Philippines’ startup ecosystem faces several barriers, yet to take off: John Orrock, Future Now Ventures

John Orrock, founder and CEO of Future Now Ventures

For the past two years, the Philippine startup community has consistently made developments, but despite all these, the country has yet to give birth to a startup ecosystem, said John Orrock, founder and CEO of Manila-based venture capital Future Now Ventures, during an interaction with DEALSTREETASIA.

Orrock described the Philippine startup ecosystem as still “very small” compared with those in other countries. This, despite the emergence of local startup groups, innovation hubs, investments by some VCs and angel investors, and a number of launched government initiatives, he said.

“It’s on a very early, mega earlier stage. It is so small. There is noise but it’s really very small,” Orrock said.

Also Read: Philippine startup community gains more ground in 2015, gears for drastic changes this 2016

Originally from South Wales, Australia, Orrock is an entrepreneur with global experience both in developed and emerging markets. He does business advisory specialising in cloud computing, Software-as-a-Service (SaaS) business applications, private cloud solutions, Platform-as-a-Service (PaaS) application development, and Infrastructure-as-a-Service (IaaS) deployment.

Orrock founded Cloud Sherpas in the Philippines in 2007 which later became a global cloud computing advisory and technology services company and was recently acquired by Accenture. His other past companies were Okere LLC, and Headstrong.

In July 2014, he founded Future Now Ventures in the Philippines that established relationships with startups and fast growth companies developing cloud, mobile, and enterprise technologies and services.

Orrock, who is well aware of many of the investments happening in the local startup scene, and has witnessed the emergence of new innovation hubs and some government initiatives, still maintained that the ecosystem is yet to take off.

Also read: Exclusive: Philippine VC Future Now Ventures invests in IoT startup Reekoh

In 2015 for instance, the Philippines had its first startup roadmap that the government launched in collaboration with technology entrepreneurs, investors, and accelerators. It targets to reach 500 startups in 2020 with a valuation of $2 billion.

Several high-impact entrepreneurship programmes such as US-based Endeavor, startup accelerator 1337 Ventures, and incubator Make a Difference (MAD) Industries, both from Malaysia, all set shop in Philippines last year.

In the same year, Kickstart Ventures Inc and IdeaSpace Foundation, heightened their support to local startup ideas. Both are owned by rival mobile telco companies Globe Telecom Inc and Smart Communications Inc (Smart), respectively. Kickstart received its “Fund 2” or $50 million VC fund from Globe in March 2015, while IdeaSpace opted for equity-free funding just last January.

Also Read: Philippine tech startup roadmap guns for 500 startups with $2b valuation by 2020

Pain points

Orrock cited the major gaps in the local startup space such as difficulties in starting a new company, insufficent support from the government, and lack of participation among the country’s biggest companies, as barriers to the startup ecosystem taking off.

“On starting points, if you’re a startup you can’t open a bank account. There’s no one in the public sector helping them. You can’t even register your company easily,” Orrock said. “There is nothing easy for a startup here, for someone who wants to start a company, from point zero.”

He noted recent tax incentives for individual startups were futile since these new companies would anyway have to earn first before they can even pay taxes.

Also read: Philippine govt urges VCs to invest in local startups

Tax break for bigger firms as solution

What Orrock suggests as a solution to improve the startup ecosystem is for the bigger corporations to have a tax break, and said the latter could then give away the money they save from tax breaks to fund smaller startups.

He believed there is enormous amount of monies from many companies in the Philippines that could be invested in local startups, and reiterated that single biggest step the government could take is to give large corporations some tax incentives.

“If the government would wanna spare it on, they must do some macro-level tax incentive or fund matching program to suck out some money from those players, to give them some at least incentive to help them everyday,” Orrock said.

“We do research, and there’s a lot of high-end first services that can go into the space. The government should do things like that,” he added.

Also read: Modelled on Block 71 & MaGIC, PH launches first Innovation Hub

Lucrative opportunities

Orrock said there are a lot of lucrative business opportunities in the Philippines pertaining to very simple things.

“There are some very large companies that are extremely profitable and there’s a massive economy and more backward in technology, more backward in everything. So the government can say like we wanna be the biggest fintech innovation country in Asia, then incent some company to dump into that,” he said.

The VC head also pointed out that there’s enough population to be serviced, particularly in healthtech, job recruitment and matching, transportation, digital services, among others.

“There’s actually simple things that are not too hard to achieve or get moving, but there’s just no one driving them,” Orrock said. “There’s a positive outlook but it’s a long road. So the [startup ecosystem] is not even born yet really. But if you think about it there is massive amount that can be done.”

Also Read:

Malaysian accelerator 1337 Ventures invests in 3 PH startups

Philippine govt launches first global ICT biz incubator hub

Philippines, APEC form new startup conference ‘SlingshotMNL’

Philippines: Narra Venture Capital targets fintech, edtech & healthtech startups

PH startup FlySpaces raises $500k from Coent Venture, others; launches in Singapore

Accenture acquires former PH startup Cloud Sherpas

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.