From the editor: Andrew Murphy is a senior vice president at Cooley LLP, a global leader at the intersection of innovation and law that services 40% of the companies on the Wall Street Journal’s Billion Dollar Startup Club. In 2020 alone, the firm raised over $34 billion across roughly 370 funds. As a champion of early-stage startups, Murphy heads business development for Asia-Pacific, helping regional founders build and scale their companies.
Prior to joining Cooley, Murphy led regional giant Gojek as vice president in charge of enterprise sales and strategic partnerships. And over the last two years, he’s supported early-stage companies at the grassroots as a startup scout for Amazon Web Services.
Pulling from roughly ten years of guiding the growth and expansion of international businesses in and around Southeast Asia, Murphy offers his thoughts on the opportunities ahead for the Philippines, where the nation stands on the regional stage, and what it will take for this economic community to soar.
Andrew Murphy, in his own words:
The Independent Investor: Cooley LLP, which has been around for over a hundred years, takes great pride in being at both the center and the forefront of innovation. The firm has helped industry giants go public, now supporting firms across the globe with online resources, learning materials, and an open platform for managing legal matters. Dozens of areas of expertise, a sprawling network, top clients, countless accolades. But for the sake of framing this conversation—how do you describe the work it is your organization does?
Andrew Murphy: Cooley is the number one in all things venture. We’re over 100 years old, doing close to $2 billion a year in revenue, working with up to 8,000 private companies a year. We’ve also been number one for venture-backed IPOs for the last 15 years globally.
We provide an end-to-end service. For example, we enter with a client after they raised their first financing from, let’s say Andreessen Horowitz. So we do Andreessen Horowitz’s investment into them, then we switch to the company side, and then we’ll work on the Series A, the B, the C, their M&A, their ESOP plan, their board management. Then we’ll put them into our IPO Institute to help them prepare for an IPO. And after we’ll do their IPO, and then their public markets litigation. And then if they decide to form a company-backed VC fund, like Go-Jek has or like Google has, we help them form that fund. And then the cycle starts all over again. This is why we take a much more long-term and strategic view on relationships as opposed to a more transactional one.
When we onboard a new client both partners and someone from the business development team is part of the process so we can help steward these companies in their journey. I help founders with capital introductions, business development introductions, hiring, and international expansion. Sometimes, I’m helping companies learn more about things like implementing performance management. Or how to set up a sales organization, because that’s something I’ve done before. Or launching a new country, because I was a country launcher for a very long time. The partners, in the early stages, we act almost like general counsel. We join board meetings for free as well as be available for quick questions and advice as founding teams navigate the fundraising and board management process.
TII: Of course, prior to joining Cooley, you came over from Gojek. And you continue to support innovative startups as a scout for AWS. So you’ve spent nearly a decade deeply entrenched in the regional innovation community. From your perspective, how does the Philippine startup ecosystem stack up on the regional stage?
AM: The way that I see the Philippines, it’s very similar to Indonesia, a lot of underlying similarities. Both countries went through a cycle of large families and different early-stage investors—high net worth individuals and the powers-that-be investing in a significant amount of the cap table of early-stage companies to have, say, a controlling share. What’s been great is as those families and those vested interests in the country have learned how to change gears and work more collaboratively with companies, we see these groups starting and backing VC funds. That has enabled a big cohort of companies to be created at the early stage and as that cohort moves to the growth stage it draws a lot of interest from international investors.
Vietnam is a great private equity market because they have one of the highest levels of investment in education in the region. And so you have a lot of outsourced finance and technical jobs that are going there, which leads to a growing middle class and a big consumer budget. But unfortunately, because Vietnam just privatized in 1995, there is less local investment and generational wealth. Given the regulatory environment, it is also hard for Vietnamese companies to IPO internationally.
Due to the similarities, we are seeing, the Philippines’ ecosystem is acting more and more like Indonesia. So now you have this big cohort of early-stage companies moving towards growth. This will draw in international capital, which helps build more tech talent. And as more and more capital comes in, it brings down the perceived risk of being a founder and getting funded. Thus, it’s almost a flywheel that helps to keep building the inertia of the Philippine tech ecosystem.
Years later now in Indonesia, because the markets are so developed and mature, it’s, I would say, disaggregated. So there are a lot of different funds, a lot of different founders and people who have then gone off and carved out their separate places in the ecosystem. Initially, if you knew the right people you could really have full visibility on the market but now that’s almost impossible. This is still the case in the Philippines, because it’s such an early ecosystem. The ecosystem really kicked off only two to three years ago. And so if you know the right stakeholders you’re going to see most of the deal flow that’s going through the market. And I think that that’s what’s really interesting and a great opportunity for funds to entrench themselves early. And that’s why there are so many VC funds, spending more and more time here.
What will be really interesting is to see how growth funds continue to participate in the growth of the Philippines. And it will also be very important that the early stage cohort moves to growth. Then more money comes in, which will give it the momentum to move forward as a whole.
TII: Looking now to the near to mid future, what kind of opportunities and specific industries do you see shaping the next few years for the Philippines?
AM: I think Fintech is going to be a big one. Just because the underlying infrastructure and levels of service for financial services in the Philippines are not really up to global standards. So that’s the obvious one. But what will also be very exciting is to see new models come out of the Philippines where local innovation and culture can lead to global companies because that’s always exciting. One example is Kumu, a truly unique company that has come into the world when very few new companies are being launched in the social space.
TII: You’re not the first to compare the Philippines’ trajectory to that of Indonesia not too long ago. We recently spoke to Pandu Sjahrir about the foundational work his cohort needed to put into growing the Indonesian ecosystem, not only on the investing side but also working alongside the stock exchange to streamline the process of going public. I suppose similar work needs to be done in the Philippines.
AM: Yeah, I think, also, you need to make people start to change their perception of local stock exchanges. Up until recently, a lot of companies weren’t as interested in local IPOs in India and Thailand, and Indonesia. And then people started to realize that actually, local investors might better understand the nuances and potential of your company than other markets. It only takes a couple of people to do an IPO to make people feel like, ‘Oh, this is a valid option for me, and I’m not going to be the first one.’ I’ve been speaking to a lot of companies in India, Indonesia, and Thailand, and all of them are showing a lot more interest in local IPOs.
But as far as what needs to happen for the tech ecosystem to mature, it goes back to the core thing that I said earlier. There needs to be a larger cohort of companies moving from early stage to growth, and then exiting, because as that happens, within this asset class, more capital will flock to it. That’s both international capital and local family capital, and more people will be starting things like angel syndicates.
And then we’ll also see more successful founders who’ve potentially taken a secondary exit, or have gone through an M&A or IPO that also begin investing themselves. As more and more people invest, and more and more people show interest, then the perceived risk of being a founder goes down, and more people within society will want to participate in the tech ecosystem.