Preparing for Fund Raising from Regional Investors

Jeffrey Seah, Partner, and Gwen Sim, Senior Analyst at Quest Ventures

Whilst the investment world anticipated private market funding to slow down at the onset of COVID-19 and its constrictive repercussions to the global economy, tech startups worldwide are instead flushed with an expansive volume of VC funding hitting record highs.

Southeast Asia (SEA) is no exception and has successfully drawn a disproportionate allocation of venture capital.  High profile exit plans (IPOs, SPACs), opportunistic mergers behind accelerated & desperate digital transformation of legacy industries, and accelerating births of unicorns in the region have collectively generated international attention.

We zoom in on the region's blue ocean - The Philippines.  The country is home to more than 100 million people spread over 7000-8000 islands (depending on tidal flows), and has more than 10 million diasporas working across 100 countries – “Remittances” is Top 10 in the country’s FDI.

Southeast Asia-focused VCs have long recognized its potential but few have actually understood their Bayanihan culture, made inroads into their business ecosystems, or made an actual investment in the Philippine archipelago. As investments in Indonesia and Singapore saturate with copycats and premium valuations, the urgency of focus in investors looking for new venture frontier land has shifted to under-appreciated tech ecosystems like The Philippines.

The time is ripe now for Filipino startups to orientate towards professional regional VC investments – besides their traditional PH family business “venture studio” support base –with a regional thematic focus to fully realize the potential of the Philippines to the SE Asia tech ecosystem.

Startups need to understand that VCs are looking for the next billion-dollar company and hence are actively looking for founders who believe that their startup can achieve much more besides dominating the PH domestic market, and its high-value international Overseas Filipino Worker (OFW) diaspora.

For founders, constructing the market size exercise is critical beyond fundraising pitching. It allows the management team to understand the growth gradient & scale of resourcing the startup needs to budget for, e.g., metrics such as GMV, revenue, number of users.  Such strategic planning discipline forms the starting blocks to BHAG billion-dollar valuation.  And in pitch-proofing this process, founders may come to an earlier realization that the domestic Filipino market may not be big enough to build a unicorn and adopt a regional expansion mindset from day one.

As Filipino startups prepare themselves for a belated onslaught of regional foreign investors, founders should also not forget to garner support from local angels and corporates as well, especially with strategic investors from the local conglomerates who are embracing the digital transformation with relish. In the words of the late Mon Jimenz, past Tourism Secretary and an-exit founder of a Creative Content House (sold to Publicis Groupe) –“It's More Fun in the Philippines” for venture investments!

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