LIRON GROSS moved to the Philippines with her family in 2017 to start Payo, a start-up e-commerce payment solution.
She saw a good potential from selling jewelry back in Israel in 2012, when intermediary costs led to higher prices.
Starting a business is never easy and starting a successful one is even harder especially for one that was introducing a new product. “I remember back then, the words I did not use was ‘start-up,’” Ms. Gross said in an interview.
“If I came to people and told them to join a start-up, they might think this could disappear in three months.”
Southeast Asia is home to some of the biggest start-ups such as Malaysia’s Iflix, Indonesia’s Gojek and Singapore’s Hooq, all of which have raised money at a clip, showing heavy interest among investors.
The country’s cash-heavy society inspired Ms. Gross to form Payo, a Philippine-based business that has since grown to half-a-million dollars in monthly revenue. Payo gets revenue from e-commerce clients who avail themselves of its logistic services.
Aside from the difficulty of getting people to join Payo, a major challenge was getting funding to support the start-up’s working capital.
“It’s very hard for me to get a credit card without having at least three years of operations. Local investors were hard to start a conversation with,” Ms. Gross said.
LAW FOR START-UPS
But in two years, the Philippines has become more accepting of start-ups.
For starters, the government in April enacted a measure that offers incentives to start-ups and removes constraints to encourage this type of business to flourish.
Republic Act No. 11337, or the Innovative Startup Act gives subsidies in business registration and in the use of office space and equipment, provides research and development grants, and offers special visas to start-up owners, employees and investors.
It also aims to build a so-called startup development program led by the departments of Trade, Science and Technology, and Information and Communications Technology.
Rules that will implement the law are now being drafted, and Trade Undersecretary Rafaelita M. Aldaba has said the initiative would help the Philippines “catch up with our neighbors.”
Having a clear legislative direction is key to help start-ups thrive, said Katrina R. Chan, director at local start-up organization QBO Innovation Hub. Start-ups, she said, are different from small and medium enterprises, which enjoy a different set of incentives, regulations and industry objectives.
“We want to make the Philippines a friendly place for start-ups,” Ms. Chan said. “It’s important that we set up the Philippines in such a way that it’s easier for talent and ideas to prosper no matter where they come from.”
Kumu, a local start-up that offers a Filipino culture-based livestream platform, is one of these. Its founders said the idea for the company was born when they were overseas.
Jose L. Cuisia, Jr., a former Philippine ambassador to the US, challenged its founders to move to the Philippines to start a tech company. Kumu launched its app last year and now has a million users.
Some Philippine start-ups that have yet to hit a homerun are seeking more government support, particularly protection from predatory entities from abroad.
Raphael Layosa, founder and chief executive officer of RetailGate — a start-up that uses artificial intelligence to gather consumer behavior and help retailers optimize operations — said the government should form a regulatory body that startups can run to for protection.
He cited the need for a “Filipino-First” policy for start-ups, adding that foreign technologies entering the Philippines are a big threat. “If you bring in a giant from abroad, it’s difficult to fight.”
Mr. Layosa said local startups, especially those with a rather limited funding, should be given more support and protection since foreign giants entering the Philippines more often have much bigger and deeper pockets.
“Every local startup founder shares a common dream — to be able to have their product or service be recognized globally as proudly Filipino-made,” he said. “But if at the onset these founders find themselves eaten up in their own homeland by foreign giants, then that dream can be easily lost.”
TARGETING UNICORNS
“More than encouraging people to have a start-up, what really matters is getting people who are already in start-ups to stay there and run the race,” Mr. Layosa said.
“If you have the government hand-holding start-ups in that marathon, I’m sure you have fewer people giving up.”
Ms. Gross, mentioned at the outset, thinks the new law on start-ups is a good start and could motivate foreign unicorns — start-up companies valued at more than a billion dollars, typically in the software or technology sector — to consider the Philippines as their first market.
Ms. Gross said there are international start-ups that believe in Southeast Asia but never considered the Philippines as their first market.
“Now the government is opening its doors to those initiatives,” she said.
“It’s a very good go-to market for Southeast Asia because of the language and the high penetration rate for smartphones.”
