FOSTERING INNOVATIVE PINOY TECH

IDEAS THROUGH STARTUP RESEARCH

GRANTS AND SECURING THEIR
LONG-TERM VIABILITY
Key Policy recommendations:
• Advocate for interagency coordination between startup funding agencies and other
relevant government agencies responsible for documentary requirements of startup
programs;
• Capacitate and foster the startup ecosystem in other regions;
• Budding startups should be provided with synergistic networks; and
• Lobby for the amendment of outdated regulatory measures and provide post funding
endorsements to startups.

Section 3(g) of the R.A. No. 11337 or the Philippine Top 10 Countries
with the Most Startups
Startup Act defines a startup as any person or
registered entity in the Philippines which aims to 80,000
develop innovative products, process, or business
model. It is a young company that innovates
technologies - or applies existing technologies in
innovative ways – to provide a new product or 60,000

service. It is further referred to as “disruptor” not

only because it displaces products offered by
traditional businesses, but also because it changes
40,000
the way products or services are supplied, and
consequently, the way we live. In the Philippines, an
innovative startup is defined as any enterprise that
is less than five (5) years old, registered with 20,000
financial regulatory authorities of any country,
provided that majority of its team is operating and
residing in the Philippines. It should have the
potential to scale, to utilize non-traditional business 0

models, and to address a specific social problem

(Teves, et al., May 2023).
It has been reported that there are over 150 perceive Southeast Asia as a primary market
million startups worldwide as of 2023, with the that has immense potential for economic growth.
United States having the highest number of Indeed, the Philippines checks all the boxes in
around 72,560 startups (Shewale, May 2023). terms of criteria for investment: having (a)
available market, (b) available talent, and (c) low
Number of Startups in the Philippines
from 2017-2021 (Statista, 2023)
barrier for entry (PwC, 2017).

