Globe Telecom has earmarked up to US$50 million (P2.2 billion) in a new venture capital (VC) fund which its wholly-owned subsidiary Kickstart Ventures, Inc. will use to help drive the rapid growth of high-potential startups. This growth fund or “Fund 2” targets startups in expansion mode anywhere in the world with clear regional and global prospects.
“In the Philippines, I have yet to see a startup break through in a big way, not because of lack of talent but because the whole sector is devoid of support. Large tech incumbents operate well here, but startups struggle,” said Ernest L. Cu, Globe President and CEO, explaining the Fund’s rationale.
He added: “Globe has been finding and working with smaller, innovative startups to boost the quality of its customer experience, with very good results. So good that they get acquired by large global companies at respectably higher valuations! Seeing this potential, we believe that Kickstart can use the VC fund to help our startup partners to scale even faster via an equity investment.”
Kickstart started in 2012 with a $2.4M seed fund or “Fund 1” focused on seed and early-stage startups. For Fund 1, Kickstart also recently received a US$1.1M (Php50M) top-up for 2015 deals. Investment targets of Fund 1 can be domiciled in any country and have no nationality requirements. Its earlier-stage nature means closer, more frequent mentoring, thus, Fund 1 portfolio companies tended to have some of their operations in the Philippines.
On the other hand, Fund 2 expands on Globe Telecom’s innovation thesis and is possibly the largest commitment to early-stage startup investing coming out of a Philippine company. Like Fund 1, investment targets of Fund 2 can be based in any country with no nationality requirements for founders but they are aimed at more developed startups that have validated their product-market fit and are now looking to expand.
“We are looking for startups that have strategic capabilities of value to communications and digital companies, in which we could invest more significant sums at Series “A” round and beyond to drive customer adoption and market momentum. These startups can be anywhere in the world and this new fund underscores our confidence that Philippine capital and the Philippine market will support innovation,” said Minette Navarrete, Kickstart President.
Fund 2 is intended to help drive rapid growth in startups focused on the digital communications domain and encompasses telecoms as well as media, data analytics, Internet of Things, financial services, health, education, IT security, and energy and spectral efficiency.
Startups would be able to leverage the relationships of Kickstart within the Ayala and Singtel networks through the ff: 1) having their product undergo technical due diligence from Globe in anticipation of a Philippine market roll-out and 2) receiving warm introductions to affiliate operating companies in the region as well as to mentors, advisors, and investor contacts of Kickstart.
So far, Kickstart has made 20 investments. Many have grown and attracted follow-on funding from third-party investors including recognized institutional investors like Y Combinator, 500 Startups, Omidyar, Wavemaker, IMJ Investment Partners, FutureNow Ventures, Seawood Capital, Elea Foundation, and a number of local and overseas angel networks.