Key Point 3: This is basically what you'll get: seed funding of Php200,000...

This is basically what you'll get: seed funding of Php200,000 to built a demo product second round funding of up to Php1.5 million to launch the product access and sharing of knowledge, ideas and t...

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A new Tech Start-Up Investor is in town!

Abe Olandres February 23, 2010 · 2 min read

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Ever since the bubble burst back in 2000, venture capitalists and incubators have become sparse in the Philippine IT industry so it’s a little surprising to see one calling out and looking for tech start-ups to invest into. This is good news to budding technopreneurs out there.

If you have a great idea for a tech start-up in the software and mobile space, check out PhiLabs for some assistance on funding your next big project.

This is basically what you’ll get:

seed funding of Php200,000 to built a demo product
second round funding of up to Php1.5 million to launch the product
access and sharing of knowledge, ideas and trends with top entrepreneurs and talents
office and administrative support provided

There’s no requirements for detailed business plan or presentation. All you need is a great idea and the skills to build it up. The initial Php200,000 seed fund might not be big but for a fresh grad or a freelance developer, it could go a long way.

Know more about the company and the people behind phiLabs here. PhiLabs will be holding a launch event at 4.00 pm February 27, 2009 at Ateneo De Manila University Social Science Conference Hall 1 and 2 to introduce the program and its website to potential technoprenuers and partners. Everyone’s invited.

Disclosure: I serve as a consultant to one of the principals of the company but I am not directly affiliated with them.

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Abe Olandres

Editor-in-chief

Abe is the founder and Editor-in-Chief of YugaTech with over 20 years of experience in the technology industry. He is one of the pioneers of blogging in the country and considered by many as the Father of Tech Blogging in the Philippines. He is also a technology consultant, a tech columnist with several national publications, resource speaker and mentor/advisor to several start-up companies.

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102 Comments

Frank · 16 years ago

just my two cents worth, here’s some thoughts about funding an idea from ycombinator. http://paulgraham.com/startupfunding.html

Lance · 16 years ago

Being an avid observer of US startup scene, I think the 51/49 thing is way over the norm.

I think PhiLabs should be aware that the geeks here are not that cheap. Head on to yCombinator and read http://news.ycombinator.com.

joedwebguy · 16 years ago

@ everyone who thinks this 51% thing is bad.

It’s actually not that bad. You get free office space, without the cost of spending for rent. You get administrative, technical support without a single cent spent.

It’s not all about making money, at the end of the day, you want to just help the world become a smarter place.

As for the math problem, it doesn’t take a genius to solve it, you have to think of the way to solve it. After all, whats important is how you systematically process and solve a problem.

It doesnt need to be done this way, you can find 200K from your family and friends, or from your own savings. But to start now, maybe it’s a good option.

Aris · 16 years ago

@joedwebguy thanks sir. pero di po ako math major software engineer po he he he he.

Well this is possible solution too.

Thanks…

joedwebguy · 16 years ago

@Aris, and other math majors

ph, (p or h repeated 1to5 times) i (or more i’s (+)), l (or more l’s (+)), a, b, s (no s or many s’s (*)), as long as the string is up to 100 in length.

you have to count variations on strings that would match this thing up to strings up to one hundred in length :)

Anonymous · 16 years ago

kelangan ata ng funding ng pinoychan.org.

site to beat: tipidpc.com

Aris · 16 years ago

Hula ko lang po yung 77 pwede rin namang 7 kasi ang tanong naman N<=100 string less than N so yung 7 is less than N

(ph){1,5}i+l+abs = philabs parin he he he

Naku siguradong bura ito sa Yugatech

Aris · 16 years ago

@Edwin – Sir mukhang di naman masyadong mayabang ang worried ko lang is baka ma abuse yung mga mag su-submit ng idea hangang ngayon wala parin Terms & Condition sa Application form.

I agree na para nga ito sa mga no choice na developer na walang makuhang Angel Investor.

