What does a Startup Founder in the Philippines look like?

By Facebook Icon Twitter Icon Email Icon
On April 19, 2016
Post Thumbnail
By Ezra Ferraz and John Alliage Morales

When President Obama and Alibaba founder Jack Ma interviewed SALt CEO Aisa Mijeno about her startup for APEC Philippines 2015, it wasn’t just her who took center stage, but also the startup ecosystem in the Philippines.

SALt, after all, had been incubated as part of the second cohort of Ideaspace Foundation, one of the growing number of venture capital funds investing in the Philippines. Mijeno, like her fellow co-founders, must strike casual onlookers as a curious breed: where others saw the country as a premiere destination for business process outsourcing (BPO), venture-backed founders strive to forge an altogether different identity for the countrythat of a science and tech entrepreneurship hotspot.

A note on our methodology

What’s the profile of today’s generation of local founders? The answers have important implications for would-be entrepreneurs and policymakers. For example, the career paths and skill set of today’s founders can guide fresh graduates on their post-college career decisions if they want to get the relevant experience for starting a company one day.

Similarly, if we learned that more Filipino founders hailed from a particular university, it would be helpful to analyze what aspects of that school’s curriculum or culture influence its students to pursue entrepreneurship.

To help guide the local startup ecosystem, Stack decided to do a broad study on startup founders in the Philippines.

We’ve specifically chosen technology-driven and venture-backed startups, based on our belief that these are the kinds of companies that accelerate innovation and create more 21st century jobs in the long run.

In contrast to bricks-and-mortar or lifestyle businesses, startups are designed to grow fast. With its technology, digital-driven marketing, and a distributed workforce, a food delivery app will have very different business model compared to a Jollibee franchise. As a result, such a startup will require a different kind of mindset and skill set from its founders.

To find these startups, we used this list published by Tech in Asia last year that identified all the venture capital firms operating in the country, including Ideaspace Foundation, Kickstart Ventures, UP Enterprise Center, Ayala TBI Network, Hatchd Digital, WaveMaker Labs, Narra Venture Capitals, WaveMaker Labs, 500 Startups, IMJ Investment Partners, ICCP Venture Partners, Golden Gate Ventures, Omidyar Network, and Benjamin Joffe.

All in all, we gathered data from 55 venture capital-backed startups and 105 of their founders, pulling the information from what was publically available on their personal LinkedIn accounts.

STACK INFOGRAPHX 700x500_STARTUP CHART2

We excluded data from entrepreneurs who did not have LinkedIn accounts, and in cases where information was lacking, we made our best effort to get it elsewhere, such as media features on the founders under study. While the data below certainly has its limitations, we hope it’ll represent the first major step in understanding  the Philippine tech ecosystem and analyzing what drives Filipinos to become founders.

For policymakers, investors, and support services, these founders are essentially your customers. Consider this free market research!

Let’s dive in.

Founders ng Bayan: UP produces the most founders.  

Based on our data, a disproportionate amount of founders attended the University of the Philippines for their undergraduate degree. A full 31% of founders hail from the UP system. While the larger figure may be attributed on some level to the fact that we are tallying schools from an entire system, both the Ateneo and La Salle systems do not come anywhere close in number.

The highest individual schools are Ateneo de Manila University at 10% and De La Salle University at 8%.

Ideaspace Foundation Executive Director Diane Eustaquio, who herself graduated from UP Manila and has seen many UP graduates come up through Ideaspace, believes that the culture of UP is what produces many tech founders. “We learn to be scrappy from day one,” she said.

As an example, Eustaquio told of an instance where a professor told a class of 25 students that she was in that they needed a book that was only available in the reserve section of another school’s library. “With situations like that, you find ways,” Eustaquio said, adding that those from Ateneo and La salle, on the other hand, have access to great business networks.

