Start-up success: The Philippines emerges

The Philippines used to be the target of jokes about valuation discounts, but now the market is having the last laugh as investors fight for a piece of its potential.
Start-up success: The Philippines emerges

A version of this article was first published on FinanceAsia.

Six years ago, when Raymund “ER” Rollan and his founding team started GrowSari, many investors and start-up peers alike would joke about the “Philippines discount”. Despite this antiquated misperception combined with a start-up ecosystem that was not well-established and a host of other challenges, the team resolutely persisted and founded their company in Manila in 2016.

GrowSari is a B2B technology platform that digitises the country’s “mom and pop stores” which are known locally as “sari-sari”. With over one million sari-saris nationally, which can be found at almost every street corner, Rollan considers them the “best and most efficient” last mile network to the Filipino consumer.

His vision is to empower these micro, small and medium sized enterprise (MSME) owners through technology.

“Sari-sari stores account for over 90% of MSMEs in the Philippines, and over 90% of these stores are owned by women. By helping grow their profits, GrowSari helps these store owners attain a more sustainable livelihood, while being able to stay at home and take care of the household,” Paul Santos, managing partner at Wavemaker Partners, an early investor in GrowSari, told FinanceAsia.

Wavemaker has raised over $300 million across four funds in Southeast Asia. Santos pointed to the value creation in connecting sari-sari stores digitally, which would enable them to extend their products and services to a wider pool of customers.

“GrowSari has the potential to be a major omnichannel network in the market,” he told FA.

A growing network

There are currently 150,000 MSMEs active on GrowSari’s platform. Within the next two years, the company hopes to double this number and extend its reach beyond the 20 key cities and 400 municipalities where its current user base of sari-sari businesses is present.

To date, GrowSari has raised $110 million from investors, including $77.5 million in its latest Series C round that closed in March, led by New York-based private equity firm, KKR. With its fresh Series C capital, GrowSari is accelerating its national expansion by channelling its funds into the Visayas and Mindanao regions. It is also bolstering its product suite to provide access to credit and basic financial services.

“The world is now seeing the Philippines as a serious contender in the start-up scene — especially in B2B space, which is not easy. This provides recognition that the economic and cultural significance of sari-sari stores is likely to stay for many decades to come,” Rollan, co-founder and CEO of GrowSari told FA.

Rising from the shadows

Last year was a “watershed year” for the country’s start-ups, according to the Philippine Venture Capital Report 2022, with total deals hitting a record of 92 by count and $1.03 billion raised.

$310 million was raised in the first two months of 2022 and six out of eight deals so far have been Series B and C deals, in a sign of maturity of the start-up ecosystem, the research detailed.

Often the Philippines has been overshadowed by Indonesia, a country that has massive potential due to its size and an ecosystem that has been dominated by unicorns.

“It will probably take a couple of years to catch up to Indonesia, assuming we are able to build a policy environment that supports start-ups in tech entrepreneurship,” said Minette Navarrete, president and co-founder at Kickstart Ventures, the corporate venture capital (CVC) arm of Globe Telecom.

“This is one area which the Philippines has been slow to develop,” she added.

Navarrete started the CVC in 2012 with just $2.5 million in its incubator fund. Today, its  assets under management (AUM) total around $255 million, which is the aggregate of three funds, including an open-ended vehicle.

Founded in 2010 as an online marketplace for MSMEs, Indonesian e-commerce site, Bukalapak, attracted early institutional investors including GIC and Ant Financial. In August 2021, it raised $1.5 billion on the Indonesian Stock Exchange (IDX) in what marked Indonesia’s largest equity listing at the time.  

Following its IPO, Bukalapak president Teddy Oetomo told FA that through its expansion, it would aim to continue to address the market’s inequality by “bringing anyone in this segment up to the same level playing field as other modern retailers”. The firm continues its push for financial inclusion in spite of vast share price fluctuations following its stellar quity market debut.

For the Philippines however, there is a silver lining to being “late” to the game.

