In 2021, total startup funding in the Philippines reached $858 million, a figure that surpassed the combined $803 million invested over the previous three years. That surge happened despite — or perhaps partly because of — an ecosystem where personal connections, known as the padrino system, have historically determined who gets opportunities. For founders without those connections, the question isn’t whether the system exists, but how to navigate around it.
The sevenfold increase in active startups since 2015 suggests that the ecosystem is growing faster than the old-boy network can control. But the gap between having a good idea and getting it funded, mentored, or hired for remains wider for founders who lack a padrino. This article breaks down where the real barriers are, which government programs actually bypass patronage, and what non-connected founders can do to compete.
How the Padrino System Actually Affects Startups
The padrino system, rooted in Spanish colonial compadrazgo traditions, evolved from ritual kinship into a patronage network where favors and endorsements replace merit. For startups, this means that a founder’s network often matters more than their product’s viability. But the 2019 laws — the Philippine Innovation Act and the Innovative Startup Act — changed the landscape by legitimizing government programs that were previously ad-hoc and vulnerable to political interference.
What Changes the Answer for Non-Connected Founders
The most important shift is structural: the government now runs startup programs through agencies like DOST, DTI, and DICT that have clear, published criteria. These programs don’t require a padrino — they require a completed application, a viable product, and compliance with eligibility rules. That doesn’t eliminate the advantage of connections, but it creates a parallel track where merit can win.
Consider the numbers. DOST’s PCIEERD funded 49 startups with 183 million pesos in 2021–2022. DOST’s TAPI Venture Financing Program offers up to 2 million pesos covering up to 70% of project cost. DTI operates a 250-million-peso startup venture fund. These are substantial sums distributed through application processes, not backroom deals.
The Philippines ranks among the top 20 global ecosystems for affordable talent and top 25 in Asia for funding (Startup Genome 2022). But those rankings measure potential, not access. The real question is whether a founder in Cagayan de Oro or Davao can access the same opportunities as one in Makati with family connections. The answer is increasingly yes — but only if they know where to look.
Complications, Exceptions & Fine Print
DOST Programs Were Once Discontinued Due to COA Concerns
Between 2017 and 2018, some DOST startup programs were halted after the Commission on Audit raised concerns about their legality. The 2019 Innovative Startup Act resolved that by giving these programs a clear legal mandate. But the episode shows that government support isn’t always stable — founders should monitor program continuity and have backup plans.
The Pre-Series A Funding Gap Is Real
The 2023 ADB study identified a specific gap: startups struggle to transition from seed funding to Series A. Government grants (typically 500,000 to 5 million pesos) help with early-stage costs but don’t replace venture capital. Non-connected founders may need to bootstrap longer or seek alternative funding like revenue-based financing.
Red Tape Still Favors the Connected
Multiple permits and lengthy processes before operations can commence create opportunities for padrino-based shortcuts. A proposed “one stop shop” for qualified startups, similar to “Green Lanes” for strategic investments, hasn’t been fully implemented. Until it is, founders should budget extra time for regulatory compliance.
Regional Hubs Offer a Different Path
Seven Philippine cities outside Metro Manila — including Cebu City, Davao City, and Cagayan de Oro — are emerging as startup hubs. DOST programs and local incentives like Start-Up QC are deliberately designed to decentralize opportunities. For non-connected founders, building in a regional hub may mean less competition and more direct access to government support.
What Non-Connected Founders Can Actually Do
Apply Directly to DOST Programs
DOST’s four main councils offer grants with published criteria:
- 1PCAARRD (Agriculture & Natural Resources)Up to 5 million pesos for startups operating 1–5 years. Also runs the Agri-Aqua Innovation Challenge with prizes of 100,000–1 million pesos plus mentorship.
- 2PCHRD (Health R&D)Startup Research Grants of 3–5 million pesos for early-stage health research and market traction.
- 3PCIEERD (Sustainable Industries & Tech)Funds startups in sustainable industries, learning, remote productivity, creative industries, and data-driven solutions. 49 startups received 183 million pesos in 2021–2022.
- 4TAPI Venture FinancingUp to 2 million pesos (covering up to 70% of project cost) for technology viability, competitiveness, and commercialization.
Use DTI’s Venture Fund and Mentorship
DTI’s 250-million-peso startup venture fund is available for expansion, product development, sales, and marketing. The agency also provides learning sessions, consultation, and mentorship for early-stage startups, plus financial management and IP support for advanced-stage startups. These are application-based, not connection-based.
Leverage DICT’s Digital Programs
DICT’s Digital Startup Development and Acceleration Program includes Startup 101 workshops and Startup 102 pathways. The agency is developing the One Philippine Startup Portal as an online database for startups and enablers. DICT’s ICT Industry Development Bureau will launch a fund offering 500,000–1 million peso grants for early-stage ICT startups with proof of concept or prototype needs.
Target Regional Incubators and Accelerators
The National Agri-Aqua Technology Business Incubation (ATBI) program has established 22 ATBIs with 230 million pesos since 2017. These are spread across the country, not concentrated in Metro Manila. QBO Innovation Hub (a collaboration of IdeaSpace, J.P. Morgan, DOST, and DTI) and the National Startup Accelerator Platform (DTI and Plug & Play) are also accessible through open applications.
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Frequently Asked Questions
Do I need a padrino to get a DOST grant? ▾
What’s the minimum capital for foreign investors in Philippine startups? ▾
How much funding can I get from DOST’s TAPI program? ▾
Are there startup programs outside Metro Manila? ▾
What’s the “Gobyernong Walang Padrino Act”? ▾
How do I find startup mentors without connections? ▾
Can AI help level the playing field? ▾
What’s the biggest risk for non-connected startups? ▾
What to Do Next
The padrino system isn’t going to disappear overnight, but the infrastructure to bypass it already exists. The most practical step is to identify which government program matches your startup’s stage and sector, then apply — treating the application process as seriously as you would a pitch to investors. Monitor the progress of the “Gobyernong Walang Padrino Act” and similar reforms, but don’t wait for them. The ecosystem has grown from 100 to 700 active startups in less than a decade, and most of those founders didn’t have a padrino — they had a product, a plan, and the willingness to navigate a system that’s slowly becoming more merit-based.
If this was useful, you might also want to read how inefficient systems cost Filipino companies money.
Sources
Confusing rules hurt Filipino businesses — Explores how regulatory complexity affects startups and small businesses beyond the padrino system.
Philippine companies struggle with uncertainty — Discusses the broader challenges startups face in an unpredictable business environment.
How the Philippines is helping tech startups. ADB / BIMP-EAGA, 2023.
Philippine Tech Startups 2026: Real Impact, Job Creation. The Business Manual, 2025.
Fund in the sun: why the Philippines could be the next startup powerhouse. Withers Worldwide, 2025.
Padrino System. Grokipedia.
