Jurassic World: Predatory investing behaviours we’d rather not see in today’s startup ecosystem

jurassic worldCaveat: like all opinion pieces, this comes with a perspective that not everyone will share, so let me state where this is coming from.

We hold an investor’s perspective. Our objective is to drive a return on our investment: not just the cash we provide, but the connections/market access we enable and the time and energy we invest in each deal. Our financial focus and the capital and relationship/reputation risk that we take aligns us closely with the founders’ own objectives:

  • Because we are not a charity, our key metric is neither funds deployed nor grants given. Our performance metric is not about Inputs: it is about Outcomes and Results. Which is what the founders most benefit from, ultimately.
  • Because we are not a PR machinery: our key metric is not the media mileage we as investors get. We value PR for the benefits it brings to a business and to our deal flow, and to evangelising to corporates and consumers. But our focus is investing; and we prefer to shine the spotlight on startups and founders.
  • Because we are not a development organisation, our capability-building initiatives focus on driving successful outcomes – liquidity events, in this industry. Massive development, advocacy are side benefits we seek, but these are not the focus of our investments.

All the above have consequences.

  • Our objective is to have some spectacular winners, the significant funding rounds and landmark exits that place our market on the global investment map. We double down on a few high-performers. But we do not have the bandwidth to invest in everyone who pitches to us. And while we do follow-on investments, we do not guarantee follow-on for every single startup in our portfolio.
  • Our strategy is a combination of straight-up venture investing, authentic community engagement and intensive portfolio development. We do not invest in advertising for the Kickstart brand. We don’t have sponsorship budgets. We don’t have an ad agency; we don’t even have a full-time marketing person. I moonlight as copywriter-slash-creative director (those Kickstart geek shirts? Yup, that would be my copy. Saved by Hannah’s great design capabilities!). Hackathons and business plan competitions are not our main source of deal flow. These have a purpose, but their purpose doesn’t perfectly align with our investing objectives; and other groups are better are staging these.
  • Our ethos is to aim for homeruns and moonshots. We like ambition, coupled with methodical execution. We’re not impressed by the wild uncontrolled swings, or avowals of passion as the sole driving force. We believe in planning, preparation, measuring and iterating. We practice rigour in our investing.

So having framed our position, here are a few investing practices we wish we hadn’t seen (but we have).

  1. Taking too much and giving too little
    1. Taking too much equity for too little cash. Our starting position for Philippine seed stage investments is a minimum $200K post-money valuation because we know that seed-stage startups need a longer runway, hard cash to hire talent, and multiple future rounds of investments. Taking 20% equity at this stage, for less than $40K in cash, is not a good thing for founders: it ruins their prospects for future funding because smart investors will see that the founders are close to losing control of their own startup. What investors value in founders is skin in the game: “owner behaviour,” not “employee behaviour.”
    2. Taking significant equity (>3%) for advice, introductions, and anything that is not full-time, has no concrete commercial outcomes (and no consequences for non-delivery), or is on a “best effort basis.”
  2. Confusing investing with commercial practices
    1. Mixing commercial and equity agreements – these are separate transactions, and should be dealt with in separate documents. This delineates which transaction is which, and allows founders to negotiate commercial deals in a fair environment.
    2. Taking collateral for investment. Yup, we’ve seen this kind of a term sheet.
    3. Any sort of revenue share deal for investors. We’ve seen this, too — in the Philippines, and overseas.
    4. Hidden conditions in investment documents or commercial agreements. Three words for founders to Google: “Entire Agreement Clause.”
  3. Using time, deliberately or not, as a means of control.
    1. Taking too long to decide. Or, having made the decision to invest, delaying funding for reasons outside of the agreed list of Closing Conditions (this is why founders need to pay attention to this part of the term sheet).
    2. Deciding quickly, then piling on the conditions after. We’ve seen startups suffer from vague term sheets and long-delayed Share Purchase Agreements. Even the ostensibly generous offer to “fund now, and sign SPA’s later” can be dangerous: by the time definitive deal documents are swapped, and founders are wanting to negotiate newly-introduced deal conditions, they may have already spent the cash. They are now not in a position to return the cash and walk away from what has become an onerous deal.
  4. Overly asymmetrical conditions
    1. Too stringent reserve matters. A burdensome approval process for standard operating decisions; or for too low a cost hurdle.
    2. Investor self-promotion at the expense of startups.

