Venture capital expert Martin Cu, Partner at 500 Global, offered a nuanced perspective on the evolving investment landscape in the Philippines during The Independent Investor’s SESSIONS II event. Held on April 24th at Winery.ph in Makati City, the intimate gathering featured a panel discussion with Cu, where he emphasized the need for a recalibrated approach focusing on results and sustainable growth.
The panel discussion was co-hosted by veteran HR talent consultant and Paraw Talent Solutions Founder Warren Habaluyas and The Independent Investor Managing Director Keenan Ugarte, himself an investor and serial entrepreneur.
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Cu’s background in operational roles, from his early days at ZALORA Philippines to his experience as Country Head at Ninja Van Philippines, instilled in him the value of hands-on leadership. He witnessed a growth-oriented environment at ZALORA and later led Ninja Van’s expansion from its inception to a network covering 97% of the country with over 5,000 employees.
Cu highlighted the “Toilet Paper Rule,” where CEOs take responsibility for even the most critical aspects of the business, as a cornerstone of his investment philosophy. This translates to active involvement with portfolio companies, particularly beneficial for early-stage founders navigating uncharted territory.
Cu reinforced the value of the Toilet Paper Rule with a quote from veteran entrepreneur and Toki CEO and Co-Founder Frederic Levy: “I learned the Toilet Paper Rule from him, which is that if you as the CEO don’t think about changing the toilet paper in the bathrooms of an early-stage company, then nobody will. It drove home how the CEO is responsible for everything, especially at the start.”
The Need for Originality
However, Cu acknowledges the need for a shift in investor strategies. He urges a results-oriented approach where investors temper expectations and prioritize sustainable growth over simply replicating Western models. This is reflected in 500 Global’s growing interest in sectors like agritech, which Cu sees as having a higher impact on Southeast Asia’s development compared to Western-style ventures.
The focus on outcomes also influences 500 Global’s approach into picking which sectors to invest in. “We try to invest in high-impact things,” Cu shared. “In the past, we saw that the most successful businesses were Western analogs, but the only place compatible with the West in Southeast Asia would be our metros. But that’s not representative of whole countries. That’s why sectors like agritech are interesting now. This is a sector our region is more reliant on than other countries.”
One example Cu cites as a high-impact startup is eFishery in Indonesia, which creates automated feeding technology embedded in aquaculture ponds. Making it easier to feed fish compresses the fish farm supply chain dramatically, with tens of thousands of farms in Indonesia now reliant on eFishery. 500 Global notably invested in eFishery’s Series A funding round in 2018.
However, Cu also points out that eFishery’s success is hard to replicate in the Philippines for several reasons. For one, there are too few founders in the Philippines, with many people being unable or unwilling to take the financial risk of becoming an entrepreneur, especially with fundraising markets tightening up. Cu notes that factors such as trickier geography and the frequency of typhoons would also make it difficult for eFishery to expand into the country.
While Cu acknowledges challenges in the Philippine ecosystem, such as a limited pool of founders and geographical hurdles, he remains optimistic. He emphasizes the importance of resilient partnerships and candid communication to navigate obstacles and mitigate risks. Cu believes that open discussions about potential pitfalls, alongside optimism for impactful solutions, are crucial for success.
“My role is to understand why something won’t work; that’s an essential conversation. If you only focus on the upside, you’ll overlook critical aspects. Founders naturally need to be optimistic, but investors must help identify potential pitfalls. The limited resource pool, especially funding, must address these gaps,” said Cu.
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Cu’s pragmatic outlook, coupled with his belief in the potential for innovation, resonated with the attendees at SESSIONS II. The event, sponsored by Winery.ph and Kraver’s Canteen, concluded with a positive outlook on the Philippines’ future growth potential.
Looking Ahead
The Independent Investor encourages its readers to stay informed about the evolving investment landscape in the Philippines. We will continue to host events featuring industry leaders and share valuable insights to empower investors and entrepreneurs. Stay tuned for upcoming Sessions!