Global tech money sets its sights on Southeast Asia, PH

Chris Schnabel
Global tech money sets its sights on Southeast Asia, PH
Big venture capital firms and investors are reaching out beyond traditional tech centers in search of more profits, putting Southeast Asian entrepreneurs in a good position to scale up

MANILA, Philippines – Tech companies are arguably the sexiest firms on Wall Street.

From peddling sexy smart phones to streaming media, from connecting people across the globe to solving problems from traffic to climate change, they are the heavy lifters in the world’s march towards change.

Disruption is key to how most of these startups have grown, both in valuation and in recognition, and each of these companies started life solving a particular problem.

Just as Wall Street has become shorthand for the finance industry, the tech industry has its own: Silicon Valley, referring to that stretch of land between the cities of San Jose and San Francisco in California that is home to some of the world’s biggest and most famous tech firms, from Facebook to Apple.

Together, these of firms – often headquartered within walking distance of each other – have changed just about every other industry.

These companies, however, wouldn’t have succeeded without money – and the firms supplying the cash have grown right alongside the businesses they back.

Known in the industry as venture capital (VC) firms, they give the talented people behind these startups the platform to grow and change the world by investing in them.

Most of these firms are focused on Silicon Valley, but as tech makes the world smaller, the people controlling the purse strings are beginning to scour the globe in search of more brilliant ideas, more problems to solve, and of course, more customers.

TRENDING. (from left) Shasta Ventures Managing Director Rob Coneybeer, Endeavor Catalyst Managing Director Allen Taylor and Endeavor Philippines Managing Director Manny Ayala, give a presentation on current trends in Silicon Valley. All Photos by Chris Schnabel/ Rappler.

Eyes toward Southeast Asia

Silicon Valley veteran Allen Taylor thinks that Southeast Asia is a region ripe for tech-related investments. After all, he pointed out, “it’s home to a population of 600 million people and growing, and features some of the fastest growing economies in the world, so it’s going to get attention.”

Taylor is one of the key personnel at Endeavor, a global non-profit entrepreneurship organization that aims to kickstart economic growth by supporting entrepreneurs who can make huge impact.

As managing director of Endeavor Catalyst, he oversees the Endeavor Investor Network, a program that connects US­-based venture capital and growth with entrepreneurs around the world.

Taylor’s role has also taken him across Latin America, the Middle East, Africa and Southeast Asia, and his travels have given him a unique perspective on how tech ecosystems develop around the world.

He sees bright things ahead for the Philippines. “If you’re an entrepreneur in the Philippines, I think, over the next 5-10 years, if you’re building a really cool high-growth company you’re going to meet a lot of investors showing up in Manila trying to figure out what’s going on,” he said at a presentation on Silicon Valley trends hosted by Endeavor’s local arm on Friday, January 29.

He thinks the country, alongside Indonesia, are the two places in region where Endeavor can have the biggest impact due to each country’s distinct advantages.

Philippine entrepreneurs, he pointed out, are fluent in English, which can help open up the doors to global business – a major plus in today’s globalized business world, as the growth of the BPO sector has proven.

Indonesia, on the other hand, lacks the English advantage, but its native language provides its local entrepreneurs with a natural barrier to entry of competition from the outside.

“Indonesia will probably have fewer folds showing up from the US and Europe coming in to be foreign entrepreneurs; the Philippines will probably see more of that… and that’s not necessarily a bad thing,” he said.

GLOBAL IMPACT. Taylor gives an overview of the emerging markets Endeavor has a presence in.

‘China out’

Unlike pioneering Silicon Valley firms, entrepreneurs from the region also stand to benefit from an increasingly diverse investor base.

For a time, venture capital really only existed in one place: Silicon Valley. That started to change a bit in the 1990s when tech industry hubs sprouted in places like Boston in the US, the United Kingdom, and Israel, Taylor said.

 

China’s tech development was a pretty significant change, he added. US VCs first entered China, he said, and the Chinese quickly figured out how to develop their own venture industry – now one of the biggest in the world.

In the region at present, a lot of the investment capital has come from Singapore, but Taylor sees that changing with China’s economic clout in a process he calls “China Out.”