As startup ecosystems evolve, and more traditional investors and corporates come into the marketplace, they (we!) carry with us the DNA of our genesis. Some investors evolve and adapt more quickly to the startup ethos of generosity, collaboration and fairness. Others are slow to shed their more aggressive, predatory investing practices: after all, in the corporate world, we are trained to squeeze all value from a deal, to never miss a trick, and to leave no money on the table.

Investor self-promotion is also a potentially damaging practice for the ecosystem, especially for very young ecosystems such as the Philippines. The politics of corporate hierarchies and investment banking mean that some investors want to be the rockstars of whatever passes for the ecosystem’s version of Wall Street or Sand Hill Road (come to think of it, even Wall Street and Sand Hill Road are not immune to this). What people need to realise, though, is that what makes a startup ecosystem valuable is having (and hearing about) amazing startup founders, and high-performing startups and startup teams. Everyone else — investors, advisors, policy makers, event managers — we’re supporting cast. We don’t make the show better, or the ecosystem more valuable, by calling attention to ourselves.

Thankfully, we’ve also seen investors — traditional and otherwise — who genuinely strive to understand the ecosystem, who listen and learn, who don’t hard-code overly aggressive practices into startup investing. These are the early days; and many of us are learning, too. With any luck, most of us will evolve quickly enough to help the ecosystem grow healthy and robust. And maybe Darwin’s theory applies to startup investing, too.

 

Image credits: www.jurassicpark.wikia.com

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Minette B. Navarrete

President

Minette is Vice-Chairman and President of Kickstart Ventures, Inc., the corporate venture capital subsidiary of Globe Telecom.  She is a member of the Ayala Corporation’s Innovation Advisory Council, and of Globe’s Innovation Advisory Board.  She is a Senior Vice President at Globe Telecom, focusing on New Business, and a member of the Board of Directors of AdSpark, Globe’s wholly owned digital advertising subsidiary. 

Minette has held a number of CEO/COO positions in various industries, ranging from scrappy Philippine startups to iconic global companies.

Dan I. Siazon

Senior Vice-President & Treasurer

Dan is a co-founder as well as the Senior Vice-President and Treasurer of Kickstart Ventures, the corporate venture capital arm of Globe Telecom. He also concurrently supports Globe in M&A activities, which in the past have included acquisitions of Yondu (formerly Entertainment Gateway Group) and Bayan Telecommunications. Dan’s career track has mostly been in global tech-related companies, particularly in telecommunications, personal portable computers, and over a decade in tech venture investing with JAFCO Asia, with senior-level stints in key global markets including the US, Japan, Europe, Southeast Asia, and Australia.

Dan holds a BS in Mechanical Engineering from the University of Notre Dame, Indiana, USA, and dual master’s degrees from the University of Pennsylvania’s Lauder Institute in International Studies (MA) minoring in German studies, and the Wharton School of Business (MBA).

Joan Cybil Yao

Vice-President

Joan is Vice-President of Kickstart Ventures, the corporate venture capital arm of Globe Telecom. She is a member of the Kickstart Deal Team.

Prior to Kickstart, Joan was Investment Manager for Southeast Asia at LGT Venture Philanthropy, a global impact investing firm headquartered in Europe. For six years, Joan was primarily responsible for the sourcing, screening, execution, and management of LGT VP’s deals in the region. In 2015, Joan also served as a consultant to the Department of Trade and Industry of the Republic of the Philippines, advising the Office of the Secretary on matters related to MSME development, tech startups, innovation, inclusive business, and social enterprise.

Joan holds a BS in Management Engineering with a minor in English Literature, cum laude, from the Ateneo de Manila University, Philippines.

