Limited access to funding and lack of focus on areas outside Metro Manila hindered the number of young entrepreneurs in the country, a report by the International Trade Center revealed.

According to the study “Entrepreneurship Ecosystem in the Philippines: Network Analysis and Mapping of Institutions Supporting Youth Entrepreneurship,” the country’s entrepreneurship ecosystem continues to struggle to attract sufficient capital to support early-stage businesses.

It noted that most of the deals were made with start-ups already in the mature stage, leaving out those in the early stage, who rely on access to capital to scale their operations.

For one, there was a huge drop in the number of student-led ventures that continue their start-up. Out of a cohort of 10, only one or two pursue their entrepreneurial ambitions after finishing the program and graduating from university, according to the study.

“Young entrepreneurs cannot survive on their own capital as they often lack the savings needed to tap into to fund their own business ventures,” the study said.

“With little financial resources available, bright and equally passionate young entrepreneurs often quit early as they see few opportunities to scale up and receive financial support,” it added.

The study also cited the centrism in Metro Manila, which is seen as the center for the country’s entrepreneurship ecosystem’s development activities, as a key ecosystem actor.

It found that the most diverse group of start-up funders is located in the National Capital Region, giving Metro-Manila-based entrepreneurs a distinct advantage over their competition in other areas of the country.

However, there is a network of university-based funders, such as the Department of Science and Technology, in regions outside Metro Manila; they are “less dense” compared to those in the capital region.

“When ecosystem support focuses too heavily in Manila, it leaves many areas under-served and leaves potential youth talent stranded in the process,” the study reads.

To resolve this issue, the study suggested that a grant be made available to young start-ups, specifically a starter fund grant that could range from P250,000 to P350,000 for six months, to cover other expenses related to product development, prototyping, and validation.

It also emphasized the need to institute a network of funders outside Metro Manila by partnering with experts from other institutions and reaching out to local firms to understand entrepreneurs’ unique needs.

The Department of Trade and Industry earlier reported that the Manila startup ecosystem hit $6.4 billion by the end of 2023. At the same time, a 72 percent compound annual growth rate was seen between July 2019 and December 2021 and continued between July 2021 and December 2023.

On the other hand, the country ranked 52nd globally in 2021 in terms of start-up ecosystem, with thriving industries including fintech (19 percent), e-commerce (7 percent), education and healthcare (5.2 percent), and agriculture (3.1 percent).