinas,Philippine Statistics Authority,Foxmont analysis10.122.1WorkingcapitalInvestmentsClosing the MSME financing gap requires coordinated efforts

144、from the government,banks,fintech companies,and MSMEs.By addressing systemic challenges,fostering innovation,and building financial resilience,these stakeholders can collaboratively unlock MSMEs potential as drivers of inclusive economic growth.GovernmentMonetary policies by the BSP alongside credit

145、 guarantee initiatives encourage MSME financing.The Reserve Requirement Ratio(RRR)is a key tool used by the BSP to influence lending in the economy,including MSME lending:1.RRR and Lending Capacity:A lower RRR increases banks liquidity,enabling them to allocate more funds to loans.To increase the ap

146、petite for MSME lending,the BSP allows banks to count loans to MSMEs as part of their compliance with RRR requirements.2.Recent Changes in RRR:Over recent years,BSP has gradually reduced the RRR:In June 2023,the RRR for digital,thrift,and rural banks was reduced by 200 and 100 basis points,respectiv

147、ely,allowing those banks(who tend to lend to MSMEs more)to allocate more funds to loans for MSMEs.In September 2024,the RRR was further cut by 100-250 basis points for some financial institutions.3.Current RRRs:Universal and commercial banks:from 9.5%cut by 250bps to 7.0%Digital banks:from 6%cut by

148、200bps to 4%Thrift and cooperative banks:from 1.0%cut by 100bps to 0%The BSP was also one of the first to cut interest rates in 2024,first in August by 25 basis points and thereafter another cut by 25 basis points in October 2024.1 Although there is often a lag in how this trickles down to the borro

149、wer level,this will ultimately make it cheaper for MSMEs to borrow.Despite the BSPs efforts,some banks may still hesitate to expand MSME lending due to perceived credit risks.To address these barriers,other programs such as the Philippine Guarantee Corporation(PhilGuarantee)provide credit guarantees

150、 to reduce the risks banks face when lending to MSMEs.BanksFrameworks that have previously been suggested can serve as building blocks to which banks can follow in order to make lending schemes less daunting to business-owners:Product CustomizationBy gaining a deeper understanding of their market,ba

151、nks can develop simplified offerings and processes tailored to the needs of sub-segments within the MSME sector.This customization would align their products with the unique requirements of these groups,ultimately boosting MSME business owners willingness to borrow.1.Philippine StarPhilippine Ventur

152、e Capital Report 2025 24FINTECHORIGINBUSINESS MODELEXAMPLES OF FINTECH COMPANIES WITH INNOVATIVE FINANCING MODELSProCreditPhilippines Puts credit officers at the forefront Utilizes a technology-driven back-end Offers an SME business credit line Implements comprehensive risk structuring Provides a no

153、n-collateral credit line Enables fast withdrawals Removes limits and fees on transfers Does not require a minimum balanceFirst CirclePhilippines Requires no collateral Needs minimal documentation Ensures quick approval timesEsquirePhilippines Offers credit,savings,and investments Provides an SME bus

154、iness credit line Eliminates annual fees and ensures fast approval rates Allows users to apply once and reuse funds as needed SalmonPhilippines Provides an SME credit line Allows up to a 60-day repayment period Offers up to P20M in financingAdvance Philippines Provides non-collateralized MSME loans

155、Offers up to P50M in financing Ensures quick approval times Requires minimal documentationFuse LendingPhilippines Maintains low fees Provides personalized business loan offers Enables fast activation and application Maya Flexi LoanPhilippinesDigitizing Operations:Streamlining operational processes t

156、hrough digitization is key to reducing costs,improving efficiency,and accelerating turnaround times in MSME lending.The implementation of end-to-end digital workflows can enhance transparency and operational efficiency for both lenders and borrowers.Creating shared service centers could also help to

157、 standardize and accelerate underwriting,approval,and fulfillment processes.Data and Analytics Integration:The integration of data and advanced analytics is essential for transforming how banks identify lending opportunities,structure loan terms,and manage risk.By leveraging technology and data-driv

158、en insights,banks can better assess creditworthiness and forecast potential risks,enabling more informed decision-making and stronger lending strategies.Fintech CompaniesFintech companies are transforming the way MSMEs access financial services by tackling their unique challenges with innovative sol

159、utions.Key strategies include:1.Developing Innovative Financing ModelsFintech companies have the agility and technological expertise to create alternative financing solutions that can address liquidity challenges and reduce reliance on traditional credit lines:Working Capital Loans and Revolving Cre

160、dit:Flexible,short-term loans to manage cash flow gaps,tailored to the operational cycles of MSMEs.Accounts Payable(AP)Financing:Products that enable early payment discounts or invoice financing optimize cash flow without requiring large collateral commitments.Philippine Venture Capital Report 2025

161、25Although fintech companies targeting MSMEs show promise,their loan books currently collectively bridge less than 2%of the previously mentioned funding gap of USD 199B.12.Partnering with Banks to Enhance Lending:Fintech companies can play a critical role in complementing banks efforts by co-develop

162、ing products and offering technology-driven insights to manage risks.3.Collaborating with MSMEs to Improve Credit ReadinessFintech companies and financial service startups can empower MSMEs by equipping them with tools and knowledge to meet formal banking requirements.Digital Accounting Software:Pla

163、tforms that help manage financial records,improve cash flow tracking,and generate the necessary documentation for loan applications.Hybrid Products:Partnerships with banks to design loan packages that combine the flexibility of fintech solutions with the stability of traditional banking infrastructu

164、re(e.g.,supply chain financing,embedded lending as part of e-commerce platforms)Data-Driven Tools:Advanced analytics tools for better credit scoring,real-time loan monitoring,and predictive risk management,so banks can lend confidently to MSMEs.Credit Readiness Tools:Self-assessment tools or financi

165、al literacy programs to educate MSMEs on improving their creditworthiness and navigating formal lending systems.Outsourced Accounting Services:Fractional CFO services from local service companies help provide full management accounts on a timely basis without having to hire a full finance and accoun

166、ting department.Credolab Singapore Reduces cost of risk Eliminates fraud Improves marketing strategies Provides an API platform for financial institutions to access and analyze consumer financial dataFinantier Singapore Conducts data-driven credit analysis Enables loan approval within minutes Offers

