Venture capitalist pushes initiatives for VC ecosystem

Eyed to address the problem of entrepreneurs on start-up capital for their potential business models, a US-based Filipino venture capitalist urged the private and public sector to form capital formation initiatives in order to jumpstart venture capital ecosystem in the country.

A venture capitalist or a VC is a professional investor, who invests in a business venture, providing capital for start-up or expansion looking for a higher rate of return than would be given by more traditional investments; however, they consider both the risk of loss and the potential for profit.

Eric Manlunas, a venture capitalist said that VCs these days are interested to invest and fund high technology researches or innovative enterprises that are internet-related such as consumer web, enterprise web and mobile web or software as a service ventures and clean tech like alternative energy and conservation-related studies, and life sciences or biotech which are well-suited in the Philippines considering our skills.

Manlunas pointed out that VC investments in the US last year have funded 3,813 venture deals and hit a six-year high at 29.7 billion dollars which composed one fifth of their gross domestic products.

He cited that for the country to jumpstart our own VC ecosystem, the government as well the private sectors should invest in capital formation programs that should be taken seriously.

“No capital formation initiative is analogous to asking superior performance from an athlete without providing sufficient resources so government needs to institute a VC matching funds program and private investment sector needs to take advantage of this by raising capital for VC-specific use,” he added.

A matching fund worth 100 million dollars he said could be sufficient enough to start the momentum and this could be generated through access of pork barrels, IMF or ADB grants. He said that these similar movements were done by Israel and Russia and currently countries from Latin America are also following these models.

He said that 100 percent of the funds need to be invested in early-stage Philippine-based tech ventures within three to four years and the return on government money needs to be capped as 5-year inflation average benchmark.

Manlunas also pointed out that large corporations as well as local universities can also start their own technology business ecosystem by putting up “seed funds” for homegrown ventures that will encourage students to pursue their ideas more and encourage corporate executives to revisit their entrepreneurial spirit.