“We didn't experience that hype circle that Indonesia had with the massive valuations, which means that the Philippines is hopefully going to be less impacted by the current investment climate,” former CEO, angel investor and founder of, Ron Hose, told FA.

International investors started taking notice of the country in 2017 when Jack Ma’s Alibaba invested in fintech player, Mynt. That year, there were 44 deals worth $47 million, according to the e-Conomy SEA 2021 report. In 2018, the number of deals increased to 57 with over $300 million worth of investment pouring into the country.

In 2019, blockchain-enabled mobile wallet,, was acquired by Indonesia’s GoJek (now known as GoTo after its merger with Tokopedia). Kickstart Ventures invested in the firm in 2016 and exited its investment when GoJek acquired the company, in a move that Navarrete described as “material for the Philippine ecosystem, because it was an exit of some size with interest from a large foreign entity”. Hose shares this view and hopes it will increase investor sentiment and entrepreneur confidence in the market.

“I’m fairly confident that within the next two years we’re going to be seeing funding rounds and liquidity events that are going to eclipse what has achieved. It’s what excites me the most about this market: that Filipino founders and teams will be showing everyone else what’s possible.”

Minting the next unicorn

The Philippines is already journeying along that trajectory after Mynt became the market’s first unicorn in November 2021. The fintech start-up is backed by Globe Telecom, Ayala Corporation and New York-based private equity firm, Bow Wave Capital Management. It is particularly well known locally for its mobile payment solution, GCash.

With a huge opportunity to tap into the 71% of the population that is currently unbanked, the next unicorn is expected also to emerge from the fintech space. But it is the entertainment content arena that Kickstart’s Navarrete is watching most closely.

Navarrete has high hopes for Kumu, a social entertainment app that is one of the firm’s portfolio companies and has amassed a registered user base of over 10 million since its launch in 2018. The start-up raised Series C capital led by General Atlantic in October 2021, bringing its total funding to over $100 million.

“Entertainment is such a big industry, not just in the Philippines, but globally,” she said.

“When we look at the cadence of execution and strong principles and values of the company, we think Kumu has real opportunity to achieve unicorn status. We think the current market would certainly support such a valuation,” Navarrete said.

The worldwide Web3 of opportunity

Another sector that carries a lot of promise for investors is the metaverse.

“The Philippines has evolved into a Web3 powerhouse, and I think part of it is fuelled by the fact that there is already great crypto infrastructure already in place,” said Hose. was an early player in the digital assets space, using blockchain technology to provide financial services such as digital remittance and payment services to the unbanked in Philippines, as well as other regions within Southeast Asia. Fully regulated by Bangko Sentral ng Pilipinas (BSP), it is the first crypto-based firm in Asia to hold both virtual currency and electronic money issuer licences from a central bank. In April this year, former CFO of Binance, Wei Zhou, became the new CEO of the fintech following his partnership with Joffre Capital to acquire the firm from GoJek.

While Kickstart Ventures has not yet put money in the space, decentralisation is one of three key strategic themes for the firm, alongside digitisation and decarbonisation.

“Decentralisation offers real opportunity when you think about it in terms of its impact on business, industry as well as the economy and democracy,” said Navarrete.

“But we want to be mindful as the Philippines is a country where we’re looking to solve real problems and what we’re looking for is whether decentralisation can offer real, practical solutions. I think we’ll get there, but from a timing perspective, it’s not a 2022 investment theme for us.”

One of the real problems that GrowSari has set out to solve is to create positive socio-economic impact for the MSME owners and communities that it serves. With a population of 110 million and a land mass that extends to over 7,000 islands, GrowSari’s Rollan describes the market’s potential as offering “a massive opportunity, with more to be done”.

While an IPO is not on the firm’s radar just yet, as Rollan considers there to be more pertinent opportunities to pursue, the company has maintained healthy unit economics from day one. For now, its focus will remain on maintaining a healthy cash flow and working to achieve absolute profitability over time.

The company is just one of a new generation of start-ups that hopes to penetrate the Philippine market by creating solutions that can improve the lives and livelihoods of its population while tapping into its $360 billion economy.

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