167、 microloans directly through the mobile app Tala United StatesFINTECHORIGINBUSINESS MODELEXAMPLES OF FINTECH COMPANIES WITH HYBRID PRODUCTS AND DATA DRIVEN TOOLS FINTECHORIGINBUSINESS MODELEXAMPLES OF FINTECH COMPANIES IMPROVING CREDIT READINESS FOR MSMESListaPhilippinesPhilippinesPhilippines Tracks

168、 income and expenses Provides reports and insights on user spending habits Is tailored to Filipino users since it is in Filipino Generates financial statements Handles bookkeeping Assists in tax filingQuickbooksUnited States Facilitates tax filing for MSMEs Ensures BIR compliance Offers an affordabl

169、e and user-friendly solution for small businesses Taxumo Provides accounting services Manages cash flow Tracks income and expenses Ensures tax complianceCloudCFOPhilippines Delivers AI-and tech-enabled bookkeeping services Conducts periodic budgeting and forecasting Generates financial statementsOne

170、CFO1.This is non-exhaustive,comprising the largest MSME loan books in the PhilippinesPhilippine Venture Capital Report 2025 26Regional and local fintech players are key to alleviating the MSME lending gap and creating frameworks moving forward in the Philippines.Offering products like microloans,rev

171、olving credit lines,and business credit with minimal documentation and no collateral,these fintech companies provide fast,flexible,and affordable financing.By minimizing dependence on traditional banking processes and offering MSMEs streamlined digital access,these banks effectively address the chal

172、lenges surrounding MSME loans.This approach tackles regulatory barriers,improves transparency,and overcomes the lack of appetite for lending to this sector.MSMEsFrom the standpoint of MSMEs,there are certain practices that they can implement in order to be prepared to apply and receive loans.1.Adopt

173、 sound financial and accounting practices,such as using fractional accounting services,which are often more cost-effective than hiring full-time finance staff.Transparent financial management ensures MSMEs maintain clear and accurate financial records,building trust and creating a strong financial h

174、istory for banks and other lenders.2.Strengthen financial literacy among business owners to improve their chances of securing loans.While it doesnt guarantee fundability,better financial knowledge equips them to present and communicate their financial information more confidently and transparently t

175、o lenders.3.Maintain a strong credit history,as it significantly enhances an MSMEs attractiveness to lenders.Business owners can achieve this by consistently paying debts on time,managing credit utilization effectively,and positioning themselves to benefit from regulations that may become more favor

176、able to their businesses.4.Explore equity financing as an alternative to debt as more options become available in the market.By understanding diverse funding opportunities,MSMEs can broaden their perspective and enable them to make informed decisions about their financing options.Understanding Debt

177、vs.EquityWith the significant funding gaps in debt financing for MSMEs in the Philippines,entrepreneurs can explore equity as an alternative means of raising capital.While equity funding in the Philippines is still roughly a fifth of the total funds raised in Southeast Asia,it has grown every year f

178、rom a base of 2%in 2000.It is now higher than Indonesia for 2024 based on data from the GPCA as more investors recognize the potential of the local market.1 Equity financing can be particularly beneficial for startups and MSMEs that may not meet the strict financial regulations for debt but have pro

179、mising growth plans and scalable business models.In particular,a survey done by Villgro revealed that 30%of Philippine women entrepreneurs still remain reluctant about taking on equity investments,which is already less than the 52%of female entrepreneurs averse to formal debt,highlighting growing fa

180、miliarity and comfort towards equity investments.By securing equity investment,these businesses can access not just capital but also strategic support and networks from investors,enabling them to accelerate growth without the immediate pressure of repayment.The Philippines continues to trail its reg

181、ional peers in MSME lending,held back by hesitations from both supply-side and demand-side stakeholders.Bridging this gap requires a concerted effort from banks,government institutions,MSMEs,fintech innovators,and venture capitalists.By working together to create a more supportive and inclusive inve

182、stment ecosystem,these key players can unlock the full potential of smaller businesses,fueling sustainable growth and driving the Philippine economy forward.1.Excluding secondaries,PIPEs and IT infrastructure2.Villgro PhilippinesPhilippine Venture Capital Report 2025 27Unlocking Philippine Energy 06

183、The Philippine energy sector is poised for a dramatic transformation,driven by shifting electricity consumption patterns and sustained economic expansion.By 2040,the Department of Energy(DOE)expects that industry will overtake households as the dominant consumer of electricity,reflecting the growing

184、 demand from manufacturing,a key economic driver.Supporting this shift,broader sectors including agriculture,services,and transportationwill also require significant energy inputs as they modernize and integrate advanced technologies such as artificial intelligence and data centers.Industrial Demand

185、 and Economic Prosperity Electricity has been a vital driver of the Philippine economy historically,supporting rapid urbanization and industrial growth.Over the past two decades,electricity consumption has more than doubled from 53 TWh in 2003 to 1 12 TWh in 2022.1 Most of this growth has been fuele

186、d by investments This rising demand comes with challenging projections as electricity needs in the Philippines are set to grow annually by around 6%until 2050.Achieving these growth targets,along with the governments economic goals of 6 to 8%GDP expansion,will hinge on the power sectors ability to e

187、nsure a reliable,abundant,and affordable electricity supply.This challenge creates substantial opportunities for innovation and investment,particularly in renewable energy,infrastructure development,and energy efficiency technologies.in coal and oil power plants as illustrated below,but due to renew

188、able energy commitments made by the Philippine government,35%by 2030 and 50%by 2040,2 this is no longer a feasible growth strategy moving forward.The State of Power2003Energy supplyCoalOilBiofuelsRenewableenergyNatural gas2022Energy supply100%39%14%1 1%3%1%167%Source:International Energy Agency 1.De

189、partment of Energy2.Department of EnergyPhilippine Venture Capital Report 2025 28One way to address this challenge is by improving industrial energy efficiency,and the Philippines has shown a good track record here.The country has more than halved its electricity use per dollar of GDP from 314 MWh/U

190、SD 1 million GDP in 2003 to 139 MWh/USD 1 million GDP in 2022.This remarkable improvement in energy efficiency highlights significant progress in optimizing energy relative to economic output.In comparison,Indonesia achieved around a 25%improvement,lowering its energy use to 179 MWh/USD 1 million GD