700 Moreover, Philippines ranked among the top 25

Asian Ecosystems and top 15 Asian Emerging
350 Ecosystems in funding according to the Global
Startup Ecosystem Report of 2022 of the
Startup Genome (Talavera, 2023). Nine (9)
0
2017 2018 2019 2020 2021 Philippine startups also made it to the Forbes
Asia’s 100 to Watch List which spotlights
In relation to the Philippines, it has a relatively startups that are targeting underserved markets
young but rapidly expanding startup ecosystem or applying new technologies (Gonzales, 2023).
with around 700 startups as of 2023, an
increase of 156 percent from 273 startups in Nonetheless, the Philippine Startup Survey
2017 (Teves et al., May 2023). This is reveals major challenges encountered by
manifested in the improvement in its position in startups. One of these challenges is the capital
the Global Country Ratings, placing in the 52nd requirement in establishing an enterprise given
spot globally. Financial technology, life sciences that it roughly requires at least one million pesos
and healthcare, and artificial intelligence remain to kick off the business and guarantee its
the most popular industries in startup categories sustainability. As a result, the majority of startups
worldwide (DTI Policy Brief: Startups, 2021). resort to equity financing, angel investors, or rely
on their own capital to finance their growth.
The Philippines startup ecosystem started in Furthermore, some startups find it burdensome
early 2000s with the emergence of mentorships to obtain permits and licenses for government
and the first private sector incubators (Teves et grants. Even after completing the requirements,
al., May 2023). As a matter of fact, most of the the processing of applications can take so long
existing startups that venture on retail, that by the time a decision is made, the startup’s
education, fintech, shared service facilities, and financial resources have already been
digital services were founded in 2016, exhausted (Teves et al., May 2023).
concluding that the industry is fairly new in the
country. This entails the propagation of “serial
entrepreneurs” in the industry, wherein most
startup founders are also owners of multiple
businesses. The startup industry is projected to
thrive in the coming years as Filipino
entrepreneurs continue to develop and venture
into innovative ideas. The global trend is also in
favor of the Philippines as most investors
Enabling Local Startups Ecosystem: However, even prior to the passage of the
Philippine Innovative Startup Act, PCIEERD had
It was in 2010 when the Philippine government already implemented the Startup Grant Fund
started recognizing the importance of startups (SGF) Program in 2018, financing a total of
and providing support through enabling policies. fifteen (15) startups. The Council relaunched the
These enabling policies were followed by the said program in 2021 in alignment with the
creation of the Roadmap for Digital Startups in enactment of the Philippine Innovative Startup
2015 and the Philippine Innovation Act of 2019, Act in order to capacitate local innovative
which awards grants to enterprises that develop entrepreneurs and manifest their proud Pinoy
innovative solutions in ten (10) priority areas tech ideas through providing support for various
identified under its 10-year National Innovation technology needs.
Agenda and Strategy Document (Teves et al.,
May 2023). The main goals of this program are (1) to
improve the product’s marketability through
The government and other stakeholders i.e., establishing initial market traction, (2) refine the
universities, conglomerates, and global business model, (3) upgrade existing practices
companies also sponsor incubators and that provide revenue through overcoming
accelerators. While an accelerator offers R&D roadblocks, and (4) strengthen intellectual
mentoring, access to finance, and networks to property which will eventually entice lead
investors, an incubator assists in turning unique users into purchasing their products. The SGF
ideas into sustainable businesses through Program’s initial call for application proved
guidance, training, access to markets, and successful, with funding granted to twenty-one
connections to potential investors (Teves, et al., (21) startups. To date, the SGF Program has
May 2023). supported a total of forty-three (43) startups,
with cumulative funding of Php. 225.84 million.
Moreover, the enactment of the Philippine
Innovative Startup Act created programs and In addition to the SGF Program, PCIEERD also
incentives to support the development of launched the Women-Helping-Women:
startups. It is aimed at providing benefits and Innovating Social Enterprises (WHWise)
removing constraints in order to encourage the Program in 2021 which is focused on assisting
establishment and operation of innovative new Women-led Social Enterprises (SEs) in need of
enterprises and businesses crucial to their assistance with acquiring technology, R&D
growth and expansion. In 2018, the DOST- technical assistance, and mentoring.
PCIEERD, Department of Trade and Industry
(DTI), and Department of Information and The Policy Group of the Policy Coordination and
Communication Technology (DICT) forged an Monitoring Division (PCMD) of PCIEERD,
agreement to synergize their assistance to the conducted a study on the implementation of
Philippine startup community, to provide these 2 Startup programs, randomly selecting
continuous support and respond to the three (3) grantees, one (1) from each of the
community’s needs, and to promote innovation major island groups - Luzon, Visayas, and
and technopreneurship for the socio-economic Mindanao. The study employed a qualitative
development of the country. method.
 Case Study: TWALA
The grantee from Luzon was Twala, a blockchain startup specializing in
document management and digital signature for drafting, signing, verifying,
and storing digital contracts and documents. Its funding was utilized to
improve security, enhance user experience, and guarantee the authenticity
of all documents signed within the platform. Through the enhanced
blockchain-based digital signature solution, Twala is providing companies
with remote and hybrid work arrangements with an innovative yet secure
way of signing crucial documents. Moreover, Twala is compliant with the
domestic and international laws on digital signatures. Twala’s R&D activities
funded by the Council has helped the latter advance blockchain’s practical
application in the Philippines and has supported its new blockchain training
program for its researchers to determine other practicable applications of
the technology.

Case Study: Virtualahan

For Mindanao, one of the grantees of the WHWise program was selected,
which is Virtualahan, a startup social enterprise based in Davao City. It
promotes equal access to education for persons with disabilities (PWDs) and
envisions to break multiple barriers that hinder PWDs from engaging in high-
level work in various industries. With the support from the Council’s funding,
a fully accessible cloud-based learning management system was developed
which equips PWDs with in-demand digital skills necessary to work in the
digital economy. As a result, 70% of about one thousand (1,000) PWDs
scholars who received the grant secured jobs, mainly aligned with the
training programs they completed with Virtualahan from 2021 to 2023.