Bit Santos

Portfolio Director

Bit Santos is the Portfolio Director at Kickstart Ventures where he leads the efforts to support portfolio companies and to nurture the local startup ecosystem. He has been a software product development leader for more than 10 years.

Prior to joining Kickstart, he was the Chief Technology Officer of OLX Philippines, an online classifieds platform company. He was primarily responsible for the product and technology strategy and operations of the Philippine team, but he also worked on global and regional initiatives within the OLX Group.

Pia Angeli C. Bernal

Community Manager

Pia joined Kickstart Ventures in September 2012 as its manager for social enterprise investments. Beginning May 2017, she serves as Kickstart’s Community Manager where she oversees PR/communications and external relations with the startup ecosystem stakeholders and enablers.

Before Kickstart, Pia held key Corporate Social Responsibility (CSR) roles in both the not-for-profit and corporate sectors, specialising in resource mobilisation, project management and comms, employee volunteerism, community relations, and public-private partnerships. In Globe Telecom from 2006 to 2012, she owned the Education and Social Protection Services CSR portfolio, which saw the application of telco assets -- mobile, broadband, and value-add services -- to bridge resources to communities in need. This role in particular prepared her for Kickstart, as it allowed her to experiment and become an early adopter in the use of digital technology for public good at a time when smartphone and broadband adoption were still early, and the gains from the use of digital assets, technologies, and skills were still evolving. 

Pia holds a BA in Development Studies from the University of the Philippines in Manila, Philippines.

Frances Barsana

Business Development Manager

Frances Barsana is Kickstart’s Business Development Manager, who drives value creation in our portfolio companies by building strategic and commercial partnerships between best-in-class tech startups and top1000 corporations in the Philippines and in Southeast Asia.

With her deep understanding of both sides of the opportunity: the innovation and speed of tech startups, and the scale and stability of large corporations, Frances is the conduit for high-impact collaborations that help shape and define digital transformations within the ecosystem.

Frances was previously Business Development Director at PHAR Partnerships Singapore, an international media and marketing consultancy with offices in Europe, Asia, and the Middle East. She is a graduate of the University of the Philippines, Baguio where she majored in Journalism.

Camille Cua

Investment Associate

Camille joined Kickstart Ventures in 2014 and is a member of the Kickstart Deal Team, with a primary focus on making strategic investments into promising startups in the region and globally.

Camille seeks out entrepreneurs building the next generation of category-defining digital companies, who offer innovative solutions to deeply felt problems, especially in Southeast Asia. She is also responsible for Semaphore, a Kickstart-owned SMS API.

Camille holds a B.S. in Mathematics from Fordham University and is both a voracious reader and eater.

Janis H. Nolasco

Office Manager

Janis is Kickstart office manager and the designated grown-up(!) in view of her 15+ years of experience in office management systems and administration.

She holds a BS in Clinical Psychology from the Polytechnic University of the Philippines.

Merivita Marasigan

Accountant

Bavi is the Kickstart accountant.

She is a Bachelor of Science in Accountancy graduate from the University of Batangas in Southern Luzon and has 14 years’ worth of experience in accounting working with small and medium enterprises, manufacturing companies, and government agencies.

Ernest L. Cu

Kickstart Investment Committee Chairman; Globe CEO

Ernest is currently the President and Chief Executive Officer of Globe Telecom. Joining the company on 1 October 2008, he brings with him over two decades of general management and business development experience spanning multi-country operations. In 2010, he was declared Best CEO by Finance Asia and was conferred the International Association of Business Communicators Philippines (IABC/Philippines) CEO EXCEL Award for communication excellence in telecom and IT. In 2012, Ernest earned international accolade as CEO of the Year by Frost&Sullivan Asia Pacific.

Prior to joining Globe, he was the President and Chief Executive Officer of SPI Technologies, Inc., where he earned the Ernst & Young ICT Entrepreneur of the Year Award in 2003.