191、P in the same period.Residential Demand and Regional DisparitiesResidential electricity demand has also surged over the years,reflecting rising incomes and increased access to modern conveniences.Since 2003,per capita electricity consumption among Filipinos has grown by 65%,with figures rising from

192、0.19 MWh in 2003 to 0.31 MWh in 2023.When adjusted for the proportion of the population with electricity access,consumption increased from 0.24 MWh to 0.32 MWh during the same period.This growth has been largely driven by the adoption of home appliances,air conditioning,and other technologies.Despit

193、e this increase in residential demand,the Philippine population does not yet demand as much electricity as Indonesia,where residential electricity consumption has nearly tripled over the same period.Indonesias nationwide per capita consumption of 0.43 MWh is comparable to Luzons 0.46 MWh but far exc

194、eeds the 0.21 MWh and 0.20 MWh averages in the Visayas and Mindanao,respectively.20033142421391792022-56%-26%Source:Department of Energy,World Bank,Foxmont analysis PhilippinesIndonesiaCOMMERCIAL AND INDUSTRIALENERGY DEMANDMWh/USD 1M GDPRESIDENTIAL POWER DEMANDSource:Department of Energy,Internation

195、al Energy Agency,World Bank,Foxmont analysis1.7x2.9x1.7x2.2x20030.50.40.30.20.1200520072009201 120132015201720192021PhilippinesIndonesiaLuzon(Philippines)Mindanao(Philippines)MWh per capitaSystem Losses and Infrastructure ChallengesSystem losses,which refer to electricity lost during transmission an

196、d distribution,remain a significant challenge in the Philippines due to geographic andv infrastructure constraints.While these losses have decreased from approximately 15%in the early 2000s to 10-1 1%today,1 there is further room for improvement.By comparison,Vietnam has reduced its system losses fr

197、om less than 12%in 2003 to just around 6%in 2022 through grid modernization and anti-theft technologies.Although the Vietnam and Philippine grids are very different,adopting similar measures in the Philippines could help further reduce inefficiencies and improve overall grid performance.1.Department

198、 of EnergyPhilippine Venture Capital Report 2025 29KEEPING THE LIGHTS ON:CAPACITY SCENARIOS BY 2030 To keep up with rising electricity needs,the Philippines must increase capacity by over 50%.Depending on what energy mix is used,investors will need to invest USD 5.5-8.0B per year until 2030 to meet

199、this demand,a significant jump from the USD 1.5 billion invested annually in recent years based on OECD historical figures.in TWHSource:Department of Energy,International Energy Agency,World Bank,Foxmont analysis2022PopulationgrowthEconomicgrowthEVconversionResidentialuseincreasesSystemlossimproveme

200、ntsEffieciencyimprovementsA 5%electric vehicle(EV)adoption rate under the Electric Vehicle Industry Development Act(RA 1 1697)will increasepower demand.2030Currentlyinstalled-1 18Solar-13-1 18Naturalgas-13Wind-9Hydro-6-6OtherRemaining projectneed1239Initiated Power projects(2023-2030 Completion)1 12

201、357726-3-24178A growing population will naturally drive increased electricity consumption of around 3 TWh.Higher energy demand is expected as the country works towards its USD 6,044 GNI per capita by 2023 goal.If household electricity usage increases to match current levels in Luzon or Indonesia,a r

202、ealistic scenario given rising incomes,the country would need to boost electricity production by 23%If the Philippines continues reducing system losses by 0.25%annually,as its done in the past two decades,it could cut required supply by 3 TWh.Sustaining the countrys current pace of energy efficiency

203、 improvements,at around 4%per year,could further help manage consumption.The country will need to add around 1239 TWh to meet power demand by 2030,depending on the materialization of energy efficiency and system loss improvements.This is roughly equivalent to USD 5.5 17B in project value,assuming th

204、e current energy mix.By 2030,the countrys total energy demand is expected to reach 178 TWh,aligning with the DOEs Philippine Energy Plan 2023-2050,which targets 170.35 TWh of gross generation output.Currently,initiated energy projects total approximately 47 TWh,covering about 80%of the additional su

205、pply needed by 2030.Most of these projects focus on renewable energy sources.Philippine Venture Capital Report 2025 301.Numbers may not add up due to roundingSource:Department of Energy,International Energy Agency,World Bank,Foxmont analysisCurrently 80%of this additional energy need has already bee

206、n initiated according to the Department of Energy(DOE).However,an additional 12-39 Twh(or approxiametly USD 5.5-17 billion in project value)still needs to be added by 2030 to fully meet the countrys projected power requirements.2030178Currentlyinstalled-1 18Solar-13-1 18Naturalgas-13Wind-9Hydro-6-6O

207、therRemaining projectneed1239Initiated Power projects(2023-2030 Completion)1 12357726-3-24178A growing population will naturally drive increased electricity consumption of around 3 TWh.Higher energy demand is expected as the country works towards its USD 6,044 GNI per capita by 2023 goal.If househol

208、d electricity usage increases to match current levels in Luzon or Indonesia,a realistic scenario given rising incomes,the country would need to boost electricity production by 23%If the Philippines continues reducing system losses by 0.25%annually,as its done in the past two decades,it could cut req

209、uired supply by 3 TWh.Sustaining the countrys current pace of energy efficiency improvements,at around 4%per year,could further help manage consumption.The country will need to add around 1239 TWh to meet power demand by 2030,depending on the materialization of energy efficiency and system loss impr

210、ovements.This is roughly equivalent to USD 5.5 17B in project value,assuming the current energy mix.By 2030,the countrys total energy demand is expected to reach 178 TWh,aligning with the DOEs Philippine Energy Plan 2023-2050,which targets 170.35 TWh of gross generation output.Currently,initiated en

211、ergy projects total approximately 47 TWh,covering about 80%of the additional supply needed by 2030.Most of these projects focus on renewable energy sources.Philippine Venture Capital Report 2025 31Depending on what energy mix is used to increase the installed capacity,investors will need to invest U

212、SD 5.5 billion to 8 billion per year until 2030 to meet this demand,up from around USD 1.5 billion in recent years.1 Longer term,according to the DOEs Philippine Energy Plan for 2023-2050,the countrys peak demand is expected to more than quadruple by 2050 a more than 5%annual growth rate.To meet thi

