The country’s startup funding value plunged by 72 percent to just over $100 million in 2025—the lowest level in six years—as investors adopted a more cautious stance amid governance concerns linked to a multibillion-peso infrastructure corruption scandal.

A joint report by business news platform DealStreetAsia and Ayala-led venture capital firm Kickstart Ventures Inc. showed that Philippine startups raised $119 million last year, sharply down from $428 million in 2024.

The amount covered 23 startup deals, lower than the 44 deals recorded the previous year.

Kickstart Ventures president and managing partner Minette Navarrete said the country’s weak showing coincided with a broader slowdown in investor flows across Southeast Asia, driven by eroded trust in governance.

She said investors are demanding stronger accountability, greater transparency, and more rigorous startup governance standards before reallocating capital.

In the Philippines, the drop in equity funding was more pronounced in the second half of 2025, when funding slid to $33 million from $86 million in the first half.

It was during this period that a massive corruption scandal involving flood-control projects unfolded, implicating multiple government officials and later weighing on the country’s economic growth.

Amid the downturn, Indonesia overtook the Philippines in startup funding after securing $260 million, rebounding from its own corruption issues earlier in the year that had initially dampened investor sentiment.

Based on the report, Southeast Asia’s equity investment rose by 18 percent last year to $5.37 billion from $4.55 billion, even as deal volume fell to 461 from 633 a year earlier.

“Overall, this feels like a phase of disciplined consolidation. There is confidence returning to the market, but it is a quieter, more thoughtful kind,” Navarrete said.

“From our perspective, that is healthy. It creates the conditions for a more resilient and sustainable next growth cycle, rather than a premature rebound driven by excess risk-taking,” she added.

For this year, Navarrete said there remains room for growth in the Philippines’ startup ecosystem, noting that it is still relatively young, with independent startups continuing to find their footing.

She said the country’s young population, expanding middle class, and rapidly growing digital adoption provide a solid foundation to sustain inbound investor interest.

“2026 will likely extend the structured reset we’re seeing in venture capital across Southeast Asia. We expect investment activity to pick up gradually, though not uniformly across markets, sectors, or stages,” she said.

While fintech remains resilient, Navarrete said the Philippines could attract more startup funding in areas such as artificial intelligence (AI) and smart spaces focused on sustainability and energy efficiency.

She added that private consumption will remain a key growth driver, in line with trends across the region.

To fully realize this potential, Navarrete said the country must further address structural challenges in regulation, talent development, and funding scale to strengthen the startup ecosystem.