Ladies and gentlemen, good afternoon!
It is my pleasure to be here at the Venture Pilipinas: Startup Venture Fund Pitch. Pursuant to the Innovative Startup Act, our attached agency, the National Development Company (NDC) has allocated PHP 250 million (or an equivalent of USD 5 million) venture fund for Philippine-based tech startups. This fund would support startups’ expansion, plant and facilities establishment or improvement, product development, sales, and marketing.
Today, we will witness the launching of the Startup Venture Fund along with Venture Pilipinas: The Startup Venture Fund Pitch this afternoon. This event is a milestone in our startup ecosystem journey so allow me to take this opportunity to thank NDC GM Ditas Rebueno and the CIG team headed by Undersecretary Fita Aldaba for working hard on the SVF guidelines. Let me also send the Department of Trade and Industry (DTI)’s gratitude to the QBO team through the leadership of Butch Meily and Katrina Chan for all the effort and hard work in making this activity possible.
The 2020 Philippine Startup Survey revealed that the financial impact and effects on operations, potential global recession, and difficulties with funding remain the top three major concerns of startup founders with respect to the pandemic.
The report says that more than 50% of startup founders say they need up to PHP 5 million in additional funding to help normalize their operations, with plans of securing this either through equity financing or bank financing. However, banks in the Philippines still ask for traditional banking requirements such as hard securities.
With that said, the launching of the Startup Venture Fund is timely and relevant. Venture Capital Investment is proven to be effective in promoting innovation and job growth, and generating productivity gains, especially for SMEs and young startups.
In implementing the Startup Venture Fund, the government plays a key role in terms of policy-making, regulations, and establishing an enabling environment for startups. Our country’s Startup Venture Fund will be implemented together with key players from the private sector. This is because evidence shows that partially government-owned venture capitals can boost startup success; however, solely government-owned venture capitals do not. Another study by an American nonprofit research organization, the National Bureau of Economic Research, shows that moderate amounts of funds from Government-Sponsored Venture Capital funds (GVCs) can improve the performance of entrepreneurial ventures, relative to ventures supported purely by private venture capitalists.
VC-backed firms perform better if the amount invested by the public sector is smaller, and under the control of a private fund manager than if the amounts are larger. This reinforces the argument that the size of the public intervention must be appropriate: large enough that it makes a difference, but not so large that it affects the alignment of incentives and objectives leading to relative underperformance of VC-backed firms.
In closing, the DTI will be working closely with the private sector to efficiently and effectively implement the Startup Venture Fund because this would help qualified startups for capital requirements, technology improvements, and salaries of potential new employees, among others. This commitment is in line with President Rodrigo Roa Duterte’s confidence in our innovative industries when he emphasized in a recent speech that “innovation is our big push,” and added that “this will keep our country on the growth path for decades to come.”
Lastly, I would like to congratulate in advance all the startups that have made it through this part of the pitching competition.
Maraming salamat at mabuhay tayong lahat! ♦
Date of Release: 18 November 2021