213、s demand and the renewable energy target of 50%by 2040,the DOE calculates that by 2050,installed capacity should more than quintuple with a compound annual growth rate of 6.2%.Luckily,the Philippines has certain fundamental geographical advantages,which,combined with recent government initiatives,sh

214、ould help in achieving these goals.Geographical AdvantagesGeographical advantages,together with government initiatives and interest from the private sector,are working hand-in-hand to reach the renewable energy targets set by the DOE.A joint project by the Philippine government and USAID in 2020,her

215、eafter referred to as the“CREZ Report”,determined that there is more than 800GW in renewable energy opportunity capacity remaining in the Philippines,almost 100 x the 2022 installed renewable energy capacity.2Scaling Up Energy CapacityTOTAL OPPORTUNITY VS.2022 INSTALLED CAPACITYSource:National Renew

216、able Energy Laboratory,Department of Energy,National Grid Corporation,United States Agency for International DevelopmentInstalled(2022)OpportunityHydropowerSolarWindBiomassGeothermal658.8176X59.639X94.3288X1.02X2.31Xin GWHydropower:The Philippines possesses significant hydropower potential due to it

217、s abundant water resources and diverse topography.Over 1,000 sites have been identified for small hydro installations and 176x the current installed capacity is projected to be feasible according to the CREZ Report.Similarly,the rehabilitation of existing facilities,such as the Ambuklao Dam,which wa

218、s restored to a 105 MW capacity in 201 1,contribute to reaching the power demand of the Philippines,and can act as peak demand power plants.Wind Power:Philippine waters present ideal conditions for fixed wind energy development,with an impressive technical potential estimated at 94GW.Many areas acro

219、ss the coastline offer viable and extractable wind resources.These favorable characteristics position the Philippines as a key player with significant opportunities for advancing wind energy projects.Similar to many of its neighboring countries,the Philippines has yet to optimize the production and

220、utilization of wind power.With this potential,the Philippines can generate more than 280 x what it is currently producing according to the CREZ Report.1.Organization for Economic Co-operation and development2.National Renewable Energy LabotatoryPhilippine Venture Capital Report 2025 32Source:Nationa

221、l Renewable Energy Laboratory in MWDISTRIBUTION OF OPTIMIZED CREZ WIND DEVELOPMENT1,400400Philippine Venture Capital Report 2025 33Government Initiatives To accommodate this accelerating demand,the Energy Regulatory Commission(ERC)has sped up its approval processes and issued nearly 4,000 Certificat

222、es of Compliance in 2024 alone,covering approximately 24 GW of power supply(or around 100 TWh)to enhance grid security and affordability.The Philippine banking sector has been a key source of clean energy financing,but limitations imposed by the Bangko Sentral ng Pilipinas(BSP)necessitate greater fo

223、reign investment.Policy reforms,such as the removal of foreign ownership restrictions,aim to attract this capital from foreign funders instead.The successful adoption of policies to attract foreign direct investments has led the Philippines to climb to second place among emerging markets for renewab

224、le energy investments in Bloombergs Climatescope 2024 report,a significant leap from 20th place in 2021.This growth reflects strong policy fundamentals,including tax incentives,net metering,and a 35%renewable energy generation target by 2030.SOLAR INTENSITY AND PRODUCTION POTENTIALSource:World Bank,

225、Energy Sector Management Association PhilippinesKoreaIndonesiaMalaysiaTaiwanVietnamJapan3.93.83.83.73.63.63.5in kWh/m/daySolar:According to the National Renewable Energy Laboratory,the Philippines receives an average solar radiation level of 128-203 watts per square meter,with a mean of approximatel

226、y 161.7 watts per square meter,making it one of the sunniest countries in Southeast Asia.Among regional peers,the Philippines has the highest solar radiation levels,highlighting its significant potential for solar energy production.In addition,the price of photovoltaic panels has dropped by 75%over

227、the last decade.As a result,the returns on investment for many solar projects around the Philippines have significantly improved and the CREZ Report sees nearly 40 x the 2022 capacity as potential capacity.Geothermal:The Philippines,situated in the Pacifics“Ring of Fire,”is one of the worlds top pro

228、ducers of geothermal energy.Its location offers abundant geothermal resources,making it a natural leader in this sector.However,the high costs associated with geothermal energy and the lack of remaining viable sites for this technology have led many industry players to look for alternative power sou

229、rces.This trend has contributed to a slowdown in the geothermal energy sectors growth.1 1.ASEAN Center of EnergyPhilippine Venture Capital Report 2025 34CLIMATESCOPE RANKING POSITIONSource:Climatescope by BloombergNEF 2024202320222021PhilippinesIndiaMainlandChinaKenyaRomaniaBrazilChileNigeriaNamibia

230、Guatemala61514131211 1112010223101531693216817510365557611793541925More initiatives have been put in place to meet the 2030 target.These include an imposed moratorium on new coal plants,as well as the Electric Vehicle Industry Development Act(EV)law that supports EV adoption by requiring at least 5%

231、of government and corporate fleets to consist of EVs,with plans for 10%conversion by 2040.The DOE Local industry leaders often publicize their support for and investments in more renewable energy projects,contributing to reaching the power demand and power mix targets discussed in this chapter:AC En

232、ergy,the energy division of Ayala Corporation,has set a goal of supplying 20 GW of renewable energy by 2030.To reach its target,it has implemented initiatives,including a partnership with AC Health to transition hospitals to renewable energy.1 Meralco is investing USD 1.72 billion in a“smart grid”up

233、grade while expanding renewable energy assets through its subsidiary,MGreen.The company aims to achieve a coal-free energy mix by 2050,focusing on solar farms,wind energy,and exploring innovative solutions such as nuclear power and digitized technologies.2also announced the commencement of the Renew

234、able Energy Market(REM)platform,which permits the trading of Renewable Energy Certificates,allowing industry players to meet the requirement of sourcing 1 1%of power from clean energy sources.AboitizPower,the energy sector of the Aboitiz Group,aims to double its renewable energy capacity to 4.6 GW b

235、y 2030,focusing on the development of various renewable energy sources.Additionally,the company plans to invest in LNG as a flexible,lower-carbon alternative to coal during the energy transition,balancing sustainability with reliability.While large-scale projects will rely on infrastructure funds an

