Evaluating the Philippine Innovation Ecosystem (Highlights/Notes)

Sources

1. Rebert Kerwin C. Billones, Carlos Matthew P. Cases, Tanya V. Olegario, Ryan Rhay P. Vicerra, Nilo T. Bugtai, Elmer P. Dadios, De La Salle University “A Systemic Evaluation of the Philippine Innovation Ecosystem” - 2020-12

Introduction

• A prolific innovation ecosystem is the key to a successful innovation(s)
• Oxentia’s The Elements of Review provides a systematic approach for evaluating innovation ecosystems; it can identify the gaps in the market.
• It is good to have successful startups because it can integrate research-based technologies into enterprise-level systems

Startups

Startups are companies at its early stages that sell a main product/service to meet a particular demand

• Innovation ecosystems are composed of elements which are classified into the following categories:
  1. Research (Universities)
  2. Government
  3. Businesses
  4. Third Sector (charities and enablers)

Research and Technology Organizations (RTOs)

• Universities play a key role in innovation systems because they heavily contribute to research and development.
• 6 elements included in this category
  1. vice-chancellor
  2. university policy
  3. research activity
  4. research services
  5. proof of concept funds
  6. technology transfer office

Technology transfer

Technology transfer pertains to the commercialization of university research

• University researches are valuable sources for innovation. It can either be adopted by local communities or be commercialized.
• Poor policy of technology transfer can drive off foreign subsidiaries from linking with a domestic firm
• Philippines has good policies of technology transfer
  • Most universities support commercialization of their products
  • Existing laws involving the benefits of commercializing research products
  • Government and foreign organizations support Philippine researches
  • Technology Transfer Offices (TTOs) are present in the country’s big universities

Government

• Governments can encourage the creation of startup by providing tax incentives, funding, and benefits for individuals forming innovative businesses. Philippine laws and organizations that tries to do this include the following:
  • Innovative Startup Act (RA 11337)
    • This mandates the creation of the Philippine Start-Up Development Program—a program that gives incentives and benefits for innovative businesses.
    • Provision of the Startup Grant Fund
      • This exempts startups from taxes in their first two years of operation
  • Tax Reform for Attracting Better and High Quality Opportunities (TRABAHO) Bill
    • Provide incentives for registered companies that pursue innovation
  • Innovation Council (or DOST-PCIEERD)
    • Provides grants for startups
• Government challenges in promoting the creation of startups
  • No laws that incentivize early-age investors who invest from their own pockets

Businesses

• Presence of businesses that closely work together in the country increases the chances of startups succeeding. This is because startups also need funds and connections to source materials and services.
• Connecting startups with big companies can foster their growth: they have access to training, they are incubated until they are ready to be invested for, and they are provided venture capital.
• Business networks also provide professional services that supplement the needs of an innovation system: they can allow startups to outsource some of their activities.

Venture Capital

A venture capital is a form of private equity provided by firms to support a startup at its early stage.

An equity is money provided that is to be returned to the shareholders once the assets are liquidated and debts are paid

Third Sector

• This includes the following elements:
  • Non-Governmental Organizations (NGOs)
  • charities
  • foundations
  • not-for-profit companies
  • social enterprises
• These are organizations that supports and funds things (such as startups, innovations, and projects) that align with their goals.

Methodology

The Elements of Review prompts evaluators to rate the performance of each element in each categories of innovation ecosystems:

Universities	Government	Businesses	The Third Sector
Vice-Chancellor	Tax Incentives	Business Networks	Non-governmental Organization
Research Activity	Grant Programmes	Innovative Tech Companies	Charity
University Policy	Legislative Framework	Business Angels	Foundation
Research Services	Public Procurement	Seed and Venture Capital	Not for Profit
Proof of Concept Funds	Support, Clarity, and Consistency	Entrepreneurs	Social Enterprise
Tech Transfer Office		Professional Advisers

This paper used a number rating to assess each element (1 for low performance and 3 for best performance).

Results

SUMMARY

Area	Rating
RTOs	2.33
Government	2.4
Businesses	2.5
Third Sector	1.4

RTOs

• Although vice-chancellors support commercialization, not a lot of startups come from universities
• University policies are unclear in the benefits they provide to research-entrepreneurs
• Despite universities having transfer offices, they are not promoted enough.

Element	Rating
Vice-chancellor	2
Research activity	3
University Policy	1
Research Services	3
Proof of Concept Funds	3
Tech Transfer Office	2

Government

• Public procurement has the reputation of being slow
• Support, clarity, and consistency, and the grant programmes still needs to be improved.
  • The need for a bill for angel investor incentives
  • Greater budget allocated for research

Element	Rating
Tax Incentives	3
Grant Programmes	2
Legislative Framework	3
Public Procurement	2
Support, Clarity, and Consistency	2

Business

• Lack of companies engaging in high-tech industries
• Need more emphasis on the design of devices or systems
• Lack of domestic angel investors
• Not many organizations provide venture capital

Element	Rating
Business Networks	3
Innovative Tech Companies	2
Business Angels	2
Seed and Venture Capital	2
Entrepreneurs	3
Professional Advisers	3

Third Sector

• Not a lot of third sector organizations active in this country

Element	Rating
Non-Governmental Organizations	1
Charity	1
Foundation	1
Not for Profit	2
Social Enterprise	2