How the Philippines is overcoming a history of bad startup deals

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Hello readers,

I got the opportunity to write video scripts for the first time late last year when we started a new original series called Tech in Asia Explains (check it out!). The series takes concepts and trends in the startup world and, well, explains them.

The first episode I worked on was about capitalization tables, a topic that is pretty dry at first glance. A cap table is just a spreadsheet that details who owns how much of the company, right? But after interviewing experts for the video, I found out just how critical a well-kept cap table is to a startup – give up too much equity to early investors, and the firm’s growth prospects could be dead in the water.

This is a challenge that many in the Philippines’ young startup scene have had to deal with. Today’s premium piece dives into the startup investing landscape in the archipelago and what startups and investors alike should keep in mind when navigating these waters.

Today, we look at:

• The bad investment deals holding Philippine startups back
• An Indian D2C meat brand enters the unicorn club
• Other newsy highlights such as Temasek putting serious money into cybersecurity and the rise of a new financing program for ESG-focused SMEs

PREMIUM SUMMARY

The growing investment pains in the Philippines

You know that adage about choosing between giving a man a fish or teaching him how to catch one? I’ve always been a firm believer in the latter because I feel like I’ve been spoon-fed a little too much growing up. It’s put me in many situations where I couldn’t quite get things done on my own because I hadn’t built up those particular “muscles.”

Similarly, a startup’s growth is held back when early investors ask for (and are given) too much equity – an unfortunate and common occurrence in the Philippines.

• Outdated mindset: James Lette, executive director of Manila Angel Investors Network, has come across angel investors seeking to take a majority stake in the companies they fund. These backers tend to be those who “made their money 20 years ago” and usually do this because they want control over their investments and would go to great lengths to get that.
• Lack of options: While startups can walk away from unfavorable deals, they also have to reckon with the lack of funding options. Jason Gaisano, co-founder of local VC firm Core Capital, calls the Philippines a “buyer’s market.”
• Slowly improving: New ecosystem players, more experienced founders, and more local success stories such as Yield Guild Games are all working together to help the Philippine tech ecosystem mature.

Read more: Bad deals stifle Philippine startups. But things are looking up

PREMIUM SUMMARY

Do you think unicorns taste deLicious?

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