236、d private equity funding,venture capital has a vital role to play in supporting energy efficiency and optimization technologies.For instance,Foxmont portfolio company SolX exemplifies how innovative startups can drive change.By providing energy management solutions to over 100 clients,SolX helps bus

237、inesses reduce costs and improve operational efficiency,underscoring the potential for technology-driven approaches in addressing the nations energy challenges.Private Capitals Role in Energy Transformation1.Manila Bulletin2.International Finance CorporationPhilippine Venture Capital Report 2025 35T

238、he maturity of the energy innovation ecosystem in the Philippines,as assessed by New Energy Nexus,is still at the early stages of development.While the government has introduced a range of supportive policies to drive innovation,the ecosystem faces critical challenges in the technical implementation

239、 of new energy projects.Encouragingly,It is interesting to note as well that most capital goes towards renewable energy generation,particularly solar and mini-hydro systems.In contrast,much less capital goes into other critical areas such as sustainable transportation,energy access and energy manage

240、ment,signaling untapped opportunities in these subcategories.2Apart from more funding that can be provided through venture capital(VC),VCs can bring in expertise and networks that can help founders navigate the complex regulatory landscapes and technical challenges.The growing interest and involveme

241、nt of international venture capital players,with their deeper experience there is a growing presence of professionals in new energy technologies and a surge in collaboration among startups,government bodies,NGOs,and private energy companies.However,bridging the gap between policy and execution remai

242、ns a significant hurdle.1and proven track records in the space,can also open up greater potential for growth and facilitate the adoption of global best practices in the Philippines.The Philippine power market stands at a critical juncture.With rising demand,regional disparities,and the need for subs

243、tantial investment in infrastructure,the sector presents both challenges and opportunities.Strong policy frameworks,improved grid efficiency,and increased participation from both domestic and international investors will be key to ensuring a sustainable energy future for the Philippines.3PHILIPPINE

244、ENERGY INNOVATION ECOSYSTEM MATURITYSource:New Energy Nexus MoneyBEGINNERBUILDEREXPERTEXPERIMENTERCONNECTORPeopleGoverrnmentKnow-howNetwork1.New Energy Nexus2.New Energy Nexus3.Business WorldPhilippine Venture Capital Report 2025 36Cultivating a Strong Agricultural Sector 07The Philippines is blesse

245、d with abundant natural resources,fertile soils,and a climate ideal for year-round farming,offering immense potential for agricultural productivity.The agricultural sector not only feeds the Philippine population,but is an important driver of the economy contributing around 10%of the countrys GDP an

246、d employing a quarter of the countrys workforce.1 Rapid population growth exacerbates the countrys food security challenges,risking a further reliance on agricultural imports as local production struggles to keep pace.Compounding this is the rise of a growing middle Despite its natural resource adva

247、ntages,the country struggles to meet its own food demand,with an agricultural trade deficit of USD 1 1.5 billion in 2023,a near ninefold increase from USD 1.3 billion in 2005.2 This stands in contrast to some of its neighboring countries,Thailand and Vietnam.class,whose increasing purchasing power i

248、s reshaping consumption patterns and amplifying the demand for higher-quality and diverse food products.PHILIPPINE TRADE BALANCE 2023,as a%of GDPREGIONAL TRADE BALANCESource:ASEAN StatisticsSource:Philippine Statistics Authorityin USD BExportsImportsTrade Balance2005201020232.74.16.42.4x4.5x-4.0-7.4

249、-17.9ThailandVietnamIndonesiaPhillippines2.8%-0.5%1.5%-1.1%1.World Bank2.Philippine Statistics AuthorityPhilippine Venture Capital Report 2025 37Three overarching issues have resulted in the Philippines struggle to meet demand for agricultural outputs:FragmentationFarmland fragmentation,often as a r

250、esult of partible inheritance,has resulted in the average Philippine farm size dropping by two-thirds over the past decades,from 3.6 hectares in 1960 to 1.3 hectares in 2012.1 In response,the Department of Agriculture(DA)launched the Farm and Fisheries Clustering and Consolidation(DA-F2C2)program in

251、 2020,which aims to consolidate farmer operations into larger groups of at least 50 to 100 hectares to capture economies of scale.The State of AgricultureProductivityIn part because of this farmland fragmentation but also due to other drivers discussed in this chapter,improvements AgeingThe average

252、age of Filipino farmers has been steadily rising and hit 57 in 2022,3 over double the countrys median age.The younger generation is more reluctant to pursue farming due to perceived challenges of the profession,as a result of low income,limited access to modern farming techniques,and the physically

253、demanding nature of the work.to total factor productivity(TFP)in the Philippines have lagged behind other Southeast Asian countries,despite a similar decrease in agricultural employment over the past 30 years.2Consequently,many farmers who are reaching retirement age struggle to find a clear success

254、ion plan for their farms.The challenges of an aging farmer population are mirrored in permaculture crops,like coconut and banana,which make up a significant share of agricultural output.Many plantations are aging,leading to declining yields,while replanting efforts take years before reaching full pr

255、oductivity.4 Source:Philippine Statistics Authority196019711980199120022012654321043.532.521.510.50MillionsHectaresAvg farm sizeFoxmont-BCG survey:1.9 haNumber of farms in millionsAverage farm area in hectaresSource:International Monetary Fund,USDA,Teruel&Dumagan(2012),PhilRice,Foxmont analysis19601

256、9711980199120022012654321043.532.521.510.50MillionsHectaresAvg farm sizeFoxmont-BCG survey:1.9 haNumber of farms in millionsAverage farm area in hectaresGROWTH IN TOTAL FACTOR PRODUCTIVITY2119801985199019952000200520102015MYVNIDTHPHSource:Philippine Rice Research Institute 4919965120012006201 120162

257、02253545657MEAN AGE OF FILIPINO RICE FARMERS1.Philippine Statistics Authority2.International Monetary Fund,Productivity Growth and Technology Capital in the Global Agricultural Economy3.Philippine Rice Research Institute4.Philippine News AgencyPhilippine Venture Capital Report 2025 38Foxmont and Bos

258、ton Consulting Group(BCG)commissioned a quantitative survey in January 2025 on the practices and challenges faced by a representative group of 300 Filipino farmers.The findings of this survey,along with third party research,can help explain the existing supply-side constraints in the Philippines agr