Sabi nga

â€œItâ€™s doesnâ€™t matter if you have a killer idea because there are thousand person thinking with the same idea what matter is how you going to create product on that ideaâ€

Yung Problem Solving pang elementary 77 lang ang sagot he he he he.

N=78 in Ascii Code
(ph){1,5}i+l+abs = philabs

Ngayon pa ano sya nag match
(ph){1,5}i+l+abs is equal parin sa
philabsssssssssssss hangang maging 77 character or 100+ equal parin sya

PauloDP · 16 years ago

Everyone knows that. And isn’t it quite obvious? Funded is indeed needed. I never mentioned and I don’t think I even implied that funded is not needed.

What I’m saying is, if they’re expecting “the Next Google” as it was mentioned in their website, that means they’re after the people who have GREAT FAITH in their idea. As I mentioned, if you have that much faith in your idea, then you are confident that it will make you millions. Now if you’re confident that it will make you millions and it will succeed, then why join this if in the end you won’t own the product anyway?

Giving 51% of the share in a corporation means you are relinquishing your control. So even right after the first of funding, Philabs can already direct you on the direction that you’ll be going (I’m not saying they will, but they can). That means if they recognize your product as a future million dollar cashcow, they’ll have the capacity to IMPOSE their own ideas on how you SHOULD go about creating your product.

Also since even just on the first round of funding you give them 51% — ” PhiLabs will provide successful First Round Teams (â€œFRTâ€) an initial capital of PHP 200,000 for a 51% share of the company.” — they will have majority ownership on the idea/the company already regardless if you make it to the second round of funding. Which means, they’ll have majority control on the idea how it will be expanded. So from the very first round of funding, they already have the upper hand, the last say on how things will progress.

I wouldn’t want that if from the very start I BELIEVE that I have a billion-dollar idea, which they are practically saying (” If you think you have that one great idea…”,”Are you the next Google?” – Philabs).

Abe Olandres Editor-in-chief · 16 years ago

@paulo – even great ideas need marketing money. that’s where funding comes in.

Paul · 16 years ago

@ PauloDP: It makes sense!

PauloDP · 16 years ago

Just my two cents:

Every person who thinks he has a good idea thinks it will succeed. So of course, from the very start, at the back of his head, he believes that his idea will make millions. Thus, he will put passion, time and hard work into making this idea into a product.

Now, if from the very start he knows that the venture capitalist will have the power to take away the ownership of the product from him, then what’s the reason for him to get the funding from PhiLabs?

In the end, mediocre ideas, whose owner only HOPES it will succeed should join this.

ON the other hand, if you’re a smart person, who has faith in your idea, you should find a better source of funding.

That’s the message I get from this, at least.

Abe Olandres Editor-in-chief · 16 years ago

@paul – you hit the right spot. Bottom line, if you can proceed with your ideas on your own and without the help of that 1.7 Million, by all means please continue doing so. The option offered by phiLabs is only for those who thinks they badly need the cash to develop and market their products and hope that it will gain traction.

@ericzoo – we agree on that note. =)

@aris – great questions! I’m sure they are reading the comments here.

Aris · 16 years ago

Thanks sa mga comment nyo so I decide di sasali group ko he he he he well we still have some question and waiting for thier reply:

1.Any Government certification or DTI regarding this competition, so we could assured both Investor and participant will not be compromise at any reason and terms.
2.The application form is very straight forward, there is no Terms & condition? Why?
3.How can we assure that our entry will be protected in term of Non Disclosure Agreement.
4.How many winners are possible to win or their target winner?

ericzoo · 16 years ago

“As for your issue with the 51%, you are correct. They basically have controlling shares IF you succeed with the project.”

enough said… :) so if you succeed you do not own the company.

lets say, the startup gets traction. P1.7 is not enough to make it go big. so together with philabs, founders get a SERIES A. the share of the founders will be further diluted into the single digits range. Hire a CFO, CEOs, etc. and shares will again be further diluted.

after 5-7 years, the company exits for $10 million. each founders has 8% after philabs, VCs and employee stocks. so after 5-7 years of building your company you get $800k while philabs gets $2-$4m.