Case Study: AtoANI

For Visayas, another notable grantee under the WHWise Program was
selected which is AtoANI, a startup social enterprise located in the province of
Bohol. AtoANI specializes in the production and distribution of organically
farmed fresh produce from its own farm and from partner farmers employing
a produce-to-demand agriculture model. The grant was primarily used to
improve the AtoANI i-CROP prototype and subsequently validate it with
partners. AtoANI i-CROP is an online platform that provides data-driven
analytical recommendations to farmers on the type and amount of crop to
plant depending on soil-crop compatibility data in Bohol and Cebu. The
project’s overarching goal is to promote sustainable agriculture by eliminating,
if not significantly reducing, crop wastage among farmers, and ensuring a
ready market for their crops through customers using the platform.
While the SGF and WHWise Programs play a lengthy application process and numerous
crucial role in addressing compounding concerns documentary requirements which must be fully
of startups by assisting them translate their early- complied with prior to the release of grant. In fact,
stage technologies into market ready products, five startups under the SGF and WHWise
persistent challenges hinder startup grantees Programs reportedly took longer than six months
and potential grantees alike from taking to secure the requirements from local
advantage of these grants and other similar government units (LGUs) and other regulatory
government grants and in securing sustainability agencies. Yet, some requirements from LGUs
in their operation after the grant period. and other regulatory agencies are not applicable
to the nature or setup of some startups. In the
case of Virtualahan, which fully operates online, it
ISSUES AND had to rent a small office space just to secure a
CHALLENGES permit from the LGU of Davao City.

Furthermore, grantees of government programs

On Government Startup Grant Fund are required to attend all seminars under their
Programs: respective acceleration/incubation programs
without prior consultation if they have already
1. Lengthy application procedures and numerous participated in similar seminars, nor is there prior
requirements of startup programs offered by determination whether these seminars are
various government agencies, some of which are applicable to the nature of startups. There is also
inapplicable to the nature of startups. no post assessment of the effectiveness of the
seminars conducted.
Funding opportunities such as the DOST
PCIEERD startup grants are also offered by other On Sustainability of Startups:
government agencies such as the Department of
Trade and Industry (DTI) and Department of 1. Feeble startup ecosystems in Visayas and
Information Communications Technology (DICT). Mindanao.
In November 2021, the DTI, together with the
National Development Company and QBO As earlier mentioned, 26 out of the 37 startups
Innovation Hub, established the Startup funded under the PCIEERD start up programs
Venture Fund that allocated Php 250 million were from Luzon, while only 11 startups came
venture funds for innovative Philippine startups from Visayas and Mindanao. This is mainly
(DTI Policy Brief: Startups, 2021). In the same attributable to inability of startups from Visayas
year, the DICT launched its Startup Grant Fund and Mindanao to compete with other startups
which provides funding up between Php 500,000 coming from Luzon on the basis of merit.
to Php 1 million to early-stage ICT-based
startups and gives them access to mentors and 2. Delay in processing Intellectual Property
coaches. applications by the Intellectual Property Office.