259、icultural supply chain,and how the country can unlock these for a more self-sufficient food system.The survey paints a clear picture of the diverse realities farmers face,revealing three distinct farmer segments:By examining these groups,a clearer understanding emerges of the realities farmers face

260、on the ground.This segmentation helps shed light on the factors driving relative farm success and hardship,and thereby offers insights into best and worst practices in the sector.Understanding Farmer Segments in AgricultureSource:Philippine Rice Research Institute 4919965120012006201 120162022535456

261、57MEAN AGE OF FILIPINO RICE FARMERS1.For those with income below PHP 15K(USD 258.6)per monthStrugglingFarmers struggling to make ends meet.StableStability seekers focused on maintaining steady income andwilling to invest to achieve it.StrongHigher performers who earn approximately 50%more than their

262、 peers.136%36%28%Philippine Venture Capital Report 2025 39STABLESTRUGGLINGStable farmers are focused on securing a steady livelihood,and minimizing downside risks remains their top priority.They therefore take out insurance,invest in equipment to protect their crops,and like joining cooperatives to

263、benefit from knowledge sharing.Struggling farmers have limited access to customers,outside support,and even smartphones or the internet.They struggle to make ends meet,and need additional help from organizations and government institutions to sustain their farming activities.PHILIPPINE CONTEXTEquipm

264、ent/Technology-Gadget ownership-Internet accessPrevious support receivedMembershipsSales channelIncomeOwnershipLand insuranceEducationAgeHigher proportion inherited their land,yet have a smaller average land size of 1.7 hectaresSell crops more easily and more often directly to the customer30%have re

265、ceived prior help,and more likely in the form of frequent financial assistance such as grants or loans40%of non-members are open to joiningMore likely to have transportation equipment to sell cropsMore have smartphonesMore have internet accessLower percent with Baby BoomersEconomic challenges affect

266、 input supply and crop distribution,forcing farmers to secure reliable yields amid rising costs,all while finding steady demand.Meanwhile,reliance on basic machinery and traditional methods means openness to modernization varies across the supply chain.STRONGStrong farmers are self-sufficient,have m

267、ore profitable farms,and therefore generally have better access to resources,technology,and financing.This also allows them to reach and sell to customers directly,allowing them to sell with less reliance on intermediaries.Many Filipino farmers have limited formal education,with only 46%having compl

268、eted high school.Filipino farmers average age is 57,up from about 48 two decades ago,highlighting an aging demographic.Poverty incidence among Filipino farmers is twice the national average.While average farm size is 1.9 hectares,the most typical farm size is only 1 hectare.Farmers who inherit their

269、 land tend to perform better,as they avoid the costs of renting or sharing crop earnings.Four in five farmers see climate risk as a top challenge,which makes land insurance critical to protect against financial ruin from climate or pest-related disasters.Economic factors,including lack of steady dem

270、and,rank as farmers top challenges.This makes having robust sales channels essential,and technology seems to help strong farmers achieve this.Access to physical equipment,as well as technology and the internet,significantly influence farmers financial position.However,only 34%of all farmers have rel

271、iable internet access,a stark contrast to the national internet penetration rate of around 84%.Only 3 in 10 farmers have ever received any outside help in the past.The main forms of assistance received focus on education and training,while fewer received access to supplies or loans.A majority of far

272、mers want to join organizations and cooperatives and believe they can provide much needed support,but 42%of farmers are currently members of one.Earn on average 50%+more per hectarevs stable and struggling farmers when income is below PHP 15K/month(USD 258.6)Philippine Venture Capital Report 2025 40

273、STABLESTRUGGLINGStable farmers are focused on securing a steady livelihood,and minimizing downside risks remains their top priority.They therefore take out insurance,invest in equipment to protect their crops,and like joining cooperatives to benefit from knowledge sharing.Struggling farmers have lim

274、ited access to customers,outside support,and even smartphones or the internet.They struggle to make ends meet,and need additional help from organizations and government institutions to sustain their farming activities.Equipment/Technology-Gadget ownership-Internet accessPrevious support receivedMemb

275、ershipsSales channelIncomeOwnershipLand insuranceEducationAgeHigher proportion inherited their land,yet have a smaller average land size of 1.7 hectaresSell crops more easily and more often directly to the customer30%have received prior help,and more likely in the form of frequent financial assistan

276、ce such as grants or loans40%of non-members are open to joiningMore likely to have transportation equipment to sell cropsMore have smartphonesMore have internet accessLower percent with Baby BoomersEconomic challenges affect input supply and crop distribution,forcing farmers to secure reliable yield

277、s amid rising costs,all while finding steady demand.Meanwhile,reliance on basic machinery and traditional methods means openness to modernization varies across the supply chain.STRONGStrong farmers are self-sufficient,have more profitable farms,and therefore generally have better access to resources

278、,technology,and financing.This also allows them to reach and sell to customers directly,allowing them to sell with less reliance on intermediaries.Many Filipino farmers have limited formal education,with only 46%having completed high school.Filipino farmers average age is 57,up from about 48 two dec

279、ades ago,highlighting an aging demographic.Poverty incidence among Filipino farmers is twice the national average.While average farm size is 1.9 hectares,the most typical farm size is only 1 hectare.Farmers who inherit their land tend to perform better,as they avoid the costs of renting or sharing c

280、rop earnings.Four in five farmers see climate risk as a top challenge,which makes land insurance critical to protect against financial ruin from climate or pest-related disasters.Economic factors,including lack of steady demand,rank as farmers top challenges.This makes having robust sales channels e

281、ssential,and technology seems to help strong farmers achieve this.Access to physical equipment,as well as technology and the internet,significantly influence farmers financial position.However,only 34%of all farmers have reliable internet access,a stark contrast to the national internet penetration

282、rate of around 84%.Only 3 in 10 farmers have ever received any outside help in the past.The main forms of assistance received focus on education and training,while fewer received access to supplies or loans.A majority of farmers want to join organizations and cooperatives and believe they can provid

283、e much needed support,but 42%of farmers are currently members of one.Earn on average 50%+more per hectarevs stable and struggling farmers when income is below PHP 15K/month(USD 258.6)More have no internet access35%have received prior help,and more likely in the form of one-off pest and disease manag