Ernest earned his Bachelor of Science in Industrial Management Engineering from De La Salle University in Manila and his Master of Business Administration from the J.L. Kellogg Graduate School of Management, Northwestern University.

Alberto M. de Larrazabal

Kickstart IC Member; Globe Chief Commercial Officer

Alberto de Larrazabal is the Chief Commercial Officer of Globe.

As CCO, Albert drives the integration and execution of Globe’s strategies across all commercial units, including marketing, sales and channels, and product development for all segments of business. He joined Globe in 2006 as Head of the Treasury Division and became Chief Finance Officer in April 2010. Albert has had over two decades of extensive experience as a senior executive in Finance, Business Development, Treasury Operations, Joint Ventures, Mergers and Acquisitions, as well as Investment Banking and Investor Relations.

Prior to joining Globe, he held positions such as Vice President and Chief Finance Officer of the Marsman-Drysdale Corporation, Vice President and Head of the Consumer Sector – JP Morgan (Hong Kong), and Senior Vice President and Chief Finance Officer of San Miguel Corporation.

Minette B. Navarrete

Kickstart IC Member; Kickstart President

Minette is Vice-Chairman and President of Kickstart Ventures, Inc., the corporate venture capital subsidiary of Globe Telecom.  She is a member of the Ayala Corporation’s Innovation Advisory Council, and of Globe’s Innovation Advisory Board.  She is a Senior Vice President at Globe Telecom, focusing on New Business, and a member of the Board of Directors of AdSpark, Globe’s wholly owned digital advertising subsidiary. 

Minette has held a number of CEO/COO positions in various industries, ranging from scrappy Philippine startups to iconic global companies.

Peng T. Ong

Kickstart IC Member

Peng T. Ong is a Managing Director at Monk’s Hill Ventures, a technology venture fund. He sits on the boards of YY Inc. and Singapore University of Design & Technology, and also on the advisory board of the Chancellor of the University of Illinois.

Until recently, Peng was also on the boards of SingTel and Singapore’s National Research Foundation, and chaired Infocomm Investments. Peng founded Match.com (bought by IAC), Interwoven (now part of HP), and Encentuate (acquired by IBM).

The businesses he created now generate annual revenues that total more than US$1 billion. He has a master’s in Computer Science from UIUC and a BSEE from UT Austin. Peng is also an avid audiophile.

Myla Crespo-Villanueva

Kickstart IC Member

Myla Crespo-Villanueva is a technology entrepreneur. She has founded five startups and corporations in Asia over the past twenty-five years, and is a leader in the Philippine IT industry.

She is Managing Director of MDI , a pioneer and leading systems integrator and distributor for Dell, Cisco, IBM, Juniper, VMWare, Fireeye in the Philippines. MDI has introduced many innovations and firsts in its proud history.

Myla co-founded Wolfpac in 1999, a pioneer in Mobile Value-Added Applications and Services during the growth spurt of mobility in Asia. She also founded Meridian Telekoms in 2000, the first nationwide broadband wireless internet provider serving 7,100 islands. In 2005-2006, both companies were acquired by Smart Communications , the incumbent telecommunications company in the country with over 65 millions subscribers.

After acquiring two of her companies, Myla represented Smart Communications in the GSM Association in 2005-2010. GSM Association is the industry trade body representing 800 operators in more than 220 countries. She was part of its Executive Management Committee and was also named Chairperson of the GSMA Mobile Innovation Forum from 2007 to 2009, which linked an ecosystem of Venture Capital, Telecom Operators and mobile technology startups.

Myla was named Woman Entrepreneur of the Year in 2004, by the Entrepreneur of the year program of Ernst and Young, Department of Trade and Industry, Philippine Stock Exchange, Bankers Association of the Philippines and the Philippine Securities Exchange Commission. She was also named one of the Ten Outstanding Women in the Nation’s Service or TOWNS in 2010 for her pioneering work in the use of Information Technology in nation-building.

In 2006, she co-founded Novare Technologies with Craig Ehrlich, former GSMA Chairman and Mohan Gyani, former CEO of ATT Wireless. Novare is a consulting and solutions provider for telecommunications and banking in areas of customer lifecycle management, transformation technologies and mobility.