This include big Chinese firms like Baidu, Alibaba, Tencent, and some of the venture firms in China are increasingly investing close to home in Southeast Asia as they seek to expand and diversify.

“You’re going to start seeing them: Chinese investors and tech firms lead by Baidu, Alibaba, Tencent and some of the Chinese VC firms come out into the region,” he said.

Taylor said that Japanese corporate investors such as Softbank as well as Korean firms are actively trying to figure out how to crack into the region’s market. Some Silicon Valley money will soon be here as well, he said.

 GLOBAL INVESTMENTS. A sample of some of the Venture Capital firms that have invested in Endeavor's firms. Endeavor Catalysts is an an in-house arm that matches the investment a professional investor makes in one of its companies and the profits made from it are in turn reinvested in other Endeavor firms.

Global ideas with a twist

Of course, additional funding is useless without a solid idea to base it on, but technology’s relentless progress gives entrepreneurs in emerging markets the benefit of templates.

Innovation is always welcome, Taylor said, but “businesses are being built everyday all over the world so the odds that someone is building something truly unique and no one in the whole world is doing it is actually pretty low.”

This allows for ideas that have worked elsewhere to be tweaked to fit one’s specific country.

“You could call it localization,” Taylor said, “but I think more of it is taking a concept of a business model and then actually innovating on it to work on your local economy.”

An example is the Turkish food delivery service Yemeksepti, which beat out other globally established food delivery services in Turkey by getting the nuances of the country right.

Yemeksepeti has been a success story and was recently bought out for $600 million, one of two Endeavor-backed firms so far that have exited – which means the company has been bought out by a larger one, or became publicly listed in a stock exchange.

He also pointed out that Endeavor encourages its entrepreneurs to come to Silicon Valley and meet people in their industries, so that they can return to their home market inspired with new ideas, and to innovate within their own companies.

IoT and Robotics the next wave

Another area that entrepreneurs can look into is the Internet of Things (IoT) and robotics, two fields that veteran tech investor Rob Coneybeer identified as next big direction technology will take.

“First, we’ve had the development of PCs, and then the consumerization of IT, where everybody has a smartphone. The next wave coming will be IoT and we’re just at the tip of the iceberg and Moore’s law isn’t slowing it down,” Coneybeer said.

Coneybeer is the co-founder and Managing Director of Shasta Ventures, a VC firm that was an early investor in Nest, the smart thermostat that was bought by Google for $3.2 billion.

You can already see this with all the hype surrounding self-driving cars, he added.

He pointed that the key for entrepreneurs in emerging markets really is to figure out how to apply the underlying IoT, machine to machine technologies, to the very specific regional problems in the market they are in.

NETWORKING. Taylor chats up Ayala Incorporated chairman Jaime Augusto Zobel de Ayala at the event.  The event was held in co-working space A Space in Makati which Taylor pointed out was a sign that the local tech ecosystem is on its way to building a culture of collaboration similar to that of Silicon Valley.

Building the environment

“There is startup after startup that can solve particular regional problems and the technology is available to everybody off the shelf,” Coneybeer said, adding the real challenge is to to enable them to do so.

“The key to this is allowing free market principles to operate. That means removing regulation, removing bureaucracy and red tape to allow entrepreneurs to thrive. Those are the most important things because you have plenty of smart and driven people here,” he explained.

This takes time though, and as he puts it, “you also have to have enough of your population who is able to spend time thinking about creating a company as opposed to thinking of where their next meal is gong to come.”

This is what Endeavor wants to address with its goal of creating a Silicon Valley-like ecosystem of entrepreneurs in the emerging markets where it operates, which creates cycles of job creation and innovation in an economy.

As of this year, the organization has chosen a total of 1,189 high impact entrepreneurs, including two from the Philippines. These entrepreneurs have so far created more than 500,000 jobs.

The real secret to building an ecosystem like Silicon Valley is creating a culture, Taylor pointed out.

“Ideas don’t build big businesses; what builds big businesses is a culture of trust and mentorship where entrepreneurs try to help each other. In short, a collaborative environment,” he said.

This is a rapid departure from other business cultures which is generally distrustful and unwilling to help each other, he added.

“Our message is that what we really have to do is to innovate more, and through that, to prove that one can do well by doing good,” he said. – Rappler.com 

Laptop image from Shutterstock

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