Philippines-based corporate venture builder 917Ventures is hopeful to see more tech unicorns in the country and sees FinTech among the hottest sectors in the country.
Funding for startups in the Philippines has been growing steadily in recent years, with 2022 being the second year in a row the country has raised more than $1 billion ($1.1 billion in 2022 and $1.03 in 2021) – a far cry from the $40 million in 2010, according to Glenn Estrella, the Head of Ideation and Acceleration of 917 Ventures.
However, with the global slowdown and Southeast Asia being one of the worst-hit regions in the funding decline in the second quarter of 2023, the Philippines’ startup growth story may experience hiccups especially when it comes to funding, this is why we believe that forming strategic partnerships with stakeholders and key players in the region is integral in ensuring that the industry continues to grow despite global headwinds.
“Currently, in the FinTech space, we have two startups that have achieved unicorn status, with GCash being one of them – even attaining double unicorn status. As the Philippine startup ecosystem continues to grow, we believe we will be able to produce more unicorns sooner rather than later,” Estrella told TNGlobal in an interview.
“It’s important to note that while we hope to see more unicorns in both our portfolio and in the larger Philippine ecosystem, at 917Ventures we prioritize growth, profitability, and sustainability,” he emphasized.
He noted that for most startups, the goal is to be able to exit, whether that is through acquisition or an IPO. Similar to all startups, 917Ventures ensures each portfolio company has a viable and profitable business model to help them achieve this milestone.
917Ventures said it is the largest corporate venture builder in the Philippines that new business ideas that uplift the lives of Filipinos. Although 917Ventures is wholly owned by telecommunications firm Globe, 917Ventures said it is a separate, independent legal entity with its own ways of working, information from its official website showed.
Globe Telecom, Inc. was originally incorporated on January 16, 1935, as Globe Wireless Ltd with a franchise to operate wireless long-distance message services in the Philippines. The company eventually changed its name to the present one in 1992 and welcomed Singapore Telecom, Inc. as a new foreign partner the following year.
Globe is a telecommunications company that provides digital wireless communication services nationwide under the “Globe Postpaid”, “Globe Prepaid”, and “TM” brands using a fully digital network. The company also offers domestic and international long-distance communication services or carrier services. Globe currently has 86.7 million mobile subscribers (including fully mobile broadband), 2.6 million Home Broadband customers, and 974 thousand landline subscribers, information from the PSE EDGE portal showed.
In the interview, Estrella also shared how 917 Ventures seeks to enter into more strategic partnerships in its home country – the Philippines – and across Southeast Asia. He also shared the challenges within the startup/VC ecosystem in the country and suggestions for the ecosystem, among others.
Below are the edited excerpts:
How does 917 Ventures seek to enter more strategic partnerships as it continues to address the shared challenges in the Philippines and Southeast Asia through its ventures and portfolio companies?
We go into every venture to scale and succeed exponentially. Partnerships are a major element in achieving this goal as this helps us and our ventures penetrate new markets, leverage complementary resources, and scale synergistically.
For example, this year we partnered with Gogoro in revolutionizing the Philippine transportation landscape and delivering clean and sustainable mobility utilizing Gogoro’s trailblazing electric two-wheel vehicles and open battery swap network. We are currently doing pilot tests of the Gogoro system and hope to make it publicly available by the end of the year.
917Ventures has launched more than 20 ventures and currently has 14 portfolio companies across various industries–Healthtech, ClimateTech, Edutech, and micro, small and medium enterprises (MSMEs), to name a few. We believe that our solutions are easily scalable and replicable in other markets and that’s where partnerships come in. So we can work together to expand our solutions to markets outside the Philippines.
In the same way, just like with Gogoro, we are also very open to partnering with existing solutions, startups, and key ecosystem stakeholders and bringing them to the Philippines.
What is the outlook for the Philippines to produce more unicorns in the coming months? What do you learn from the successes of GCash and KonsultaMD and how 917 Ventures, as a venture builder, helps founders achieve global success?
Currently, in the FinTech space, we have two startups that have achieved unicorn status, with GCash being one of them – even attaining double unicorn status. As the Philippine startup ecosystem continues to grow, we believe we will be able to produce more unicorns sooner rather than later.
It’s important to note that while we hope to see more unicorns in both our portfolio and in the larger Philippine ecosystem, at 917Ventures we prioritize growth, profitability, and sustainability.
For most startups, the goal is to be able to exit, whether that’s through acquisition or an IPO. Similar to all startups, 917Ventures ensures each portfolio company has a viable and profitable business model to help them achieve this milestone.
We learned through our successful ventures (i.e. GCash, KonsultaMD) that everything starts with the purpose or the North Star. At 917Ventures, we identify opportunities and develop digital solutions to address real and pressing challenges, aiming to uplift the lives of Filipinos.
That said, we create ventures and solutions with people in mind. We take time to understand the customer needs and ensure that their feedback and how they’re using the product are integrated into the development and evolution of the solution. KonsultaMD, for example, had to integrate a chat function because we found out that some customers prefer messaging over Teleconsults.
