As of now, Southeast Asia has almost 50 unicorn startups, but The Philippines has only one – Mynt. This fintech company raised US$300 million funding recently, bringing their valuation to USD 2 billion.
With Singapore and Indonesia leading the way, The Philippines has a lot of catching up to do and we wanted to find out why. Who better to help us understand the country and local startup ecosystem other than Kickstart Ventures Vice President for Investments, Joan Yao. She has been with the team since August 2016 and has led the growth in the portfolio from 25 to 55 investments across seven countries, working on deals including Kumu, Coins.ph, Wattpad, C88, Igloohome and Sprout.
Why JazzyPay is bullish on The Philippines fintech industry
Kickstart is the Philippines’ most active venture capital firm, investing in Seed to Series C stage startups in the Philippines and beyond. Kickstart portfolio companies have attracted funding from some of the world’s most respected tech investors, and deliver solutions in the fields of Enterprise SaaS, Fintech, Healthtech, and Media/Content.
Prior to Kickstart, Joan was Investment Manager for Southeast Asia at LGT Venture Philanthropy, the impact investing arm of LGT Group, the largest family-owned private banking and asset management group in the world. For six years, Joan was primarily responsible for the sourcing, screening, execution, and management of LGT VP’s deals in the region.
What do you look out for from early-stage startups in Southeast Asia?
“Nothing is more powerful than an idea whose time has come.”
This quote by Victor Hugo is as applicable to startups as it is to social movements. I’ve learned that timing is an important consideration when making an investment – launching your startup at the right time provides a tailwind, which can make growing your startup a little bit easier. Conversely, if the timing is not right, it can be a significant headwind to growth, no matter how good the team / concept.
Timing tends to demonstrate itself through traction – you can see it either in how fast the startup itself is growing, or in how similar companies in other markets are growing.
Apart from timing and traction, I look for founders that have a track record of building things, a deep understanding of the problem / market, and most importantly: integrity. I enjoy working with teams who are humble, open, collaborative, and practical.
Life is short: It’s good to work with people you like and respect.
What are some of the things you wish more startup founders would realize before looking for investment?
Choose your partners wisely. Building a startup is a long and arduous journey, and it matters that you work with investors whose values align with yours. Be clear about the value you expect to get from working with them: Is it just the cash? Different partners provide different kinds of value and support – keep this in mind as you assemble your investor / advisor base.
Due diligence goes both ways. Before you engage with an investor, try to ask other founders and advisors what they know about them. If the investor has made other investments, speak to their portfolio companies / founders, to get a better understanding of what to expect with them on your cap table.
Get the right advice. Find mentors and advisors – preferably people who have raised VC money before, or who have VC investment experience – who can help you interpret term sheets or contracts. Watch out for non-standard terms!
With great funding comes great responsibility. Raising money is not the main goal or achievement for a startup; it’s a means to an end. Remember that the more money you raise, at higher and higher valuations, the more money your investors will expect in return. Raise only what you need, and be clear about what you plan to achieve with it.
Based on your knowledge and work on the ground, which industries are looking exciting at the moment?
The Philippines is primed to be one of the fastest-growing digital economies in Southeast Asia over the next few years. We are seeing unprecedented digital adoption in the spaces of fintech, retail, and tools for MSMEs.
Fintech continues to be a hot space, with hundreds of millions of dollars pouring into digital wallets, banks, and trading platforms. We expect to see more competition, collaboration, and innovation in this space over the coming years!
Retail is also an interesting space, as we are moving from the first wave of large-scale, generalist E-commerce platforms (like Shopee and Lazada) to more niche and specialized marketplaces, focusing on more curated merchandise + features in specific categories.
Lastly, we see more and more platforms and services catering to “the long tail” of enterprises: whether it be ERP or POS software, marketing and E-commerce enablement, financial services or logistics – more and more startups are turning their attention to serving MSMEs.
I should also mention that the Philippines has become one of the hotspots for blockchain / Web3 innovation worldwide. Our country has always been one of the fastest adopters of new media (SMS capital of the world, social media capital of the world), and it’s interesting to see how the play-to-earn movement has really taken off here. I expect it to catalyze the development of more Web3-related startups in the coming years, as well.
Do you think The Philippines has the potential to mint more unicorns in the next few years?
Absolutely. In 2021, we saw 3 PH startups raise Series B rounds within a few months of each other: Kumu, GrowSari and Great Deals. In the same year, Kumu raised its Series C round from General Atlantic. Yield Guild Games also became the first Philippine company to raise money from a16z.
At the start of this year, we saw some major announcements: TONIK raised a massive Series B led by Mizuho Bank; GrowSari raised a Series C led by KKR; while PDAX just raised a Series B led by Tiger Global. Paymongo also just closed its Series B round.
Major investors from around the world are taking notice of the Philippines, and significant amounts of capital are flowing into our ecosystem to catalyze hyper-growth. I think we will definitely see a Philippine unicorn minted in the next few years.
There are also dozens of interesting companies raising significant rounds between Seed to Series A in the Philippines at this moment – I’m very excited for what lies ahead for the PH startup scene!
Are there female tech founders in the region that you want to highlight?
Please allow me to highlight a few from Kickstart’s own portfolio, as they are some of the ones I know best:
Since you mentioned unicorns, the first person that comes to mind is Tessa Wijaya, Co-Founder and COO of Xendit. Not only is she incredibly sharp and resourceful; what struck me in all my conversations with Tessa is how proud and supportive she is of her team. Xendit’s team members are super proactive and solutions-oriented, and I think this stems from the training and empowerment they receive from Tessa and the Founders / leadership team.
Angelique Uy is the Co-Founder of ZAP, one of Kickstart’s earliest investments. The Kickstart team has worked extensively with Angelique and the ZAP team over the years, and we’ve always been impressed by their grit, resourcefulness, and maturity. Recently, ZAP secured Series A funding from True Digital Group, Thailand – a testament to the value of what they’ve built (4M users and 2,000 stores). What I really appreciate about Angelique is her willingness to help startup founders – through referrals, advice, and introductions – quietly and without fanfare.
One of our most recent investments in the Philippines is edamama, a fast-growing marketplace for goods and services for mothers and babies, run by Founder and CEO Bela Gupta D’Souza. We’ve known Bela for many years, since her days as the Founder and CEO of AdSpark, the digital marketing technology arm of Globe Telecom (Kickstart’s parent company).
Bela is brilliant and a joy to work with; I learn something new from her whenever we speak. Something memorable she shared with me recently is how, for many female founders, there is usually a strong personal connection to the mission of the company: the problem or pain point they are trying to solve. For female founders, it’s often not just about the money or the opportunity; there is something deeply personal at stake.
What’s next for Kickstart Ventures?
We’re happy to be celebrating our 10th anniversary this year – a decade of supporting the Philippine startup ecosystem; and building bridges between innovative tech companies, the Ayala Group, and other Philippine corporations.
As discussed above, we are just getting started, and there is still so much to look forward to in the years to come. We have a fair bit of dry powder with which to invest between $100K-1M into Seed to Series A companies here in the Philippines, through our inaugural and evergreen fund, Kickstart Fund 1.
At the same time, we’re also looking forward to making more investments through our latest and largest fund, the $180M ACTIVE Fund, which is anchored by Ayala Corporation. Out of this thesis-driven fund we’re able to make $2-10M investments into Series A to C companies worldwide.
Themes of particular interest and importance to the team would include Digitalization and the creation of a more frictionless future; Decarbonization through technologies that catalyze behavior change; and Decentralization through the emergence of blockchain-powered ecosystems and use cases.