The recent investor interest in Philippines-based live-streaming app Kumu is proof that significant internet businesses can be built in the country, its co-founder and president, Rexy Josh Dorado, told DealStreetAsia.
“The country is on the cusp of some cascading breakthroughs and it’s for the global investors to decide whether they want to be a part of the ride,” said Dorado, who was recognised by Forbes in its 2021 30 under 30 Asia list for achievements in Media, Marketing, and Advertising.
Kumu has been attracting funds this year, amidst the global coronavirus pandemic that forced people to stay at home and go online to quench their thirst for entertainment, e-commerce, and other stuff.
In October, the company announced it had raised a Series C funding round led by General Atlantic. Regulatory filings show it has bagged nearly $73 million in the round, which was joined by SIG, Openspace, Kickstart Ventures and Endeavor Catalyst, among others.
Kumu’s Series C round is a significant fundraising milestone in the Philippines where most deals involve early-stage rounds. According to DealStreetAsia’s latest quarterly deal review for Southeast Asia, the top 10 deals inked by Philippine firms in the third quarter were dominated by seed and Series A investments.
In April, the startup raised $15 million in its Series B round backed by SIG Global, Openspace Ventures, Gentree Fund, Kickstart Ventures, Summit Media, Gobi-Core Philippine Fund, Endeavor Catalyst, and Foxmont Capital.
Its Series A round in April 2020 raised around $4-5 million led by Openspace Ventures.
“We’re seeing more global investors than ever looking to support the next generation of Filipino founders, and it’s part of our responsibility to keep that FOMO strong by doing good work, growing responsibly, and building a business we can all be proud of,” Dorado added.
Kumu, a failed messenger app
Kumu is a shortened version of the Filipino phrase “kumusta ka?” or “how are you?”, which is often used as a form of greeting.
Dorado and co-founder Roland Ros didn’t envision Kumu to be a successful live streaming app when they first launched the startup in 2017. Originally, the two wanted Kumu to be a Filipino messenger app / super app inspired by China’s WeChat and South Korea’s Kakao.
“Roland and I met in 2015 when I recruited him to the board of directors of my nonprofit (Kaya Collaborative), which brought Filipinos abroad back to work in the Philippines. For about two years, we brainstormed ideas on how to do this at a bigger scale,” Dorado recalled.
But Kumu, the messenger app, failed almost immediately upon launch in 2017. However, a beta feature within that initial app, the live streaming feature, showed promise, and so the duo relaunched Kumu as a live streaming app in August 2018.
It made a breakthrough. Kumu soon amassed a user base of over 10 million registered users from over 55 countries. In that time, it has ranked as the #1 top-grossing social app in the Philippines and top 10 in multiple markets including Canada, Australia, Hong Kong, and Singapore.
“We are still very small and niche in comparison to our original vision—there remains a lot of work ahead of us. That said, we are humbled by the growth we’ve gotten so far and all the communities that have formed on the platform,” Dorado said.
Targeting Filipinos abroad
Kumu caters mainly to the Philippine market and Filipinos working or living abroad, a huge market for the live-streaming app. Some 12 million Filipinos live and work across countries like the US, Canada, Saudi Arabia, United Arab Emirates (UAE), Hong Kong, Japan, and Singapore.
Many of these overseas Filipinos have turned to Kumu as a way to stay in touch with family and friends back home and comprise one of the company’s strongest revenue generators.
Its business model is driven by tools like virtual gifting, advertising, and e-commerce, which allow content creators to convert engagement into income. Kumu users can buy stuff from the online shop and give them to their preferred content creators. Streamers can then convert these virtual gifts into cash.
Content creators, users, and partners are called Kumunity, which the startup said is the heart of Kumu.
“The first generation of social media was defined by passive engagement, where the platform wins through advertising, but all except the top 1% of creators struggle to earn a living,” said Dorado.
“Our growth is driven by a couple of things: on one side, people who are looking for ways to connect in a way that is positive, authentic, and deep, which is becoming harder and harder within the mainstream social platforms; on the other side, creators looking for ways to through deep relationships with their most engaged fans,” he added.
Eye on a global audience, focus on Filipino creators
The existing Kumu app is garnering appeal beyond the Filipino community. The number of non-Filipino communities in the US and Europe that are following Filipino creators on the platform is growing and the company seeks to capitalise on this popularity.
The next 12-18 months will be about building a “world-class” product and digging moats in the Philippine market by investing in groundbreaking content across the board.
“We believe we can break through to global audiences while keeping our core operations focused on being the best partner of Filipino creators,” Dorado added.
The company currently has 500 employees and over a thousand streamers who earn a full-time income on the platform. Many more, he said, whose lives have been changed by the connections they have formed through the app.
“It is our responsibility—and mine personally—to ensure that we not only maintain the momentum, but seize this opportunity to make Kumu one of the first truly great Filipino companies of its kind,” Dorado said.
Building something great
Dorado said the market dynamic is shifting to the Filipino founder’s side and it is just a matter of time before things align.
“Know your worth, trust the process, and be confident that if you are building something that is solving a real problem, you can build something great,” he tells startup founders.
Kumu joins a rising number of Philippine firms that have attracted investments from both local and global investors. In November alone, local companies secured $306.5 million in funding over nine deals, according to proprietary data compiled by DealStreetAsia
During the Asia PE-VC Summit in September, Minette Navarrete, vice-chairman and president of corporate venture capital firm Kickstart Ventures, said Philippine startups are starting to get the attention of investors.
Going forward, venture activity in the Philippines is expected to go up, according to Franco Varona of Foxmont Capital Partners, noting the $437.5 million that went into startups in the first nine months of the year. The figure, he said, was way higher than the $18 million pumped in 2017 and the $183.8 million in 2020.
According to Gobi-Core Philippines Fund, local startups are likely to raise up to $2 billion over the next three years, more than the total amount raised in the last five years.