For the past several years, the tech industry in the Philippines has been considered a lucrative investment opportunity by the global investors. In fact, the local entrepreneurs are described to be “techie” in nature. The strange irony here is that, on the ground level, the country has very low levels of tech adoption. Apart from the regulatory problems, it’s the bandwidth connection issues and the lack of private enterprise support, which is keeping the country’s tech startup ecosystem from reaching its potential.
In an interaction with DEALSTREETASIA, John Orrock, CEO of Future Now Ventures talks about the potential and problems of the Philippine tech startup scene, the way forward and the action required to fast-track the ecosystem for both the aspiring startups and the potential private investors.
Future Now Ventures is a Philippine-based boutique venture capital firm focusing on startups and fast-growth companies developing cloud, mobile and enterprise technologies and services. It is building an ecosystem of technology startups with its 12 partner companies: LikeJobs, Four Eyes, Rollbase Philippines, TSA Group, Cloud Sherpas Incorporated, BillingPlatform.com, AllFamous Digital, Skedulo, P3ople4u, Kalibrr, Seven Scent, and AutoDeal. Edited excerpts from the interview:
How do you see the local startup community in the Philippines?
Philippine tech startup community and capability is still not mature. Although there is no dearth of individual talent, good advice is lacking. The firms are willing to invest but they lack experience. This situation makes it very hard for the entrepreneur to get the right exposure to different business scenarios. Most entrepreneurs, here in the Philippines, are technically qualified but don’t understand the structure of the business and other regulatory issues.
What do you think of the tech adoption in the Philippines?
It is slow, primarily, because the (Internet) bandwidth is hard to access. Entrepreneurs don’t spend enough money on technology, but this is starting to change. The tech adoption is extremely low right now, which means it can only go up. There is massive opportunity, a growing need for tech and I think its going to peak in the near future. Slow connection is crippling people. You don’t realise that until you go somewhere else. For anything that is tech, it’s a challenge on where you can do the most innovation and get the most innovation.
What kind of tech business opportunities do you see in the Philippines?
From a tech standpoint, anything that relates to cloud, mobile, and data sensitivity has potential. Those are types of areas where demand is coming from. Another area is addressing local problems through tech solutions. For example setting up a company in minutes rather than months or streamlining the way how businesses are registered and who owns them. In Australia it is extremely regulated and it takes only 15 minutes to set up a company. Here it would take like four months. Also financial and insurance services are emerging areas. There’s a lot of innovation that can be done from all the franchise organisations through mobile apps, in these areas. The government can also provide a lot of opportunity but that’s not generally for startups because it’s extremely difficult to work on that segment unless you do it through an aid organisation.
Education and content education is another area where tech-innovation can work. Another challenge is how do you provide better onshore, offshore services. How do you expose the professional services capability and tech capabilities of the Philippines to other countries? Because although this segment is now large, it can be much larger. A lot of companies don’t have human capital management software and anything that relates to tracking of revenue can be another sector for tech innovators.
The Department of Science and Technology (DOST) has announced a plan to launch the first ever tech startup roadmap in the Philippines. What’s your advice to DOST?
They should find an advising group that knows how to do it right. It’s good that they’re trying to help startups; I think we could propose to help them. The time is running out for them because in 2016 a new administration is going to come in and they might change the course of action.
The roadmap could provide the immediate, the short term and the long term goals. To fulfill immediate needs of startups, we need private enterprises that can share good ideas. Then we need to encourage the private enterprises to sponsor, support or adopt these ideas and champion them. For other longer term goals, tax incentives and other regulatory issues need to be sorted. .
What’s your advice to startups in terms of pitching ideas to companies?
They should prepare well for their audience. They must have a very clear view on how they will spend the (seed) money and what goals will they achieve with that money. They must also have clarity about their offering, especially compared to the competitors; the marketing of the product and the revenue source from it. Sometimes it comes down to the very basic things, especially on how they would spend their money. They must know exactly how they will use the funds, about their products, and their organisation structure.
What’s your advice to investors who plan to support local tech startups?
They must realise that they’re investing in a company and not buying it. It means investing in the people, their capability, the ideas, and the likelihood of those ideas to succeed.
(edited by Yamini Dhall)