Daily Tribune‘We should support MSMEs and startups. We are building Team Philippines, not Team Barangay. Let us practice buying from these small businesses even if we already have large business organizations’
Prominent figure in technology, education, and business leadership, Dr. Francisco ‘Paco’ Sandejas was guest of honor and speaker at the weekly Rotary Club of Makati meeting last Tuesday, 5 March 2024 at The Peninsula Manila in Makati. Noting that Filipino startups in the technology space have been attracting the attention of venture capitalists and foreign and local investors, he encouraged RC Makati members to invest in technology-focused industries, including fintech, artificial intelligence, innovative technologies and digital technologies, among others.
photograph courtesy of Richard Manilag for RC Makati
The Philippines’ business ecosystem should provide a supportive condition for the growth of startups and micro, small and medium enterprises, said venture capitalist and mentor Francisco “Paco” Sandejas during the weekly Rotary Club of Makati meeting last Tuesday, 5 March 2024 at The Peninsula Manila.
Sandejas, who was the RC Makati’s guest of honor and speaker at the said meeting, stressed, “We should support MSMEs and startups. We are building Team Philippines, not Team Barangay. Let us practice buying from these small businesses even if we already have large business organizations.”
He called on business leaders which make up many of the Club’s members, to invest in technology-focused industries, including fintech, artificial intelligence, innovative technologies, digital technologies, and others.
Sandejas noted that Filipino startups in the technology space have been attracting the attention of venture capitalists from foreign and local investors. The shift of several businesses to online commerce, such as food, trading, and other services, has triggered the exponential growth of startups and MSMEs because of the convenience of digitalization.
“There are growth opportunities that we can take advantage of. The rise of digitalization and AI will set the growth stage for investments in banking, wealth management, lending and other fintech-related sectors,” he said.
Rise in startups
According to a recent report by the Asian Development Bank, the number of active startups grew sevenfold from 100 in 2015 to 700 at present, thanks to a growing ecosystem of support and financing that has accelerated in the last two years.
With a better ecosystem, Philippine startups have received more funding recently. In 2021, $858 million was invested in startups, more than the combined total of $803 million from 2018 to 2020.
The report, also based on interviews with startup founders, noted a significant improvement in government support level and quality for the sector. A decade ago, when the tech startup scene was emerging, getting government attention or support took a lot of work.
With gradual improvements in the country’s startup ecosystem, the Philippines’ innovation rankings improved. Between 2014 and 2021, it rose from 100th to 51st in the Global Innovation Index.
Tech startup making progress
As in many countries, fintech and e-commerce dominate the startup landscape. Meanwhile, startups with high development impact — those focused on education (edtech), health (healthtech), agriculture (agritech), and the environment (greentech) — are emerging, although at a slower pace, according to the report. Those four sectors were the subjects of the just-released report, The Philippines Ecosystem for Technology Startups.
The government has implemented many supportive policies and programs, including the Innovative Startup Act and the Philippine Innovation Act, passed before the onset of the Covid-19 pandemic.
Many incubators have been established through universities, and a grants program has been launched.
“The government understands the importance of startups for driving innovation now and in the future,” said ADB Economist Paul Vandenberg, who collaborated on the study with local researchers. “It has significantly raised the scope and quality of public sector support for startups in recent years, including creating a policy environment conducive to the sector’s growth.”
Finance a crucial constraint
Finance is a crucial constraint for young startups. In the Philippines, venture capital provided by large corporations was the earliest investment source for startups, and it remains a primary funding source today.
These conglomerates have venture capital arms or invest directly in startups that fit their core business. At least 40 venture capital firms are in the country, but investments are concentrated in mature digital sectors such as fintech, media and entertainment, and e-commerce.
“To give these sectors a greater chance of development, agritech, cleantech, edtech, and healthtech need to attract investors,” Vandenberg said.
“Investors need to understand a sector before they feel comfortable with it. If they don’t know a sector, it’s considered higher-risk, and they are less likely to engage,” he emphasized.
Education is key
However, Sandejas suggested that industries and organizations should upskill their workforce to meet the changing demand for skill sets due to the rapid adoption of digital technology.
Among the industries he sees to be disrupted by AI and digitalization is the business process outsourcing space.
“Let us invest in upskilling our workforce. I suggest that we create an innovative center near universities and make it cool so students, researchers, innovators, and funders will find it a good place to hang out,” he added.
Sandejas, who has a Stanford University PhD tucked under his belt, is the founder and executive chairman of Narra Ventures. He also heads Xepto Education, a trailblazing system developer and integrator known for revolutionizing the delivery of digital education content and tools, particularly in underserved regions in the developing world.
He is also instrumental in the success of top-tier Southeast Asian software consulting firm, Stratpoint Technologies which is renowned for its expertise in enterprise-level digital transformation initiatives.
Sandejas likewise played a pivotal role in driving UnionBank’s board’s efforts towards award-winning digital transformation initiatives.
His commitment to advancing science, technology and education is evident during his tenure as chairman of the S&T Development Foundation.
Collaborating with such esteemed personalities as rags-to-riches tech inventor and entrepreneur Dado Banatao whose inventions include the 16-bit Microchip, the first single-chip graphical user interface accelerator allowing computer users to use graphics for commands and not the usual typed commands in older computers, Sandejas actively supports poverty-eradication initiatives in the country through STEM (science technology engineering mathematics) education, innovation and entrepreneurship.
