Manila-based innovation hub Launchgarage is planning to take on a venture capital role as it aims to raise a $5-10 million investment vehicle by the third quarter of 2018.
Jojo Flores, co-founder of Launchgarage and Silicon Valley-based innovation platform Plug and Play Tech Center, said it will be an early-stage fund that will invest primarily in the areas of fintech, agritech, aquatech, and BPO enterprise software applications.
“I think that these are the growth verticals where the Philippines can have a global play,” Flores said in an interaction with DEALSTREETASIA.
“I’m hoping to attract angel investors with high net worth value and domain expertise in various brick and mortar industries. We need to unleash some of this wealth into our startups. We need local validation before we can really attract foreign investors and customers,” Flores added.
Started in 2012, Launchgarage is a tech innovation hub in Manila that provides a venue for open collaboration, knowledge sharing, and events, among others. It was a startup acceleration programme established by Filipino early stage investment player Kickstart Ventures, and local applications engineering firm Proudcloud.
Speaking to this portal on the sidelines of GOAB (Geeks on A Beach) event, a global startup conference held at Puerto Princesa City in Palawan province, Flores said that many investors in the country don’t know how to invest in startups.
Big startup funding comes from outside the Philippines, and startups usually need to incorporate elsewhere to qualify, he added.
A report shared at the event noted that 547 startups have been found in the Philippines since 2014, with 83 of them confirmed dead, 320 still operational, while 137 claim to be on a break, or stealth mode.
A total of 130 of the 320 active startups have been verified to have gotten funding, most of it from angels, and family and friends.
Local startups focused on fintech received most funding, at $14.6 million in total investments as of 2016.
Launchgarage ventures and advisory head Fam Alonto said the new vehicle is a strategy to address the seed stage gap.
“We feel there’s always a gap. Once you graduated from seed stage, there’s a huge gap for funding. And we want to address that, not just at Launchgarage but as a community in general, because there are a lot of startups that couldn’t continue,” she said.
Alonto also said issues regarding “ease of doing business” remains as one of the barriers to the growth of startups in the Philippines. The country maintained its 99th place on the global index, compared to Indonesia that improved its rank from 108 in 2015 to 91 in 2016.
In registering businesses, for instance, it takes an average of 28 business days to complete the process in the Philippines, while it takes an average of eight business days to start a business in OECD (Organization for Economic Cooperation and Development) countries.