Creating an ecosystem of collaborative growth

STARTUPS have proven instrumental in creating impactful solutions to new, arising problems, particularly during the COVID-19 pandemic, as their nimble and adaptable nature gives them room to explore options and opportunities inaccessible to large companies. However, their same nature hinders them vulnerable to risk.

According to the 2020 Philippine Startup Survey: COVID Edition conducted by PwC Philippines, together with the Department of Trade and Industry, QBO Innovation Hub, and IdeaSpace”, out of the 90 founders interviewed, 48% felt threatened by the pandemic’s impact on their startup, while only 23% consider it as an isolated concern. Their top concerns include the financial impact and effects on operations, a potential global recession, and difficulties in funding. In fact, 20% of the surveyed startups found that they only have enough cash and capacity to sustain their business for more than a year.

Working with big businesses, however, can solve most of such concerns.

The first of the two-part BusinessWorld Insights series themed “Philippine Startups: Moving Forward and Up” gathered key movers in the country’s startup scene to discuss how large businesses and startups build each other up to be more resilient and productive in the new normal.

Joaquin L. San Agustin, senior vice-president for marketing at SM Supermalls, recounted the story of their late founder Henry Sy back when SM was still a fledgling enterprise, and how beneficial it was working with other businesses to boost each other up.

“When Mr. Sy moved beyond the department store into mall development, he also looked for those businesses who were small and wanted to grow. Brands, such as Lydia’s Lechon, Bench, Max’s, and Jollibee, all these were small brands who he convinced to put up shop in his mall so they could grow together. And what success they have become!” he said.

This is the reason SM is still a large supporter of startups to this day. A most recent example is when SM launched The SM StartUp Package late last year, which aimed to provide small online businesses the valuable support they need so they can set up their own shop in an SM mall.

“When Henry Sy started, he, like many of the startups today, had a hard time getting big businesses and banks to support him when he needed to scale up. So really, MSMEs and our love for startups and MSMEs is in our DNA,” Mr. San Agustin said.

Big businesses also benefit from the success of the Philippine startup

“What startups have brought to our businesses is the culture and mindset on how to attack digital opportunities and move fast in this accelerated digital future. A lot of enterprises and organizations are obviously slower because they have existing processes and ways of working that are apt to optimize their existing businesses, but not necessarily to capture entirely new opportunities. By working with startups, our businesses and our people get to learn things and practices that startups do.”

community. Xavier Marzan, CEO and managing director of F(DEV), explained that large corporations do not necessarily have the means to explore budding opportunities as they appear, and startups could be the answer.

“What startups have brought to our businesses is the culture and mindset on how to attack digital opportunities and move fast in this accelerated digital future. A lot of enterprises and organizations are obviously slower because they have existing processes and ways of working that are apt to optimize their existing businesses, but not necessarily to capture entirely new opportunities. By working with startups, our businesses and our people get to learn things and practices that startups do,” he said.

Reymund Rollan, co-founder and CEO of GrowSari, echoed the sentiment. “What startups are able to bring in is the ability to fail because obviously they’re not that big. Financially, the risk is not that much, so the amount of prototyping, iterating, pivoting, gives the industry space to learn,” he said.

Mr. Rollan further noted that there are numerous problems still present in Philippine society that enterprises large and small can attempt to solve. Working together simply increases their chances of success.

“In a developing market setting, there are enough problems to solve. But any time you do something like that you need the participation of the incumbents, because they are the ones basically running the industries at the moment. The efficiencies and the value that technology brings to the people are things that will benefit everyone,” he said.

Mr. Marzan agreed, pointing out that the weaknesses of a large corporation can be covered by a nimbler startup, and vice versa. “There’s a saying, ‘It takes a village to raise a child’. And this holds true for the very nascent startup ecosystem in the Philippines,” he said.

“This requires a lot of open collaboration between different types of organizations: big enterprises, small businesses, government, non-government, even local and foreign, educational institutions, banks, HR firms, marketing agencies, events companies, you name it. All these players and stakeholders need to work together. Startups are not just about new technologies or new business models. They’re also about new ways of working together.”

This session of #BUSINESSWORLDINSIGHTS is supported by P&A Grant Thornton, Management Association of the Philippines, British Chamber of Commerce Philippines, Philippine Chamber of Commerce and Industry, and The Philippine STAR.