BUILD Startup Festival 2024: Here's What You Missed From the Day's Most Important Discussions
The Philippine startup ecosystem is in the middle of an inflection point, Foxmont Capital Partners Founding Managing Partner Franco Varona said at the BUILD Startup Festival 2024.
Varona was among the various leaders throughout the startup community at BUILD to discuss the industry's growth and challenges, as well as the future of talent and capital in the Philippines. Co-organized by Sinigang Valley Association and Esquire Philippines, BUILD welcomed startup founders, executives, investors, incubators, and government regulators.
Martin Gonzalez, author and creator of Google's Effective Founders Project dialed in from overseas to talk about building teams and establishing a good culture.
"Research revealed that 65 percent of startups failed because of people issues," he said. "It was not that they ran out of money, but it was that they could not make decisions effectively."
NEO CEO Raymond Rufino, on the other hand, looked back on some lessons he's learned from establishing the real estate company in the country. To put it simply, Rufino advocated for balance when entering the startup journey. "Success is about balance. You want to have a balance where you have enough time and energy for the people you care about. But also for the business that is the source of your livelihood."
Kaya Founders managing partner Paulo Campos
Varona, meanwhile, presented this the 2024 Venture Capital Report. The VC offered valuable insights into a pivotal time for the country—when the Philippines is entering a period where it is now the fastest-growing economy in Southeast Asia.
While funding for startups may have slowed last year, the Philippines still achieved a record number of deals in 2023, seeing a 16 percent rise from the previous year. It is encouraging, too, that the country only saw a 14 percent dip in venture capital funding in 2023 compared to the 62 percent decline elsewhere in the region. According to Franco, this means that more investors are keen on MSMEs in the early stages of development.
Varona also illustrated how the Philippines has become a key hub for investors in the region. He cited the rapid digitization of the country, an evolving e-commerce and fintech network, and younger, more dynamic labor participation. The Filipino workforce is projected to top the global average by 2030 and become the fifth-largest working population in the world by 2050. Varona maintains that the community should capitalize on what he refers to as the "demographic divide."
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Following Varona's talk was a segment about discussing growth, opportunities, and challenges in the startup community. Moderated by Boston Consulting Group Managing Director and Senior Partner Anthony Oundjian, the panel featured the likes of Ideaspace/QBO Executive Director Jay Fajardo, AHG Lab CEO Rene Cuartero, Kickstart Ventures AVP for Portfolio Operations Bit Santos, and Kaya Founders Founding Managing General Partner Paolo Campos, among others.
Fajardo welcomes the larger consumer base shaping up in the Philippines. "Younger people being digitally abled influences emerging startups."
Speaking about the next startup wave, Campos reflected on the evolution of e-commerce here. "What we saw in the last year or two is unlike anything we saw in the first 10 years. On the one hand, you can follow the trajectory of the likes of Indonesia, India, and even China before us and see the industries that become interesting at this stage of socio-economic development," he explained.
Foxmont Capital Partners Founding Managing Partner Franco Varona
More importantly, he sees the median age of 24.5 for the labor force as a key indicator of growth. "What we've seen in the Philippines and the e-commerce space is that we're trailblazing and leapfrogging our company," he added. To put things into perspective, the global average is 30.3.
Under the "Navigating the Transitions in the Startup Journey: From Boostrapping to Series A and beyond" by Paymongo, Great Deals E-commerce founder Steve Sy, Paymongo Chairman Luis Sia, and GrowSari CEO ER Rollan shared some of the hurdles and successes of their groups' transitions.
"We actually tried to raise [capital] in 2019. But at the time, there was nobody to raise from. There were some corporate VCs, but it was not something that I'd thought would be possible. We really started the company with the goal of solving a problem I wanted to solve myself," he said, speaking on coming from a traditional business perspective and whether or not Series A was always the goal.
"Things are so different now. Founders who started their company in 2019 versus the ones who started in 2024 are playing in a much better ecosystem."
On failures, he added: "If there was ever any left hooks, that was when the pandemic happened. There was a lot of interest in online payments, but then that increased a lot of competition in the space. The original products we developed were commoditized and we have to innovate at a faster pace. You have to stick to the core of who you really want to be."
Scaling, of course, is a different story. Even if we have comparable markets in Indonesia, Thailand, and Vietnam, maximizing reach in the next stage requires something else from the founders.
Podcast Network Asia Founder and CEO Ron Baetiong, who has entered the U.S. market, credits the model of Cubo.land, an accelerator that he patterned his network after. "Sure, we can go for the biggest in the Philippines, but we went with Asia instead. From the get-go, we understood that, if we wanted to expand, you were spending not just to be the 10th player in a big market. If you have the ambition, you expand to win."
He reflected on their start in Indonesia and how difficult it was in a different market setup. The country happened to be one of the biggest consumer bases for podcasting in the world but he still needed constant coordination to learn more about local practices. Indonesia, suffice it to say, was a starting point.
"The main difference between the Philippines and Indonesia is that, in the Philippines, we were able to create supply and a bit of demand," he notes. "In Indonesia, we were able to get supply, no demand. If you're able to see into a country, and can't find the clearest path to sustainable revenue, you're dead."
Closing out the BUILD discussions was a talk about alternative growth and exits. Origination Vice President Juan Carlos "Ayo" Camara mentioned Cocopan Company, a local chain that offers handcrafted coffee and bakery products.
"In the case of Cocopan, they're looking at their [fast growth] as long-term growth. For VCs, you're not their target. They're looking for people who want to stay on board long-term." John Carlo Fernando, who had previously opened five local bakeshops before joining Cocopan would invest in the concept by teaming up with the business's founders.
"It allowed him to be part of a bigger organization that he feels was better. That's a very interesting alternative way to grow. In that instance, it's really more important for people to think of collaboration instead of competition. For most startups, if someone comes up to you and says, 'Hey, can you talk to me about your business.' The first response is 'No, way.' Here, it actually worked out."
Esquire Philippines expresses its gratitude to its partners, PayMongo, Aspire, CloudMile, Google Cloud, Gorriceta Africa Cauton Saavedra, Ascott BGC, Neo, CloudEats, Burger Beast, 24/7 Eats, for helping stage the event. Check out these links to watch the event recordings yourself.