I guess that’s why UP kids get venture-backed moneythey have to keep knocking on many doors before they get some resources.” – Diane Eustaquio, Ideaspace 

Two founders from the Ideaspace-backed Croo, a startup that produces a wearable safety button, mentioned other ideas. Its CEO, Ralph Chua, explained that UP promotes a sense of nationalism.

“At UP, we have been taught and constantly reminded to love our country, give back what we can to the Philippines, so I guess we’ve always had that inkling to build something, technology or business, that could improve the lives of our fellow countrymen,” he said.

Croo co-founder Arisa Ochavez said that UP’s culture promotes diversity and responsible freedom. “It opens your mind to the reality of life and makes you think critically even about the smallest, (for some) ordinary things. UP lets you see what’s inside the box and allows you think of solutions that will matter even beyond that box,” she said.

Founders have been working for an average of 10 years

The myth of the wunderkind founder may be true in Silicon Valley, but it is definitively not in the Philippines. Startup founders in the country have been working an average of 10 years, spread typically across 2-4 different jobs.

STACK INFOGRAPHX 700x500_STARTUP_CHART3

The data suggest that founders in the Philippines may need a safety net in the form of savings accrued from their job to feel comfortable making the leap into entrepreneurship. Alternatively, founders get experience on the job before launching their startup, because that is when they accrue the domain expertise necessary to try to disrupt a particular industry.

Carlo Calimon, who founded deals app mobkard, which he established after several jobs, believes that waiting to launch your startup gives one two key assets: capital and a business network.

But I think the experience would also be more valuable as people can use the experience to properly execute and start a business. They know what it entails to work for someone and also would know how to run a business,” Calimon said.

86% of founders are local, while 14% come from abroad.

The data also reveal that more than 86% of tech founders are homegrown Filipinos, while 14% come from abroad.

Both these figures are promising. The 14% suggests that more and more foreign nationals are viewing the Philippines as a suitable place to launch a tech company, owing probably to the nation’s fluency in English, rise as a Southeast Asian economic tiger, and growth in mobile and smartphone penetration.

The 84% suggests that the base of Philippine tech companies are still Filipino-made and Filipino-led. While it’s up for debate on how nationality improves or hinders one’s inclination or capacity for entrepreneurship, there is something to be said about the value of creating products borne out of your experiences and pain points.

The concern, then, here should not be about increasing the proportions of foreign versus Filipino founders, but simply increasing the absolute numbers of both.

Daniel Scott, the founder of Autodeal, expressed that there are several factors that make the Philippines an attractive place to found a tech company, including the English fluency of the population, the decent supply of technical expertise, and the increase adoption of mobile phones and smartphones.

It’s possible to build up your brand relatively economically due to the high use of platforms like Facebook, which has a huge Filipino audience,” he said.

Still, Scott acknowledged that the Philippines has challenges that make it difficult to creating a profit-making business, thus making it less attractive for other people, both local and foreign, to found tech companies here.

As many industries are just really starting to think about digital, they are still not sure where to spend budgets in the digital world. There is a lot of education that needs to take place, which also takes a lot of time,” Scott said as way of an example.  

Four out of ten founders have master’s degrees.

The most popular choices for their graduate studies are – in order –  Asian Institute of Management, University of the Philippines, Harvard University, and Ateneo de Manila University. The spread here is interesting. You have a regional business school, the top local public university, the top local private university, and the top university in the world.

60% of founders have a regular job while pursuing their startup.

Of more interest is the fact that 60% of founders either hold a regular job while pursuing their startup, or are at the helm of several startups. The data suggest that the majority of venture-backed startups are far from generating the amount of revenue that would make pursuing the startup full-time make sense. It also suggests that some founders are trying to hedge their bets with multiple startups.

Kenneth Reyes, the founder of Kickstart Ventures-backed GiftLauncher, who also had another concurrent startup, believes that the matter is one of practicality. “If you will notice there’s only a few startups that can say they are earning enough to cover their costs and give themselves a respectable salary that they can live on,” he said, adding that this secondaryor in some cases, primarysource of income is important for founders with families or children.

77% of founders are male.

