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Bright Future ahead for Budding Techpreneurs: How can startups benefit from Innovative Startup Act?

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The covid-19 pandemic exposed not only the weaknesses in our supply chains but also the difficulties in developing our digital ecosystem, despite the many possibilities it offers. Blockchain solutions had to be created to address the challenge of verifying, sharing, and securing data in the age of information and in the middle of a precarious world health crisis. This is precisely what inspired the creation of Twala,  the first Filipino-developed blockchain, in 2020 by a team led by Ireland-based engineer Jefrey Reyes.

Fed up with paperworks as an Overseas Filipino Worker, Reyes figured that there should be a way to ensure an ecosystem of digital trust, security, and compliance for banks, government institutions, organizations, and businesses. [1] As companies continue to shift to remote or hybrid working arrangements, Twala provides an efficient and safe way to digitally sign (e-signature) legal documents and transactions without the hassle of printing and sending documents through third party couriers.



Earlier this year, Twala was awarded a PHP4.6 million grant as one of the beneficiaries of the Department of Science and Technology-Philippine Council for Industry, Energy, and Emerging Technology Research and Development (DOST-PCIEERD) Grant Fund Program.[3] This Grant Fund Program was essentially enabled by the Innovative Startup Act (RA 11337) [4] [5] in its aim to help boost the reach of budding startups and provide them with financial assistance.

How can other startups benefit from Innovative Startup Act Like Twala? Here are the important things you need to know: 

1. Philippine Startup Development Program (PSDP)

Introduced by Senator Paolo Benigno “Bam” Aquino IV in 2017 and signed into law in 2019 by Former President Rodrigo Duterte, the Innovative Startup Act (RA 11337) aims to “strengthen, promote, and develop an innovative and entrepreneurial ecosystem and culture in the Philippines.”

Through the virtue of this act, the Philippine Startup Development Program was created. Essentially, the Program is “composed of programs, benefits, and incentives for startups and startup enablers.” It supports startups—from concept-making, product development, marketing, and up to expansion. It is currently spearheaded by three government agencies which serve as the Steering Committee namely, the Department of Science and Technology (DOST), the Department of Information and Communications Technology (DICT), and the Department of Trade and Industry (DTI).

2. Benefits and Incentives 

The Program covers not only tech-related startups as it also includes any startup or business venture that develops an “innovative product, process, or  business model”. The law defines these standards as new organizational methods in business practices, production, delivery, and product improvement. It also covers startup enablers or those that, as the law delineates, “provide goods, services, or capital identified to be crucial in supporting the operation and growth of startups.”

Here are some incentives and benefits provided by the new law and the PSDP in helping startups and aspiring entrepreneurs innovate:



  • Issuance of Subsidies – the PSDP provides subsidies to startups or startup enablers who are able to pass the application and selection process. This may include full or partial subsidies for the registration and application of business permit costs, facilities, office space, equipment, services, and the use of repurposed government facilities. This may also be issued through vouchers issued by the host agency. 
  • Endorsement of the host agency – this incentive will expedite the processing of applications by endorsing startups to the Intellectual Property Office of the Philippines (IPOPHL) and to the Department of Foreign Affairs (DFA).
  • Grants-in-aid (GIA) –  this can be used for research, development, training, and expansion projects. 
  • Training, Research, and Development – startups and startup enablers, through this act, will be given the chance to participate in local and international startup events or competitions. The subsidies, endorsements, and GIA previously mentioned would be provided for startups.

3. Capital Funding

Access to capital (or lack thereof) is one of the biggest challenges among aspiring Filipino entrepreneurs and startup enablers. Through this law, the Startup Investment Development Plan is created with DTI, DICT, DOST, and the Board of Investments (BOI) as the Steering Committee. This plan aims to develop short, medium, and long-term strategies to spur investments in startup and startup enablers in the country.

Moreover, the PSDP created by this law is authorized to provide funds through the Startup Grant Fund (SGF) and Startup Venture Fund (SVF). The SGF,spearheaded by the DOST, DICT, and DTI, is given to startups and startup enables that have passed the selection and application process. Meanwhile, the SVF is handled by the DTI in coordination with the National Development Company (NDC) and is used to “match investments by selected investors in startups based in the Philippines.”

4. Startup Visas

Under this law, the Department of Foreign Affairs (DFA) is commissioned to issue special startup visas for foreign owners of startups or startup enablers in the Philippines. The Bureau of Immigration (BI), on the other hand, is tasked to promulgate the immigration and admission guidelines in consonance with the provisions of the Innovative Startup Act and its implementing rules and regulations. 

 Three (3) types of startup visas are provided:

  • Startup Owner Visa – for aspiring or current foreign owners/“founders” of startups or startup enablers in the country.
  • Startup Employee Visa – for foreign employees of registered startups or startup enablers in the country.
  • Startup Investor Visa – for aspiring or current foreign investors of startups or startup enablers in the country.

These special startup visas will have an initial five (5)-year validity and may be renewed or extended for up to three (3)-years. Multiple-entry interim startups or startup enablers visas valid for six (6) months to one (1) year will be issued for free for aspiring startup owners, enablers, and investors upon the endorsement of the host agency (i.e., IPOPHL, DFA, etc.)

Furthermore, APEC Business Travel Card (ABTC) may be acquired by bona fide Filipino executives of qualified startups, in accordance with the rules and regulations promulgated by the DFA.

5. Threading the Path to Innovation and Economic Prosperity 

Innovation is needed to keep Filipino businesses alive. This kind of innovation cannot be done by the government alone and necessitates the help of startup enablers. We need to create partnerships to ensure inclusivity within the entrepreneurial ecosystem. To do this, DOST Undersecretary Rowena Cristina Guevara noted that “funding opportunities for innovative startups for their R&D (research and development) activities is needed to ensure a resilient and sustainable economy.” [6]

Now more than ever, budding techpreneurs should seize the wide array of opportunities provided by the Innovative Startup Act. As we grapple our way out of the recession brought about by a world health crisis, this law enables aspiring and current startups to pursue the business of their dreams. This will then spur economic prosperity and encourage technological breakthroughs in the long run. With this law in effect, budding startups and the country at large have a bright future ahead.

References:

[1] “About”. Twala. [Facebook Page]. https://www.facebook.com/twalaio/

[2] Ibid.

[3] The Manila Times. (2022). DoST grants funding to blockchain startup Twala for its digital signature innovation. https://www.manilatimes.net/2022/08/10/public-square/dost-grants-funding-to-blockchain-startup-twala-for-its-digital-signature-innovation/1854114

[4] Innovative Startup Act. The LawPhil Project. https://lawphil.net/statutes/repacts/ra2019/ra_11337_2019.html?fbclid=IwAR1EfMhiG_9QCynPYh7wukfAvK_YXxRYb3T6LuaC_IBUto8Uej0HMC7NG1E

[5] Innovative Startup Act – Implementing Rules and Regulations. DTI. https://ecommerce.dti.gov.ph/wp-content/uploads/2020/11/IRR-of-RA-11337-Innovative-Startup-Act.pdf?fbclid=IwAR2BJDVBqpp9IffiyN7KlqsAZwCazXGZ3s8ypW4SHz6-iua93n9UKAyxGQE

[6] Arayata, Ma. Cristina. (2021). Philippine News Agency. DICT, DOST, DTI join hands to develop PH startup ecosystem. https://www.pna.gov.ph/articles/1134513 

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