284、ementSource:Philippine Statistics Authority,International Labour Organization,Philippine Rice Research Institute60%of non-members are open to joiningHigher percent who only completed some elementary education73%earn under PHP 15K/month(USD 258.6)Less likely to have insuranceHas limited access to buy

285、ers and is more susceptible to low and fluctuating crop pricesManage slightly larger lots averaging 2 hectares to achieve economies of scale,with more farmers renting through share-of-crops agreementsMore likely to have insuranceMore likely to have crop protection equipment25%have received prior hel

286、p61%of non-members are open to joining,especially to ask for or give advicePhilippine Venture Capital Report 2025 41This segmentation not only highlights the differences in farmer success but also underscores key challenges shaping their realities.Amongst the most common drivers influencing farm per

287、formance are poverty incidence,access to technology and equipment,and the availability of Technology and EquipmentEconomic constraints also highlight a significant digital access gap for Filipino farmers.Only 34%of the total farmers surveyed have reliable access to the internet,yet 65%of strong farm

288、ers do.Compared to the national average,farmers have limited access to technology and digital tools that could enhance efficiency,improve market access,and provide data for better decision-making.Similarly,data from the Philippine Institute for Development Studies(PIDS)shows that Filipino farmers ar

289、e at least 60%Poverty Incidence Poverty incidence in the agricultural sector is over twice the national average.1 Despite this,strong farmers are less likely to experience poverty,with income per hectare approximately 50%higher than their peers for those earning below PHP 15K(USD 258.6)per hectare p

290、er month.One explanation for this difference may be that strong farmers are more likely to have inherited their land,thereby avoiding having to pay rent or share part of their crop to their landlord.This improves disposable income of those farmers.Nevertheless,40%of strong farmers still do not own t

291、heir land,so ownership alone is not a determining factor for running a profitable farm in the Philippines.less likely to have access to the internet and e-commerce in 2017 compared to the national average,and access to computers has worsened compared to the national average since 2010.2 This digital

292、 divide further impacts their ability to learn about modern farming practices,as many continue to rely on traditional methods that are less efficient and more labor-intensive.1.Philippine Statistics Authority,International Labour Organization2.Philippine Institute for Development Studies3.World Bank

293、third-party support.By identifying what has worked for strong farmers,effective strategies can be implemented for stable and struggling farmers,providing them with a clear path to improve their outcomes.Source:Philippine Statistics Authority,International Labour Organization201219.7%38.3%201518.0%40

294、.8%201812.1%31.6%POVERTY INCIDENCE AMONGFARMERS IN THE PHILIPPINESNational povertyFarmersStrong farmers are more likely to have smartphones,with nearly eight in ten owning smartphones and being approximately 30%more likely than struggling farmers to have internet access.The increasing presence of lo

295、w cost smartphones and government programs like the National Fiber Backbone project,which aims to increase high-speed connectivity in lagging regions to ensure that the most vulnerable Filipinos are connected,3 are benefiting more rural farmer populations access to the internet and therefore their a

296、ccess to forums and videos on farm practices,marketplaces for crop sales,and wholesale e-commerce platforms for agricultural inputs.Source:Philippine Institute for Development StudiesDIFFERENCE IN ACCESS COMPARED TO NATIONAL AVERAGEComputers-1 1%Internetaccess-61%E-commercevia internet-65%Employeesw

297、ith internet connection-65%2017Philippine Venture Capital Report 2025 42Third Party SupportOnly 30%of farmers in the survey reported receiving any form of external support,underscoring the limited assistance available to smallhold farmers.Even in the most common area of support,training and educatio

298、n,only 20%of farmers received access,leaving the majority without crucial resources for improvement.Even more concerning,just one in ten has had access to financial aid,underscoring the significant gap in funding opportunities.Financial access and stabilityLimited access to loans restricts farmers a

299、bility to invest in essential inputs such as high-quality seeds and pesticides,as well as crucial equipment and infrastructure like irrigation systems and protection against extreme weather.According to the 2022 Countryside Bank Survey Report conducted by the Department of Agriculture(DA)and Bangko

300、Sentral ng Pilipinas(BSP),only 6.5%of loan proceeds of countryside banks are allocated to small land-based farmer-borrowers.1.Philippine Statistics Authority,Foxmont analysis2.2022 Countryside Bank Survey3.Bangko Sentral ng PilipinasMoreover,the use of proceeds of agricultural loans may not match fa

301、rmers needs:although around 60%of banks with agricultural loan products provide loans for working capital and the purchase of inputs such as seeds and fertilizer,only a quarter or less provide loans for sustainability projects,land acquisition,or the digitalization of farms yet all are key concerns

302、for farmers based on the survey.2The top reasons for agricultural loan disapproval are low credit scores and poor credit histories.These issues create mutually reinforcing negative feedback loops,limiting farmers ability to secure the capital needed for growth.Additionally,despite better-than-averag

303、e non-performing loan(NPL)performance in agriculture,interest rates for agricultural loans remain significantly higher than those for non-agricultural loans,further hindering investment and growth in the sector.3As a result of their more frequent access to the internet,as well as their higher likeli

304、hood of owning equipment that can transport their harvest,strong farmers are more likely to sell directly to end-customers,thereby cutting out middlemen and lowering spoilage as crops change hands less frequently.Logistics and traders take a significant share of the final sales price,often collectiv

305、ely capturing more than half of the total value due to there being typically at least seven intermediaries from farm to table.1 This highlights a major value loss that farmers experience if they struggle selling directly to consumers.Source:Bangko Sentral ng PilipinasINTEREST RATES ON AGRICULTURAL A

306、NDNON-AGRICULTURAL LOANSNPL RATIOLowest(median)Average(median)Highest(median)12.0%7.5%15.0%18.0%12.0%9.3%7.2%8.1%Agricultural loansNon-agricultural loans2022Philippine Venture Capital Report 2025 43Strong farmers in the survey group show they have received,and continue to receive,more financial assi

307、stance through loans and grants compared to their peers,highlighting the importance of financial access to a farmers ability to perform well financially.At the same time,stable farmers take a proactive approach by securing insurance to safeguard against potential losses from calamities or poor harve

308、sts.These behaviors underscore how access to financial tools,whether through credit or risk mitigation,play key roles in ensuring resilience and long-term growth in the sector.Access to government support Most of the assistance farmers receive comes in the form of training and education.Struggling f