She is Regional President for Asia Pacific of the Global Telecom Women’s Network (GTWN), a global organization spearheading a yearly forum of for executive women active in telecommunications to ‘network’ and discuss current issues in the industry. Recently, she was also appointed as one of the chapter founders of Women Corporate Directors (WCD) in the Philippines.

Myla is a trustee of Go-Negosyo, which advocates entrepreneurship among Filipinos. She was a technical advisor to the PPCRV Chair (Philippine Pastoral Council for Responsible Voting) in the first-ever automated election in 2010 and is now part of the Board of Trustees.

She is a graduate of Santa Clara University, CA with a BS in Economics. Myla is married to Jun Villanueva with two children, Blanca 18, and Luis, 12.

Alberto M. de Larrazabal

Chairman of the Board

Alberto de Larrazabal is the Chief Commercial Officer of Globe.

As CCO, Albert drives the integration and execution of Globe’s strategies across all commercial units, including marketing, sales and channels, and product development for all segments of business. He joined Globe in 2006 as Head of the Treasury Division and became Chief Finance Officer in April 2010. Albert has had over two decades of extensive experience as a senior executive in Finance, Business Development, Treasury Operations, Joint Ventures, Mergers and Acquisitions, as well as Investment Banking and Investor Relations.

Prior to joining Globe, he held positions such as Vice President and Chief Finance Officer of the Marsman-Drysdale Corporation, Vice President and Head of the Consumer Sector – JP Morgan (Hong Kong), and Senior Vice President and Chief Finance Officer of San Miguel Corporation.

Ernest L. Cu

Board Member

Ernest is currently the President and Chief Executive Officer of Globe Telecom. Joining the company on 1 October 2008, he brings with him over two decades of general management and business development experience spanning multi-country operations. In 2010, he was declared Best CEO by Finance Asia and was conferred the International Association of Business Communicators Philippines (IABC/Philippines) CEO EXCEL Award for communication excellence in telecom and IT. In 2012, Ernest earned international accolade as CEO of the Year by Frost&Sullivan Asia Pacific.

Prior to joining Globe, he was the President and Chief Executive Officer of SPI Technologies, Inc., where he earned the Ernst & Young ICT Entrepreneur of the Year Award in 2003.

Ernest earned his Bachelor of Science in Industrial Management Engineering from De La Salle University in Manila and his Master of Business Administration from the J.L. Kellogg Graduate School of Management, Northwestern University.

Minette B. Navarrete

Board Member

Minette is Vice-Chairman and President of Kickstart Ventures, Inc., the corporate venture capital subsidiary of Globe Telecom.  She is a member of the Ayala Corporation’s Innovation Advisory Council, and of Globe’s Innovation Advisory Board.  She is a Senior Vice President at Globe Telecom, focusing on New Business, and a member of the Board of Directors of AdSpark, Globe’s wholly owned digital advertising subsidiary. 

Minette has held a number of CEO/COO positions in various industries, ranging from scrappy Philippine startups to iconic global companies.

Peng T. Ong

Board Member

Peng T. Ong is a Managing Director at Monk’s Hill Ventures, a technology venture fund. He sits on the boards of YY Inc. and Singapore University of Design & Technology, and also on the advisory board of the Chancellor of the University of Illinois.

Until recently, Peng was also on the boards of SingTel and Singapore’s National Research Foundation, and chaired Infocomm Investments. Peng founded Match.com (bought by IAC), Interwoven (now part of HP), and Encentuate (acquired by IBM).

The businesses he created now generate annual revenues that total more than US$1 billion. He has a master’s in Computer Science from UIUC and a BSEE from UT Austin. Peng is also an avid audiophile.

Rizza Maniego-Eala

Board Member

Rizza is the Chief Finance Officer, Treasurer and Chief Risk Officer at Globe Telecom.