As Homer Simpsons would say. ‘Doh!’

but as Yuga has said its better than nothing, which is true. :)

Paul · 16 years ago

Abe, sobrang appreciated ko that you’re responding to our concerns. At the end of each day, mahirap lang that a regular Pinoy with a brilliant mind e madedehado with regard to giving due credits. Pasensya na pero I guess nagiging idealistic lang ako. Sa totoo lang, ang hirap mag-weigh between your own principles versus business profitability. As in! I, myself, am trying to build an empire. Haha. Anyway, we’re talking way beyond the profit sharing, Abe. We’re all concerned of who gets to control the company IF it succeeds. That’s all.

Abe Olandres Editor-in-chief · 16 years ago

@brianb – I look at this as a math problem.

Here’s my scenario.

Given: 99 out of 100 business/projects fail on the 1st year.

Investment per Project: Php1.7 Million

Total Investment for 100 Projects: Php170 million

Investment Lost due to Failed Projects (99/100): -Php168.3 Million

Share of Succeeding Project (1/100): 51%

Potential Value of Succeeding Project: Php500 Million (wish!)

51% Share of Succeeding Project: Php255 Million

Gained minus Lost Investment: Php255 – 168.3 Million

Profit: Php86.7 Million

**** Summary ****
Total Investments: Php170 Million
Losses: Php168.3 Million
Gains: Php255 Million
Profit: Php86.7 Million
Return of Investment (ROI): 51%

BrianB · 16 years ago

Just to complete may explanation. You mentioned risk. Well, having an invention is beyond that. An inventor doesn’t think of cost-effectiveness. He thinks of big industrial conquests. Like the light bulb, the zipper, the safety pin, the refrigerator, the Internet. Even on a more down-to-earth scale, like instant messaging, like flickr, you don’t think aha I’ll make 50%. You think I’ll make billions out of nothing… all I need is startup capital. The capital itself is not the most important thing. You can get capital basta may makaintindi lang ng invention mo.

Given this, medyo unfair ang share ng Philabs.

BrianB · 16 years ago

They’re not looking for a typical business idea (e.g. I’m going to put up an eBay competitor, or a forum-slash-networking site, or a blog network). They are looking for “inventors” and developers of Google calibre. Ibang level pag inventor ka talaga. It’s very rarefied air. Imagine if you have a way of lowering gaming bandwidth. Jesus Christ! You would want to avoid this kind of deal.

Abe Olandres Editor-in-chief · 16 years ago

@paul – I was making an analogy of the amount of investment vs. the size of the project.

As for your issue with the 51%, you are correct. They basically have controlling shares IF you succeed with the project. But, IF you fail in the project, their 51% is worth zilch.

@brianb – if you have a multi-million dollar idea, then it is safe to say that phiLabs is not the right fit for you. You’re best partner for that kind of idea would be Andreessen Horowitz, Kleiner Perkins Caufield & Byers or Union Square Ventures.

BrianB · 16 years ago

But Abe, this is not a resto or a kiosk we’re talking about. This is a multi-million-dollar idea. Ibang usapan ito. Sayang ang idea sa ganitong sitwasyon.

Paul · 16 years ago

Abe, I am sorry, but I am quite lost with the example you provided. I believe the one “in question” with regard to the policy of phiLabs is that they get to get 51% share. It’s like this: If your product / company succeeds, the investor can easily take over everything you’ve worked hard for. How about that?

Abe Olandres Editor-in-chief · 16 years ago

I am an amateur investor myself and compared to this one, I’ve invested way smaller amounts on ideas and projects with equities very near 50%. One example would be investing around Php5,000 on someone’s blog project with 50% share/ownership. I did something similar with a net cafe, an online service, among others.

@paul – what I meant is that an investor only gets to get a cut into a business that’s commensurate of the amount they invested in. Say for example, if you want to have a Php200,000 investment, you can only put up a sari-sari store with 51% share. Compare that to a Php1.7 million investment that can get you 51% of a grocery store.

