The Philippine Startup Group, a non‑profit dedicated to nurturing the nation’s startup ecosystem, released a May 21 2025 report highlighting that many fledgling companies are grappling with unsustainable burn rates. The study points to limited financing, fierce market competition and a shortage of seasoned talent as the primary drivers of rising operational costs.
Despite a noticeable surge in new ventures—particularly in fintech, e‑commerce and health‑tech—the sector faces a paradox: rapid emergence of firms alongside a widening funding gap. Katrina Rausa Chan, executive director of QBO Philippines, an incubator and accelerator, said the most pressing obstacle is access to capital, noting that investors often prefer established businesses over early‑stage startups. Consequently, many entrepreneurs resort to personal savings or bootstrapping, a practice that can quickly inflate cash burn and jeopardize long‑term viability.
The Department of Trade and Industry (DTI) has rolled out initiatives such as a dedicated startup fund and tax incentives aimed at encouraging investment. Undersecretary Rafaelita Aldaba emphasized that a more “conducive environment” is needed, calling for broader funding avenues and additional resources to bridge the gap.
Alternative financing routes—crowdfunding platforms and venture‑capital firms—are being explored, yet they remain limited and highly contested. The scarcity of capital also exacerbates another critical challenge: attracting and retaining skilled employees. Larger corporations, with deeper pockets and more comprehensive benefits, often lure talent away from startups.
Benedict Carandang, managing director of ShopBack Philippines, identified talent acquisition as the “biggest challenge” for his company, observing that many qualified candidates are drawn to bigger firms offering higher salaries and better perks. In response, some startups have adopted flexible work arrangements and professional‑development programs to become more appealing workplaces.
Nonetheless, Carandang stresses that competitive compensation packages are essential to close the talent gap. Industry leaders remain optimistic about the sector’s prospects. Jose Victor Paterno, president of the Philippine Startup Group, highlighted the “great potential” of the ecosystem, citing a wave of innovative and disruptive startups.
He argues that overcoming high burn rates, funding constraints and talent shortages will require coordinated action from government bodies, private investors and the startups themselves. Paterno calls for a collaborative approach to build a supportive infrastructure that delivers financing, nurtures talent and provides other critical resources.
When asked about the future outlook, Rausa Chan expressed confidence, describing the upcoming years as “bright” for Philippine startups and anticipating the emergence of more groundbreaking companies. The coming period will be decisive for the country’s entrepreneurial landscape. With targeted policy measures, increased private‑sector investment and inventive human‑resource strategies, the sector could transform current challenges into engines of economic growth.