Finally, we understand that we cannot do it alone and know the limitations of working in silos. We recognize the power of collaborating with partners and other ecosystem partners, believing that the whole is greater than the sum of its parts. The success of GCash and KonsultaMD stems from the collaborative spirit within the Globe group and the synergies with our partners. Indeed, the whole is greater than the sum of its parts.
What are the challenges and how to address them?
While the Philippines has a growing economy and a thriving startup ecosystem, the challenges we face are similar to the ones faced across the region. These include limited access to funding and a market that, despite being digital-savvy, still has a slow adoption of digital services.
Other challenges include talent shortage and the need for a more robust technological infrastructure.
Funding for startups in the Philippines has been steadily growing in recent years with 2022 being the second year in a row the country has been able to raise more than $1 billion ($1.1 billion in 2022 and $1.03 in 2021)–a far cry from the $40 million in 2010.
However, with the global slowdown and Southeast Asia being one of the worst-hit regions in the funding decline in Q2 2023, the Philippines’ startup growth story may experience hiccups especially when it comes to funding, this is why we believe that forming strategic partnerships with stakeholders and key players in the region is integral in ensuring that the industry continues to grow despite global headwinds.
To help solve skill gaps, as venture builder, our role is not only to create solutions but also to mold talents–the future CEOs and founders of Philippine and regional startups. In this way, we create an environment where we cultivate the best and brightest talents in the country and minimize the need for them to look elsewhere (like Silicon Valley) for opportunities for them to grow and spread their wings.
Regarding the slow adoption of digital solutions, there is a need to tailor these solutions to the lifestyle of its users. It doesn’t necessarily have to be groundbreaking but it should be user- friendly while providing quality-of-life improvements and use so people can seamlessly integrate it into their daily lives without a lot of adjustments. That’s how we did it with GCash, which evolved from a simple SMS-based money transfer to now a finance super app that has furthered digital financial inclusion in the country.
Of course, implementing these solutions requires continuous support from the industry at large and the government.
How is the overall tech startup ecosystem in the Philippines? Where does the Philippines stand among its peers in the region? How does 917Ventures play its part?
The Philippines remains a large, very attractive market ripe for investments. Compared to our neighboring countries like Indonesia and Vietnam, the Philippines stands out as the most consumption-driven, boasting a young, well-educated, digitally savvy, and expanding middle class.
As mentioned, for two straight years, Philippine startups were able to raise more than $1 billion in funding. In addition, we have also climbed three spots in the Global Innovation Index (we’re now at 56th place) making us one of the middle-income economies that rose the fastest in the rankings.
As the largest venture builder in the Philippines, we go beyond investment to actively create, build, and nurture high-potential companies that provide value to the ecosystem. We help create, build, and grow companies by providing them with resources and support so these companies can maximize their impact and elevate the lives of our consumers.
One such resource is our suite of solutions (RUSH, m360, FundSpace, MemoApp) that caters to SMEs and helps digitalize their business and operations. Our support also comes in the form of training Filipino talent to address skill gaps specifically with KodeGo, our study-now-pay-later-when-hired coding bootcamp. Lastly, we create jobs by employing people for the companies we build, ensuring that the success of our ventures also impacts the national economy.
What are the hottest sectors in terms of technology advancement? Is there any hottest trend seen in the Philippines?
FinTech and the payment solutions sector continue to play a key role in the growth of the country’s digital economy. The ubiquity of GCash as a fintech super app is a testament to how this solution furthered financial inclusion in the country.
Beyond FinTech, we’re also seeing wider adoption of digital solutions across industries including HealthTech, Edutech, B2B SaaS, and Climate Tech which shows how digitalization continues to spur the growth of the startup industry.
917Ventures also has multiple startups and ventures in various stages of these industries:
HealthTech (KonsultaMD, PetPal), Edutech (KodeGo), B2B SaaS (Rush), and Climate Tech (Gogoro).
What’s more need to be done for the tech startup ecosystem in the Philippines? Any suggestions for startups, entrepreneurs, government and investors?
The key to accelerating our startup scene is to encourage more founders to take the first step. Increasing access to funding is pivotal in this, as many potential gems are lost in the early stages of their business cycles due to a lack thereof. Early-stage funding will help many of our visionaries turn their ideas into reality. A related factor is entrepreneurial education. While schools are increasingly teaching entrepreneurship as a course, more can be done to encourage students, and even executives, to take up entrepreneurship. Knowing what to do helps entrepreneurs plan their startups’ early paths better and improves their chances of success.
While MSMEs and Filipino consumers are more receptive to digital adoption, there is room for more digital literacy across the country. Startups and digital adoption share a symbiotic relationship. Demand for digital services produces more technology startups, and technology startups pioneer the demand for digital services.
Our government is actively helping the Philippine startup ecosystem through several initiatives that provide early funding and education. More incentives such as tax benefits will mitigate risk-aversion tendencies. Sector-specific benefits are needed to ensure equitable benefits to all verticals.