Venture capitalists eye Philippines

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The Philippines’ financial and health technology sectors continue to attract venture capitalists, banking on the strength of a young demographic of digitally savvy Filipinos seeking stable, white-collar opportunities in sectors like technology and finance.

Based on a report released by Foxmont Capital Partners, digital transactions continue to steadily expand across sectors, becoming more embedded in how people live, spend and manage their money -- with e-commerce as the largest and most established vertical. However, in other areas such as travel, food delivery, online media and financial services, sustained growth has been seen as digital services become part of everyday routines.

E-commerce, as a percentage of the digital economy, according to the Foxmont report, rose 67 percent in the Philippines, beating the comparative growth in Thailand of 59 percent, Malaysia’s 51 percent and Singapore’s 31 percent.

Private capital funding in the Philippines, according to the report, rose approximately 34 percent year-on-year last year, even as venture funding declined across much of Southeast Asia, according to the 2026 Philippine Private Capital Report by Foxmont. The increase was driven by larger transactions and a broader mix of financing structures, signaling sustained investor interest despite tighter regional and global capital conditions.

Foxmont Capital Partners is a Dutch-based, Philippine-focused early-growth capital fund that invests in tech-enabled and scalable startups in rapidly growing sectors. It aims to provide a catalytic role in the Philippine ecosystem and act as a bridge between local founders and foreign capital.

Last year, Foxmont was able to raise $1.5 billion for the Philippines, increasing steadily compared to the $960 million it raised in 2023 and the $1.12 billion it got in 2024.

Enabled by a group of limited partners from both the Philippines and around the world, as well as notable institutional investors such as Grab Holdings, Pavilion Capital, the Dutch Good Growth Fund, AppWorks and Orient Growth, it continues its investment track record, scouring the Philippine market for great entrepreneurs.

During the launch of the 2026 Philippine Private Capital Report last Monday, key officials of Foxmont, led by managing partner Jelmer Ikink and including Franco Varona and Bea Mantecon, director of value creation, cited that while funding is rising, the Philippines now faces a structural transition, moving from a consumption- and labor-driven growth model toward one led by productivity, where private capital can play a central role.

The Philippines, the report stated, continues to benefit from strong demographics and domestic demand. However, sustaining higher growth will increasingly depend on capital deepening, which translates to investment that raises output per worker, enabling firms to scale and support movement into higher-value industries.

Gross fixed capital formation, the report said, stands at around 21 percent of gross domestic product or (GDP), well below the 30 to 40 percent seen in faster-growing peer economies. Closing this gap, the report stated, could require an additional $40 billion to $90 billion in annual fixed-asset investment, with private capital acting as a catalyst alongside corporate reinvestment, public spending and development finance.

According to Ikink, “The Philippines has long benefited from favorable demographics and resilient demand, but the next phase of growth will depend on productivity, capital formation and stronger firms.”

Mantecon elaborated that “Private capital is becoming more important, not just in volume but in how it is deployed into sectors that can raise output, deepen capabilities and drive long-term value creation.”

In a panel discussion composed of Andrew Jeffries, country director of the Asian Development Bank (ADB), Jonathan De Luzuriaga, president of the Philippine Software Industry Association and Anthony Oundjian, managing director of Boston Consulting Group, they noted that the impact of rising capital flows will depend less on how much is raised and more on how effectively it is deployed.

Jeffries expressed optimism that, “In the next three years, if players like Foxmont are able to double in size, with more funding raised and capital flowing, that would be a strong signal.” However, the ADB executive also emphasized the need for the Philippine government to address infrastructure requirements to attract more investors in the digital economy.

De Luzuriaga, who had earlier sat down with members of the local media, expressed optimism about the Philippine software industry, as well as the country’s Information Technology and Business Process Management (IT-BPM) sector that has been among the stellar performers in the Philippine economic landscape.

According to De Luzuriaga, “We graduate about 120,000 to 140,000 computer science and IT professionals each year. Based on our roadmap, we foresee that 500,000 of the millions joining the workforce by 2028 would be from the countryside.” Thus, he highlighted the need for the country to expand investment and to provide upskilling opportunities in the countryside.

Oundjian highlighted how investment patterns within organizations are evolving. “Our clients are really investing in technology and mostly upgrading to cater to the emerging middle class. What we don’t see as much yet is investment in automation, but we’re at the cusp of a change there.”

The report points to two sectors that illustrate both the opportunity and the gap.

In semiconductors, the report said, the Philippines plays a significant role in global assembly, testing and packaging, but captures limited value. Moving into higher-value activities such as integrated circuit design could materially increase productivity and domestic value capture.

In services, the report noted, a divide is emerging. Technology-enabled firms such as e-commerce and software platforms are already achieving significantly higher output per worker, while many traditional sectors remain labor-intensive. The report finds that e-commerce platforms generate over $135,000 in output per worker annually, roughly 50 times higher than traditional retail.

The implication, according to the Foxmont report, is clear: the Philippines does not lack demand or talent. It lacks sufficient capital per worker and the mechanisms to deploy that capital into more productive uses.

As private capital flows grow, Foxmont said, the central question is whether the investment inflows can be directed toward sectors and business models that raise productivity, strengthen enterprise capabilities and improve value capture across the economy. That, more than funding volume alone, will determine the country’s next phase of growth.