@brianb – that’s one option that’s been there for years. However, if the business fails, you’ll have to pay the bank with interest. With an incubator, it’s a shared risk — if you fail, they also fail with you.

In short, with a bank loan, it’s a win-win or a loss-win. With an investor, it’s either a win-win or a loss-loss. That’s how I see it though.

BrianB · 16 years ago

Edwin, baka over-enthusiastic lang. Still, medyo kuripot ang venture capital na ganito. Why not just borrow directly from a bank? If you have to put a car or a house as collateral, mas sulit naman.

Even though we’re a poor country, 1.7 million is not impossible, and great ideas are very hard to come by. You can get lucky a hundred times without having one bright idea in your lifetime.

Paul · 16 years ago

@ yuga: So when you said “You get what you pay for”, did you mean that for PhP1.7M (read: Philippine Peso), you will let phiLabs “take over” your company supposing it succeeds afterwards? I say: Return the 1.7M plus, let’s say, 40-50% interest. 50% interest will already cover the “utang na loob” part in case these people will label you as “walang utang na loob”.

Off topic: Guys, kung may utang ka sa isang tao and you ought to pay him back with a huge interest, NEVER ever think na may utang na loob ka sa taong iyon. That is my principle. Period!

Abe Olandres Editor-in-chief · 16 years ago

@brianb – that’s assuming the business will succeed and make a profit. In the SME circle, it is said that 99% of businesses fail on the 1st year alone.

@ericzoo – point taken but my take is “an offer of assistance, however small, is way better than no offer at all”. The figures and equity are merely filters and as they say “you get what you pay for”.

Jason · 16 years ago

200K for 51%? They can have their 200K, I’ll keep and bootstrap my own ideas.

ericzoo · 16 years ago

@yuga not exactly. to even think like that (being big as facebook) is silly. 51% share from an investor on any tech startup is very uncommon. Make no mistake this is a red flag for any startup founder. It will create lots of operation distress as investors can override decisions, push out the co-founders, act like a boss, etc. Remember that there will probably be 2-3 co-founder. that leaves 24% to 16% controlling share each.

I appreciate the thought of a Ycombinator like incubator here but the goal of this one is suspect. Ycombinator which pioneered this model takes 6%-12% of the company for around P600k to P1.4m, 3 months of startup bootcamp with world class mentors, top tier VC exposure,etc. Ditto for techstarts, dreamit, etc.

Silicon valley angel investors NEVER ask to have majority shares in their portfolio companies because they want these companies to succeed by themselves. Asking for 51% equity signals that they want and CAN take over the company should it get bigger. There is no other way to interpret that.

you can argue that Silicon valley is different but i could go back to the 1st paragraph. its in the interest of both Philabs and its portfolio companies to ammend the 51% to something reasonable and just mentor the 1st batch better.

Paul · 16 years ago

Oh, yeah. I AM 26 years old. Inappropriate na pala sabihing “only 26” kasi reality is, hindi na bata ang nasa 26. Like when someobody asks about your age at ayaw mong ibigay ang exact figure, you’d say: “Uhm.. I’m on my LATE twenty’s.” Haha. Cheers!

Paul · 16 years ago

@ Ericzoo: Ganyan ang mga capitalist dito sa Pinas. At least, sa pagkakaalam ko. It’s as if they want to tell you na: “Hey, I’m going to provide funding for your ideas. But at the end of the day, your soul is mine!” … Hahaha. May mga kilala akong capitalists na ganyan. Sa mga technopreneurs or even just the regular business-minded Pinoys like myself, hindi dahil desperate kayo masyado sa paghahanap ng funding sa mga projects or ideas niyo, kakagat na kayo agad sa mga opportunities like phiLabs. 51%-49% equity share is C-R-A-Z-Y! All I can say is that: BE PATIENT! I am only 26 years old and I am in the process of closing a PhP900k-project. Do everything at the right time! Kung hindi man magworkout ang deal na ‘to, I don’t mind. I’m smart and so are you. We can always do better!

edwin · 16 years ago

Yung pangalawa sa last statement ko, I take it back.