From our knowledge of the Philippine tech ecosystem, we surmised that most founders would be predominantly male. Our data corroborated this hypothesis. 77% of the founders we surveyed are male. That men make up a disproportionate amount of tech founders is interesting, given that the Philippineswhile not perfectly gender equalranks as one of the highest nations in gender equality, according to a World Economic Forum report.

STACK INFOGRAPHX 700x500_STARTUP STORY - 2 revised 19 APR

This information is not conclusive, but it leads to interesting questions: Are Filipino women less risk averse than their male counterparts when it comes to doing something as inherently shaky as launching a tech startup?

Or perhaps more incriminatingly, are there many Filipino women founders out there, but they just happen to receive less institutional support in the form of venture capital? These questions, as open-ended as they may be, deserve to be raised.

Marina Morada, the founder of MyNatural, believes there are several factors that limit the number of Filipino female founders: they are generally not risk takers, especially when they have families to feed; the tech industry is already dominated by men, so some may feel intimidated; and parents want their children to become doctors, lawyers, or work for multinationals.

Unyx Sta Ana, the founder of Orchestrack, shared similar sentiments. She argued that there’s a lack of Filipino female tech founders because not enough women were steered toward science and technology courses in the first place. Alternatively, those who didn’t pursue STEM courses do not realize that you could also found a tech company without technical experience.

Sta Ana said that any solution should target the youth. “If we are talking about the tech scene and founding one, it has to start with getting little and young girls excited to technology and expose them to more possibilities of the applications and impact they could make out of it as early as possible,” she said, adding that a big part of this is also celebrating female tech founders, such as Diane Green of VMWare, Sheila Marcelo of Care.com, and Beng Coronel of PointWest, all of whom have different degrees, both technical and non-technical.

Soriano said that Filipino women need to be okay with failure. As a point of reference, she compared her experience with the Lean-In chapter in Silicon Valley, where the women were vocal about their failures, with the chapter in Manila.

In Manila, women were more reserved. The ecosystem has to show that its OK to be ‘not perfect.’ The ‘nakakahiya” culture should stop.” Au Soriano, PinoyTravel

Project management is the most common skill founders share.

One of the LinkedIn specific data sets we got was from the “skills” section. This was where entrepreneurs could self-list skills and areas they felt they were strong at and then have others in their network validate these with +1 endorsements, increasing their level for a particular skill based on the total number of people that endorse them.

We tallied the top 5 highest ranking skills of each individual founder and then ranked these skills across all founders. The top skills or areas of expertise, in order, are project management (23), startups (20), entrepreneurship (18), business strategy (16), and business development (11).

This speaks to the crucial role that execution and getting things done play in an early stage company.

STACK INFOGRAPHX 700x500_STARTUP_CHART6

Key Takeaways

These findings have some interesting implications for aspiring founders:

Build your project management, strategy, and business-related skills. Owing to the nature of an early stage company, aspiring founders would be wise to gain experience in companies that allow to take a leadership role in managing projects, with specific deliverables. This could involve anything from revamping your employer’s website, launching a new product, closing a new business development deal, or entering a new market.

Don’t be in a hurry to jump in without the right domain expertise and level of maturity. It goes without saying that startups are really really hard. If you’re an aspiring entrepreneur, you are better off starting a venture if you can confidently believe that you are better than 90% of your peers in your chosen field. Being an entrepreneur will also come with incredible psychological pressure, so you’ll need to have a mature emotional state to be able to cope with these demands. There are no shortcutsboth expertise and maturity take time to build. So it comes as no surprise that the average founder in our study had extensive work experience.

Consider pursuing a master’s degree to grow your skill set and meet similarly-minded people, particularly if it’s an MBA or science and technology degree. Earning a master’s degree also give you the domain expertise necessary to grow a business.  The other benefit is getting exposed to a broader network of like-minded and ambitious people whether through your classmates or professors. Most graduate schools also have strong industry linkages. On the decision whether to pursue a more general degree like an MBA, or a specific one in a technical field, will depend on many factors such as your interest and aptitude. Fortunately, there are many online resources such as Career Leader and Strengths Finder that help develop your self-awareness.

