No easy answers in Philippines’ sluggish VC market – AVCJ Forum

Rather than highlight attractive demographics and economic growth trends, they noted that the country is still a prospective jurisdiction but has little VC to show for it. Optimism was mixed with frustration as calls for patience were counterbalanced by an acknowledgment of the ecosystem’s subtler shortcomings and possible fixes.

Minette Navarrete, president of Kickstart Ventures, looks for solutions in structural issues, observing that the policy environment must become more reliable in terms of ease of doing business. At the same time, there is a need for broader vision among founders. The Philippines remains conservative about risk-taking versus Indonesia and Vietnam, while start-ups are held back by limited experience and execution ability in the lower ranks of management. 

“Many start-ups are going to offer solutions for problems that are rather specific or parochial, perhaps something to do with a local need or national problem,” Navarrete said. “For investors who want to deliver good returns for LPs, it’s important to have an ambition that goes beyond the country. Even if we all talk about the great statistics for the consumer market, at the end of the day, we want something that has the potential to be a regional play, if not a global play.”

The Philippines’ international, English-speaking profile appears to bode well for development on this front, but some investors suggested it might also invite too much competition from Western corporates. Gervin Yang, a vice president at Openspace Ventures, said his firm has the expertise to support the highly localized businesses found in markets such as Indonesia. The Philippines, by contrast, presents an unusual mix of risks around lower entry barriers and unfamiliarity.

“When we talk to founders in the Philippines, it takes a lot more time and understanding of what kind of value-add we need to put in to make it work,” Yang said. “We do understand that it’s a large market – the GDP per capita is actually better than Vietnam. It’s pretty much one of the most equal in terms of men and women in management positions across the region. But I think we need more people to really do a deep dive within the country and understand how we can help.”

Srinivas Polishetty, a vice president at IP Ventures, cited the need for more government support in infrastructure development and more corporate VC fund creation despite a view there is already adequate capital available. This was mooted as a way of spurring deal structuring creativity and increasing competition among investors while also heightening the necessary appetite for risk. At the same time, it could help unlock some of the Philippines’ most understated advantages.  

“Today we call China the world’s factory. But if there is a service that can be provided globally while sitting in the Philippines, the Philippines is capable of doing that, and it has done it in different ages,” Polishetty said. “When there was no technology, it was exporting helpers, programmers, lawyers, and engineers. When there was technology, it was offshoring and call-centers. I think if there’s one such thing, this country is going to push into it and capture that.”

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• Topics
• Southeast Asia
• GPs
• Early-stage
• Philippines
• Venture
• Openspace Ventures
• AVCJ Events