Pero their first question still makes my blood boil. :(

edwin · 16 years ago

They can shove their money up in their collective asses.

What this? If N<=100, what is the number of strings not greater than N in length that will entirely match (case-sensitive) the following regular expression: (ph){1,5}i+l+abs*

Oh yeah right, only the people who can answer that can think and implement bright ideas.

Have you heard of facebook? How about napster? Oh how about Apple or Microsoft? Or Dell?

Kakainis mga masyadong mayabang.

BrianB · 16 years ago

Yuga, their target is very specific. Software + Internet. They’re not looking to fund a new way of baking muffins. They want ideas that are worth tens of millions of dollars. May Internet idea ba na 10 million pesos? Wala.

Abe Olandres Editor-in-chief · 16 years ago

@mannyv & iamupset – thanks!

@ericzoo – depends on where you are coming from. if it’s as big as facebook an idea, then even 1% won’t be a fair share for that amount.

Ericzoo · 16 years ago

51% equity is so not the standard and its crazy high. This basically means that for $36k they are gonna own the majority of the share and voting power. A fair amount of equity for that amount of money would be 14% to 30% of the company.

iamupset · 16 years ago

hmmm.. interesting.. medyo maliit nga lang yong amount but interesting nonetheless..

happy birthday sir abe =)

MannyV knows · 16 years ago

buti nalang alam ni MannyV ang birthday ni Sir Yuga, yung mga iba jan nagsasasasa lang

MannyV · 16 years ago

Happy Birthday, Abe! :-)

Jhay · 16 years ago

It’s good news for all technopreneurs out there.

Hopefully more would come in and share their capital. :D

mark · 16 years ago

most might have a good idea but having a hell of a time looking for funds to have it materialize. this is a good opportunity our thousands of brilliant minds that are kept inside the shelves..

Paul · 16 years ago

I totally agree with BrianB (re: first posted comment).

Abe Olandres Editor-in-chief · 16 years ago

@brianb – it’s actually a total of 1.7 million for 51% equity. they just divided it in 2 rounds of funding.

StrayArrow · 16 years ago

Anyways sir, I have a good idea but I don’t know the technicalities of how to do it but I know if its achieved it would be a great realization…

StrayArrow · 16 years ago

I think BrianB has a good point….well anyway investors are hard to comeby nowadays….. I am an avid reader sir abe….

BrianB · 16 years ago

I think they’re trying to force an ASEAN Silicon Valley by throwing a big net in the sea. I hope it works out, but if I were someone with a billion-dollar idea, I’d keep away.

BrianB · 16 years ago

If they’re really serious, why do they have a deadline? And why do you have to have an advanced math degree to submit?

I’m not an inventor or entrepreneur-wannabe but I’m interested in venture capitals generally speaking. Philabs don’t seem to accommodating to the ordinary joe schmoe with a good idea. If they only want PhiSci graduates, they can easily google the address of the school.

200k isn’t exactly hard to come by for well-placed, well-educated youngsters. They can get a high-paying job and save that money in a year.

What I’m saying is that if you have a head and have it in the right place then money isn’t really the issue anymore, at least not in the 200k level. So why give up 49%.

StrayArrow · 16 years ago

good news!! …. Some friends of mine are very happy.

By the way sir can you give me ideas or tips on how to put ads in your blog.

Salamat po… I am vey new n blogging.

Abe Olandres Editor-in-chief · 16 years ago

@PP user – it’s the standard 51% – 49% share.

PP user · 16 years ago

I am concerned about what percentage of profits they will be taking if the business becomes a success?

ryan · 16 years ago

This looks very interesting. I just hope some freelance coders will come up of a very interesting idea for us especially those who can’t easily access the internet.

Please someone fund some twitter client here in the Philippines!