If you have a science and engineering background, you’ll have a strong competitive advantage. Most startups are simply leveraging existing technology instead of pushing the bar in commercializing radically new innovations. This is a great opportunity for scientists and engineers working on their graduate degrees and seeking to build ventures around their work. Google, after all, was founded in a Stanford research lab.

Manage risk by defining clear success criteria on when to go full-time on your startup. For example, Rudi Ramin of coaching marketplace startup Grow 360 used to work in Google while slowly building his venture during the weekends. It was only when he started getting customer traction beyond his initial expectations that he decided to focus on his company full time.

The Philippines has still a long way to go in matching the startup ecosystem of neighbors like Singapore and Malaysia. Yet with a deeper understanding of the pioneers that paved the way, we can hopefully help aspiring founders make better decisions when they ultimately make the leap to an entrepreneurial life.

 


Ezra Ferraz heads content marketing at Voyager Innovations. He graduated from UC Berkeley and University of  Southern California, and also freelances as a business journalist in the Philippines.

is Voyager Innovations' thought leadership platform for science, technology, and innovation.

Facebook Icon Twitter Icon Email Icon

LEAVE A RESPONSE

Your email address will not be published. Required fields are marked *

4 comments

  1. Tep Misa says:

    Ezra, this is an excellent article. Well written! A great eye opener!
    Keep it up!

  2. Arup says:

    Good article and analysis, thanks.

    by the way….. ? are you aware of SpringPH. The startup mentoring and incubation group. Let me know next time you update, might be able to help: Some Stats on SpringPH below:

    Started Special Interest group for Product Incubation: August 2011
    Named Spring.PH 2013 Launchpad Teams Mentored: 51 teams (“active” members, including 5 teams from first PSC)
    Teachers Trained in LeanStartup Startup BootCamp: 326 (2014 & 2015 across the country)
    Student Team Participant PhilStartupChallange 159 total entries (2014 & 2015)
    Wednesday Open Mentoring and Sharing: 100 plus over last 3 years
    National Startup Awareness ICT Roadshow: 11 Bootcamps, 7 cities (2014 & 2015): Manila, Baguio, CDO, Cebu, Davao, Iloilo, Legaspi.
    International Convention: KL Converge 2014 & 2015

    Some of the products in the market (15 in no particular order): we might not yet have Unicorns but there are lots of Cockroaches ? surviving and moving forward over the years Orchestrack, Pikld, MyConcierge, Spaceal, iCPA, LeanAsset, PerxClub, MakeApp, Tarkie, RaketPH, 199Jobs, Klaseko, Cogito

    All this thanks to our partner from DOST ICTO (seedPH), AIM and several sponsors like Microsoft

  3. remil aguda says:

    Emotional maturity, tenacity and the ability to manage projects’ risks and rewards while providing deliverables to your customers and stakeholders are definitely developed qualities of a STEM or MBA graduate with years of experience in both corporate and academic settings. As a STEM professional pursuing a PhD in the USA, I am limited to a business network. Most Filipino PhD students come to the USA as teaching or research assistants whose professors pay tuition, fees and a monthly stipend. This situation does not create an entrepreneurship mindset and develops business development skills but rather project management skills and STEM expertise that mostly academia or corporate organizations value. I have many colleagues and friends who work for start ups. They ended up being frustrated with the lack of business skills and project management expertise but completely satisfied when they have contributed significantly to the technology-based deliverables for their customers and stakeholders. The deliverables are short-lived when the business strategy has changed and their STEM expertise is no longer needed. They also come back to academia or corporate R&D because of the lack of financial stability (or lack of personal financial literacy). I hope in the future we can establish programs in the Philippine universities or local Filipino companies that develop both STEM and business skills that empower Filipinos to sustain rewarding business opportunities and maintain an uplifting culture.