Unleashing the potential of startups

The Philippines has one certified unicorn, a coveted status of a startup business that has reached a valuation of $1 billion. However, there are thousands of still struggling startups, many trying to keep afloat by constantly innovating.

As our startups realize, the journey to unicorn status is one that requires an immense amount of energy. Mynt, more popularly known in the country as GCash, has been powered by big names throughout its decades-long journey to become a true unicorn.

GCash, first introduced in 2004 by Globe Telecom – the Ayala-backed telecommunications company that operates the country’s largest mobile network – was born with a silver spoon, but nonetheless saw accelerated growth only in recent years.

The entry of Ant Financial Services Group in Mynt in 2017 could perhaps have been that catalyst of growth, being affiliated with the highly successful Chinese Alibaba Group, owner of Alipay – an online and mobile payment platform that now serves over a billion users.

From only four million registered customers, with an average weekly transaction of P1.5 billion then, Mynt now reaches over 48 million Filipinos and has a gross transaction value of nearly P3 trillion. This year, Mynt raised its value to over $2 billion through additional investment rounds.

Aside from its goal of making GCash available to more Filipinos, partner merchants, and social sellers, Mynt is looking at new channels of growth – like GLoan, which would allow qualified borrowers to receive as much as P25,000 payable in 12 monthly installments.

More vibrant ecosystem

GCash‘s story is something to emulate, an inspiration to many other Philippine startups. Not all have had the advantage of starting with the back up of conglomerate parents, but thankfully, the startup ecosystem today is more vibrant than it was decades ago when GCash first started.

A number of government agencies are empowered by several laws to extend assistance to startups, from incubation advice to seed capital sourcing, mentoring, and expansion strategies here and abroad. But, even before the passage of the Innovative Startup Act in 2019, venture capitalists and angel investors have been zealously sizing up the local ecosystem.

The pandemic has definitely pushed many Philippine startups toward more solid growth, with funding moving past the first Series A stage. Three companies, in particular, managed to complete their Series B fundraising rounds this year, helping give the country’s startup ecosystem more attention.

Fund raisers are seeing local startups tapping as much as $2 billion over the next three years, with more independent, founder-led companies finding relevance and market fit in a customer base that is starting to realize the importance of going digital.

More than 12 million Filipinos started to engage in digital financial transactions since the first lockdown was announced last year, according to a recent e-Conomy SEA study. This has contributed to a 93 percent jump in startups’ gross merchandise value.

Startups are starting to focus on real needs of Filipinos while capitalizing on customers’ new awareness of e-commerce. This has made their new investment pitches more acceptable, and the entry of global investors like Kohlberg Kravis Roberts & Co., Tencent Holdings, and the Ant Group is proof.

Lessons

The stories of the three companies that received Series B financing are worth retelling, and while far from clinching unicorn status soon, should give a glimpse of how they were able to grow to inspire other startups to stay strong during the first challenging years of starting a business.

Kumu is a live-streaming and social commerce app by Kumumedia Technologies, Inc. It offers the combined functionalities of Meta Messenger, TikTok, YouTube, Shopee and Instagram, while catering mostly to Filipinos here and abroad.

Launched in 2018, the app gained popularity with the patronage of many Filipino entertainment personalities out of jobs because of the lockdowns. The audience loved the creative outburst of homegrown entertainers confined to their homes.

Great Deals Ecommerce Corp. is an e-commerce platform similar to Amazon, but focused on the Philippine market. The company has partnered with many established brands in boosting its online presence in the country.

The startup is strengthening its delivery capabilities and expanding the number of its micro-fulfillment centers or small warehouses within Metro Manila to allow it to deliver orders within an hour. The founders are also investing in data analytics and business intelligence.

Lastly, there is GrowSari, with its B2B platform focused mainly on improving the logistical needs of the many sari-sari stores in the country. The startup has a strong partnership with the Gokongwei’s JG Summit Holdings and Robinsons Retail Holdings.

GrowSari currently serves about 150,000 sari-sari stores nationwide, but hopes to double the number within the year through a more efficient logistics and delivery system. The stores serviced by GrowSari are outfitted with tech tools that help the small store owners to grow their business.

Four other small local startups, which made it into a recent Forbes Asia’s “100 to Watch” list, also deserve mention.

ChatGenie is an automated ordering process and checkout experience via social media and messaging apps founded in February 2020.

CloudEats is a cloud kitchen company launched in June 2019 that prepares on-demand meals for many brands.

Kalibrr is a job-matching platform started in 2013 that connects job seekers with companies.

PayMongo, launched in June 2019, is a financial technology company that allows Philippine businesses to accept online payments.

With more startups gaining maturity, we should see additional unicorns within the decade, especially as the economy returns to its pre-pandemic pace.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.