Eric Manlunas, co-founder of venture capital firm Wavemaker Partners, recently shared an in-depth look at his journey as a serial entrepreneur and investor at the third edition of The Independent Investor’s SESSIONS. In addition to providing valuable advice for entrepreneurs, investors, and business professionals in the audience, Manlunas also offered a comprehensive analysis of the trends shaping Southeast Asia’s startup landscape.
Held last June 13 at Winery.ph in Makati City, Manlunas captivated the packed audience with unique expertise and insights in an intimate conversation with The Independent Investor’s Managing Director Keenan Ugarte.
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A budding entrepreneurial journey
The discussion kicked off with Ugarte asking Manlunas to detail the beginnings of his professional journey. Having migrated from the Philippines to the US at 17, Manlunas recounted that his professional journey started when he was recruited by accounting firm Arthur Andersen into their Retail Strategy Consulting division in 1991. Initially hired for a technical writing role, Manlunas eventually began meeting clients and soon realized his desire to venture into business.
Manlunas’ desire to start a business coincided with the booming wave of internet-based companies in the mid-1990s. “I was exposed to retail quite a bit during my time with Arthur Andersen. I also got inspired by a Seattle-based company called GreatFoods.com that sold specialty food online when e-commerce was just starting,” Manlunas recalled. “I suspected selling online would be a big commercial wave and I wanted to claim my slice.”
Without any inventory, he digitized various food catalogs and set up InterFoods.com in 1996 to sell specialty foods online, buying products from stores as orders came in. As the business grew, InterFoods.com eventually acquired another business selling specialty Dutch food, Holland America, to expand its inventory and acquire back-end capability —borrowing over half a million dollars from his aunt to seal the deal.
“This enabled us to solve our supply chain issues,” said Manlunas of the deal. “We started selling an esoteric selection of European chocolates, sausages, and more. We eventually grew to an $8.5 million business, before being acquired by Mexican company La Reina in 1999.”
“It was a decent outcome for a single entrepreneur that had no equity and didn’t raise money. I guess the biggest takeaway here is it doesn’t hurt to be naive!” Manlunas quips.
great opportunities in emerging spaces.
However, InterFoods was just the start of Manlunas’ entrepreneurial journey. Ugarte moved the discussion over to Manlunas’ subsequent business ventures with Manlunas recounting how he co-founded Sitestar, an internet service provider targeting small towns without national service providers back in 1999. Amidst the dot-com boom, Sitestar quickly grew to 55,000 subscribers, before being acquired by Lynchburg.net in December 2002.
Even decades later, Manlunas remains on the lookout for great business deals. Ugarte noted that Manlunas was part of a cohort of mostly Philippine-based investors and former consumer brand executives who acquired athleticwear brand 2XU from L Capital Ironman Pte Ltd. “I was actually invited to the deal by my brother-in-law who used to run Adidas Philippines,” Manlunas said. “So I was lucky again. It’s a business that is arguably a leader in sports compression garments that was under-managed and underloved but in spite of it, still had a great foundation.”
Developing an investment philosophy
By 2003, Manlunas started investing, raising an $8.3 million fund called Frontera. This fund became the predecessor to Wavemaker Partners, investing in companies that outstripped the capabilities of angel investors but were not yet ready for traditional venture funding.
Ugarte then asked Manlunas how his time investing in businesses shaped his investment philosophy. Manlunas responded by saying his philosophy centers on three pillars: people, process, and technology. “All businesses, big or small, tech or brick and mortar, are about people, process, and technology. Leveraging and executing all three correctly is the key to being a winner,” he said.
Manlunas explained that the three pillars were developed because every business will always need people. However, it’s the processes that these people undergo that make them more efficient and give the businesses an advantage. Finally, in a world filled with so much technology, Manlunas noted that even the most traditional businesses will eventually have to use technology to compete. “Even McDonald’s invests so aggressively in technology that it’s known as a tech company that happens to make burgers,” he pointed out.
are building their ventures.
Similarly, Manlunas revealed Wavemaker’s investment strategy focuses on four main areas:
- Product. Whatever product Wavemaker invests in must be designed to solve a problem, while being exponentially better than existing solutions.
- Market. A business should address a real problem with a sizable market. “You can’t expect to get more than 1% of the market so a massive market is a good sign,” Manlunas said.
- Team. The Wavemaker team looks at whether founders have the right motivation (genuine desire to solve a problem) and domain expertise.
- Investment terms. Deals must make sense for early-stage investments.
Pivoting to Southeast Asia
Based in both Los Angeles and Singapore, Wavemaker has a keen eye on opportunities in Southeast Asia. According to Manlunas, the firm’s interest in the region is driven by the pursuit of economic multipliers and the significant opportunities presented by SEA’s rising middle class and infrastructure needs.
“We’re attracted by things like the huge housing backlog, which you can see just by driving anywhere in the region. There’s an infrastructure backlog too, and those two things are huge economic multipliers,” explained Manlunas. “But the biggest factor is the demographic dividends: the region is still fairly young, which will give us opportunities to invest in.”
Manlunas also emphasized the importance of staying alert to emerging technological developments, likening the rise of AI to the internet boom of the 1990s. “There are no cheap deals right now in AI, so if you believe in it you’ll really have to pay up. I really do believe it will take off.”
Manlunas notes the Philippines will likely be greatly affected by AI.”I think the Philippines will be at the center of the storm because a significant portion of our revenue is tied to manual service labor. I hope regulators and thought leaders will embrace this technology—it doesn’t have to be scary. There will be disruptions and job losses, but it doesn’t have to be frightening,” he said.
Yet the seasoned investor maintains despite evolving tech and changing market circumstances, Wavemaker always goes back to its principles when deciding on a potential investment. “There are a couple of AI companies we’re looking at, primarily in Singapore,” Manlunas revealed. “But we never forget to ask the basic questions: what problem does this company solve? Who is interested in the problem? Can its tech solve it?”
Overall, Manlunas drew from decades of entrepreneurial and investing experience to guide the audience through the intricacies of building successful businesses and navigating the investment landscape. With his help, audiences walked away from SESSIONS with new strategies and insights for building their own ventures.
tasty food, drinks, promotional offers and giveaways.
The Independent Investor extends its heartfelt appreciation to generous partners and sponsors for their invaluable contributions in ensuring the success of the third edition of SESSIONS featuring Eric Manlunas:
- Winery.ph for hosting the event and providing the evening’s guests with delicious wine
- Gold Sponsor Hotel 101 Global that shared their unique investment platform in the hospitality segment and provided loot bags for attendees
- Silver Sponsors Kraver’s Canteen, Auro Chocolate, Golfcarts PH, and Engkanto Brewery for their contributions
Stay connected with The Independent Investor and get updates on the dynamic investment landscape in the Philippines. Watch this space for more upcoming events and workshops.