309、armers,however,tend to receive additional support for pest and disease management,primarily from larger government institutions such as the Department of Agriculture.Similarly,stable farmers also rely on these major institutions for support.In contrast,strong farmers experience a shift in the type o

310、f assistance they receive,which is typically provided by smaller government bodies like LGUs.Farmer associations/cooperativesMost strong farmers prefer to operate independently and show less interest in cooperative membership.In contrast,six in ten stable and struggling farmers seek to join,primaril

311、y for benefits and support.For stable farmers,membership also provides a sense of community and opportunities to exchange help.Despite this demand,more than two-thirds of all farmers struggle to access cooperative assistance.Similar to the challenges in securing government support,a lack of transpar

312、ency around membership remains a major barrier.Improving clarity on how to join cooperatives is crucial to maximizing their impact.AGRICULTURAL LOAN PRODUCTS OFFERED BY BANKS Acquisition of inputs63%Working capital61%Acquisition of work animals/equipment51%Construction or repair of facilities36%Sust

313、ainability projects26%Land acquisition18%Digitalization of farms14%Source:Bangko Sentral ng Pilipinasas%of total banks with agricultural loan productsPhilippine Venture Capital Report 2025 44Source:Journal of Development Economics,Dezan Shira&Associates,Government agenciesTOP FUNDAMENTAL CHALLENGESF

314、inancialTechnologicalEducational91%Cost of farm input(seeds,equipment,fertilizer,labor)84%Low sales prices82%Climate change/storm80%Fluctuating prices74%Pests/disease70%Limited access to technology69%Soil degradation68%Small farm size68%Hard to get support from cooperatives67%Inability to use techno

315、logy and equipment66%Dependent on middlemen who control pricing69%Limited/inefficient use of farm inputs(fertilizer,pesticides,herbicides,etc.)Limited access to financing options74%66%Limited/delayed weather information%of farmers who agree this is a challengeWhile the factors above can enable stabl

316、e and struggling farmers to graduate to run more profitable farms,all three farmer segments also share common challenges.The following section highlights the most pressing obstacles they face,which can be addressed through three key solution areas:financial,technological,and educational support.Phil

317、ippine Venture Capital Report 2025 45Source:Journal of Development Economics,Dezan Shira&Associates,Government agenciesSOLUTIONS TO CHALLENGESFINANCIALTECHNOLOGICALEDUCATIONALOffering loans with structured repayment options,including considerations for NPLs and risk mitigation strategies.Providing i

318、nsurance to safeguard farmers against losses from poor harvests.Facilitating financial support to enable farmers to invest in technology and improve agricultural efficiency.Strengthening internet infrastructure to improve connectivity in rural areas.Providing better access to weather forecasts,optim

319、al farming practices,and crop planning insights to help farmers avoid low or fluctuating prices.Enabling direct market access for farmers to connect with crop demand more efficiently.Additional benefit:Reducing manual labor,making farming more attractive to younger workers.Improving the content and

320、consistency of support from cooperatives and government institutions.Enhancing education on disease control,proper farm equipment usage,available technology,and best agricultural practices.Educating farmers on climate-resilient seeds and the protective equipment,such as irrigation systems and barrie

321、rs,can help safeguard crops from extreme weather,which contributes to 60.2%of agricultural losses.Case Study:In Tanzania,a randomized controlled trial assessed the impact of post-harvest constraints on smallholder farmers.The introduction of harvest loans combined with improved storage technologies

322、reduced food losses and boosted farmer income by addressing capital shortages and post-harvest spoilage.Loan recipients stored 29%more and sold 50%more maize during the lean season on average.Case Study:Indonesias digital farming solutions have expanded rural internet access through projects like th

323、e Palapa Ring.This enables digital solutions like e-Farming apps to reach farmers.These platforms provide real-time market prices and weather forecasts,enhancing decision-making and productivity.Case Study:Indias agricultural research institutes have prioritized education and training to help farmer

324、s adapt to climate change.Through government and NGO-led programs,they have taught sustainable techniques like rainwater harvesting,equipping farmers with the knowledge to improve resilience against unpredictable rainfall and extreme heat.These efforts complement the institutes development and promo

325、tion of climate-resilient crop varieties,ensuring a holistic approach to agricultural sustainability.Strengthening financial inclusion,improving access to technology,and enhancing education can help bridge the gaps that hold back productivity.Around 75%of surveyed farmers,regardless of their segment

326、,perceive government support as insufficient.Given this,the private sector can and should play an active role by implementing targeted initiatives,supporting entrepreneurs and innovators in addressing these key challenges,and fostering greater public-private collaboration.The Philippines has the opp

327、ortunity to transform its agricultural landscapeensuring food security,economic resilience,and a more sustainable future for Filipinos.Ultimately,these efforts will be essential in matching agricultural supply with the countrys growing demand for food,reducing reliance on imports,and securing long-t

328、erm stability.Philippine Venture Capital Report 2025 46ABOUT FOXMONT CAPITAL PARTNERSFoxmont Capital Partners is a Philippine-focused venture capital fund that invests in early-stage,tech-enabled,and scalable startups in rapidly digitizing sectors.We play a catalytic role in the ecosystem and act as

329、 a bridge between local founders and foreign capital.We drive value for our founders and investors by leveraging our deep operational knowledge and network,building meaningful relationships across our stakeholders.Foxmont is the first and largest independent and early-stage focused Philippine VC fun

330、d.Enabled by an amazing group of Limited Partners from both the Philippines and around the world,as well notable institutional investors,such as Pavilion Capital,AppWorks,Orient Growth,we look forward to continuing our investment track record,scouring the Philippine market for great entrepreneurs,an

331、d empowering them to build Filipino solutions to Filipino problems.PORTFOLIO AT A GLANCEABOUT BOSTON CONSULTING GROUPBoston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities.BCG was the pioneer in busines

332、s strategy when it was founded in 1963.Today,we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow,build sustainable competitive advantage,and drive positive societal impact.Our diverse,global teams bring deep industr

333、y and functional expertise and a range of perspectives that question the status quo and spark change.BCG delivers solutions through leading-edge management consulting,technology and design,and corporate and digital ventures.We work in a uniquely collaborative model across the firm and throughout all levels of the client organization,fueled by the goal of helping our clients thrive and enabling the