She joined Globe in February 1998: her previous positions in the company included being an Assistant Vice-President for Financial Planning and Analysis, President of G-Xchange Inc. (mobile-commerce subsidiary), and Senior Vice President for International Business.

She has had extensive experience in financial planning and analysis, capital markets fund raising, joint ventures, mergers and acquisitions, investor relations, strategic planning, business development, and setting up and managing start-ups.

Prior to joining Globe, Rizza was Deputy Research Head for Natwest Markets. She earned her Bachelor of Arts in Management Economics from the Ateneo de Manila University.

Vince G. Tobias

Strategy & Partnerships Director

Vince Tobias joins Kickstart as Director of Strategy and Partnerships reporting to Kickstart president Minette Navarrete. This will be concurrent to his role as head of Ayala Innovation, which he has led since its beginnings in 2012. Outside the Ayala walls, he has been a pioneer of the nascent corporate innovation community, and has been onstage in  dozens of key international conferences, alongside other leading thinkers and practitioners. Vince serves on the Board of Directors of the Global Innovation Management Institute (GIMI), the world-wide standard professional certification body, with the mission of developing innovation management as a management discipline, while democratizing innovation capability and catalyzing corporate culture.

Vince draws from eight years of management consulting experience — most recently with the Monitor Group, a top-tier strategy and innovation consulting firm founded by Harvard Business School Professor Michael E. Porter; and much earlier with Arthur Andersen’s Strategy Consulting practice in the Philippines, across the Asia-Pacific, and with AA’s Revenue Enhancement Competency Center headquartered in Chicago.

Vince also takes from experience in the startup world, where has led scale-ups internationally: as Managing Director (Malaysia) of K2, a pioneer digital agency now part of media giant the Publicis Groupe; as Regional Manager (Asia) of Intermedia Games UK, then the world’s biggest creator of cross-channel interactive games; and as co-founder of companies in the media, computing, and energy spaces.

Paolo B. Monteiro

Innovation Associate

Paolo “Monty” Monteiro joins Kickstart as Innovation Associate reporting to Vince Tobias, while continuing his role at Ayala Innovation where he helps drive disruptive thinking through trend analysis and new opportunities research; capability-building activities; and by organizing and participating in various internal and external innovation events, including Ayala’s annual Spark Innovation Conference. Monty also works with the Ayala Corporate Strategy team for special projects, group-wide strategic initiatives, and supports communications requirements of the Ayala leadership and Group Mancom.

Prior to joining Ayala in 2016, he was with the Makati Business Club for five years, where he specialized in communications, project management, and policy research and advocacy. During the Philippines’ hosting of the 2015 APEC Conference, he was appointed one of the leads of the Philippine youth delegation to APEC’s Voices of the Future Program and helped draft the APEC youth declaration statement.

Monty holds a  bachelor’s degree in Legal Management from the Ateneo de Manila University and studied on exchange at Mahidol University International College in Thailand.

Prior to joining Ayala in 2016, he was with the Makati Business Club for 5 years, where he specialized in communications, project management, and policy research and advocacy.

He earned his bachelor’s degree in Legal Management from the Ateneo de Manila University and studied on exchange at Mahidol University International College in Thailand. During the Philippines’ hosting of the APEC Conference in 2015, he was selected to be one of the leads of the Philippine youth delegation to the APEC Voices of the Future Program, where he was also part of the international team that drafted the conference’s youth declaration.

Jecky G. Pelaez

Legal Consultant

Jecky is Kickstart’s Legal Consultant, providing legal advisory and consultancy in areas such as company operations and systems, human resources, and corporate and regulatory compliance. He also supports the Kickstart Deal Team in deal screening, investment analysis, and due diligence.

Prior to Kickstart, Jecky was a lawyer with Siguion-Reyna, Montecillo & Ongsiako Law Offices and with Picazo, Buyco, Tan, Fider & Santos Law Offices, focusing on corporate and labor matters.

Jecky holds a BS in Management from the Ateneo de Manila University; a Juris Doctor from the University of the Philippines; and an MBA from the Said Business School, University of Oxford.