Nonetheless, typical challenges among startup The issue of slow processing of intellectual
grantees of government programs include property applications has been persistently
brought out during interviews with a few startup
grantees under the SGF and WHWise programs. POLICY
During the interview with AtoANI in October RECOMMENDATIONS
2023, it mentioned that it filed a patent
application for its AtoANI-ICROP platform on
On Government Startup Grand Fund
01 June 2022, but the said application is still Programs:
pending to date. The same experience was
highlighted by Virtualahan during its interview in 1. Advocate for interagency coordination among
September 2023 for the copyright application of startup funding agencies and other pertinent
its learning management system filed in January bodies responsible for providing documentary
2023. requirements for startup programs through
department administrative orders, memorandum
3. Outdated regulatory measures and circular, and/or ordinances.
accreditation procedures of relevant government
agencies. It is acknowledged that all documentary
requirements for startup programs are
Securing proper accreditation from the reasonably necessary to ensure proper
government encourages public trust as it is disbursement and use of public funds.
presumed that the startup has complied with the Nevertheless, funding agencies, together with
legal requirements and regulations that protect other relevant government agencies, may
public interests. Further, it fosters accountability periodically assess the applicability and
for the performance and conduct of the startup, relevance of these requirements while taking into
among others. While not all startups require consideration the varying nature and capabilities
accreditation, those that voluntarily opted to of startups in the Philippines. For instance, a prior
secure it are having difficulty because of outdated capability assessment may be conducted to
regulatory measures. determine which seminars under the TBI Program
are to be attended by startup grantees.
In the case of Twala, it faced challenges in
obtaining accreditation from the Department of Moreover, the DOST, DTI, and DICT should
Trade and Industry (DTI) as a digital signature engage in interagency and policy coordination
platform using blockchain technology, with LGUs, and other relevant government
despite the principle of technology neutrality agencies to expedite the application process and
under R.A. No. 8792 or the Electronic issuance of documentary requirements. It is
Commerce Act of 2000 and other issuances of crucial to ensure proper and timely compliance
DOST and DTI. Similarly, Virtualahan, with the Ease of Doing Business Law and Efficient
encountered difficulties in obtaining accreditation Government Service Delivery Act of 2016. This
from the Technical Education and Skills law enjoins government agencies to promptly
Development Authority (TESDA). TESDA’s process applications and transactions.
requirement for actual office space for the Streamlining the requirements and procedures
conduct of training and seminars posed a hurdle, makes the programs more accessible to startups,
notwithstanding the full digital nature of encouraging their participation and ultimately
Vitualahan’s business operations. fostering increased competition and more
innovative ideas among applicants. Further, challenges. This upholds Sec. 16 of the Philippine
startups will save time and resources which can Innovative Startup Act which states that aside
then be allocated to their operational from promotional programs, educational
expenditures. programs regarding startups will also be a
mandate of government agencies.
On Sustainability of Startups:
2. Expand the coverage of the Science and
1. Capacitate and foster the startup ecosystem in Technology Superhighway Program and amend
other regions. relevant provisions of the Intellectual Property
Code through an amendatory legislation to
There is a need to strengthen the startup express a more specified period for review of
ecosystem in other regions to improve their intellectual property applications.
performance in the regional startup ecosystem
rankings and to have more startups coming from The Intellectual Property Office of the Philippines
these regions securing funding from investors (IPOPHL) is intending to implement the Joint
and the government. Moreover, accelerators and Examination Trace Procedure (JET) which will
incubators should serve as champions in bringing fast track the processing of trademark
together all the different stakeholders in their applications by designating senior examiners in
respective regions and jointly implementing determining the registrability of a mark on
programs and activities aimed at boosting their absolute grounds as provided under Sec. 123 of
startup ecosystem. As of date, there are thirty- the Intellectual Property Code. Thus, a trademark
two (32) incubators operating under the TBI application will be published within 30 days
Program of PCIEERD in collaboration with higher to accommodate any opposition and will be
education institutions, each supporting 10-15 deemed registered on the 31st day if there is no
startups per year through technical, business opposition. The DOST or any other Host
development, and marketing assistance, as well Agencies may suggest to the IPOPHIL the
as intellectual property management and legal extension of this procedure to other types of
counselling services. intellectual property applications. Moreover,
IPOPHL, DTI, and DOST executed a tripartite
Moreover, startup grant fund programs of the Memorandum of Agreement in 2020 regarding a
government should be heavily promoted by; (a) project called the “Science and Technology
having a more extensive presence in various Superhighway” that will expedite the processing
social media platforms; (b) forging partnerships of IP applications, particularly industrial designs,
with stakeholders, including but not limited to, utility models, inventions, and trademarks,
government agencies, non-governmental through IPOPHL’s express lanes. Hence, DOST,
agencies, and private companies that share the DTI, and IPOPHL may expand the coverage of
same objective; (c) and engaging with this agreement or execute another agreement
communities in the grassroots level to stimulate that will cover other intellectual property
their interest in startups and eventually cultivate applications such as patent and copyright. Once
the growth of the startup ecosystem throughout adopted, these policy recommendations will form
the Philippines driving innovative ideas aimed at part of the Philippine Startup Development
utilizing science and technology to solve societal Program.
In addition, the Host Agencies may propose that accreditation, and collaborations/partnerships
a specified period for the substantive examination may be brought up as this event engages
of intellectual property applications be reflected in startups, government agencies, and other
the Intellectual Property Code to set proper stakeholders.
expectations on the applicants as to when their
applications will be completed. As observed, the Other Policy Recommendation
Intellectual Property Code only provides for the
period for filing of opposition to an application, but 1. Budding startups should also be provided with
it is silent on other parts of the application synergistic networks to aid them in building and
process. Moreover, such amendment is in protecting their brand.
compliance with the Ease of Doing Business Law
and Efficient Government Service Delivery Act of Access to various service providers,
2016 ordering 3-7-20 day turnaround time for producers, and manufacturers enhances the
simple, complex, and highly technical efficiency of prototype or product
transactions. development. This underscores the need for
relevant agencies to ensure the protection of
3. DOST, DTI, and DICT to execute a joint intellectual property. Host agencies such as
administrative order to help startups lobby for the DOST, DICT, and DTI should guarantee that
amendment of outdated regulatory measures the startups are provided the IP assistance
and provide post funding endorsement by linking and training programs in specific areas of the
startup grantees with other government IP system.
agencies.
The rapid expansion of the Philippines startup
Funding agencies of the programs must ensure community is heavily attributable to various
that startups grantees are properly endorsed to governmental mechanisms providing support
other government agencies, as a testament to in terms of finance, capacity building, market
their credibility and competence, which will aid access, and regulatory and legal assistance,
them in securing accreditation and even foster among others. This corresponds with the
partnerships with government agencies and strategy of the Philippine government of
private institutions alike. promoting technology and innovation to
accelerate its socio-economic growth.
Further, implementing agencies of the Philippine
Innovative Startup Act must support startups in Nonetheless, to accommodate this growth,
lobbying for the amendment of outdated continuous promotional efforts and capacity
regulatory measures to ensure that they are in building activities must be undertaken to
harmony with recent technological encourage innovators in other regions to
advancements. For instance, it may support a establish startups. Moreover, there must be
blockchain startup in its collaboration with the periodic review and/or amendment of
Philippine Accreditation Board of the DTI in government rules and regulations relative to
revising the governing rules on digital signature. startup operation and accreditation which may
The Philippine Startup Week is a potential avenue be accomplished by way of effective
where issues related to regulatory measures, intergovernmental coordination.
References:

1. Section 3, R.A. No. 11337 or the Philippine Innovative Startup Act of 2018
2. Teves, G., Muralla-Palustre, H., Saulo, C., Pajutan, J., Fetalino III, M., Vandenberg, P. (May 2023).
The Philippines’ Ecosystem for Technology Startups. Asian Development Bank. Retrieved 15
November 2023 from: https://www.adb.org/sites/default/files/publication/884641/philippines-
ecosystem-technology-startups.pdf
3. Shewale, R. (September 2023). 100+ Startup Statistics in 2023: Current State, Funding, and
More. Demandsage. Retrieved 12 October 2023 from: https://www.demandsage.com/startup-
statistics/#:~:text=Startup%20Statistics%20Top%20Picks%20(2023)&text=There%20are%20o
ver%20150%20million,of%20market%20demand%20for%20products.
4. Department of Trade and Industry. (2021). Startups. DTI. Retrieved 12 October 2023 from:
https://innovate.dti.gov.ph/wp-content/uploads/2020/07/Startups_draft.pdf
5. PricewaterhouseCoopers (PWC). (2017). Off to a Great Start: The Philippine Startup Ecosystem.
Retrieved 15 November 2023 from: https://www.pwc.com/ph/en/ceo-survey/2017/pwc-qbo-
2017-philippine-startup-survey.pdf
6. Talavera, C. (April 2023). Philippine shaping up as ideal site for startups. Philstar Business.
Retrived 12 October 2023 from:
https://www.philstar.com/business/2023/04/02/2256143/philippine-shaping-ideal-site-
startups#:~:text=Based%20on%20the%20Global%20Startup,Asian%20Emerging%20Ecosyste
ms%20in%20Funding.
7. Gonzales, I. (August 2023). 9 Philippine startups among Forbes Asia’s 100 to Watch. Philstar.
Retrieved 12 October 2023 from: https://www.philstar.com/headlines/2023/08/30/2292394/9-
philippine-startups-among-forbes-asias-100-
watch#:~:text=The%20nine%20Philippine%20companies%20are,sari%20store%20owners%3B
%20Peddlr%2C%20which
8. R.A. No. 8792 or the “Electronic Commerce Act of 2000.”
9. Joint Administrative Order No. 2, Series of 2001, of the DOST and DTI entitled, “Providing
Implementing Rules and Regulations on Electronic Authentication and Electronic Signatures.”
10. R.A. No. 11032 or the “Ease of Doing Business Law and Efficient Government Service Delivery
Act of 2016.”
11. Sec. 123 of R.A. No. 8293 or the “Intellectual Property Code of the Philippines.”

Acknowledgements: Mr. Jeffrey Reyes (TWALA), Ms. Maria Wilvenna Anora (AtoANI), Ms. Rose Villamor
(Virtualahan), Ms. Russell Pili, (Chief SRS-RITTD), Engr. Edward Paul Apigo, Ms. Liezl Sueno of RITTD-
PCIEERD.