START-UPS struggled during the lockdown because of restrictions on movement and declining cash, and are now looking to companies to partner with and provide investment, QBO Innovation Hub President Rene S. Meily said.
Start-ups, he said in an online interview Wednesday, typically cannot go to banks for financing because they lack collateral. Their traditional recourse, he said, is to offer equity or issue convertible notes.
Mr. Meily said technology-based start-ups have advantages that can be attractive to corporations.
“Investors are looking for start-ups to invest in, and I know from personal experience that corporations understand that there’s a new future engulfing us much faster than we expected and they’re looking for companies — start-ups in particular — that they can either purchase or partner with so that they can join this new digital future.”
He said more Filipinos are now relying on technology, with goods delivery and e-learning wide open to new entrants which start-ups can pivot to.
Some industries are still growing despite the pandemic and are looking to partner with start-ups, Mr. Meily said.
“There are many companies cutting costs but there are certain companies that are also doing relatively well, and it’s the companies that have cash. Their industries are still doing fine. For example telecommunications… and I do know that they’re looking in particular at start-ups that they can fund and invest in and grow.”
Anita Tiessen, chief executive officer of Youth Business International, said in an interview that the immediate crisis for most businesses during the pandemic is liquidity.
“I think if you were operating within the sectors that were still considered essential… or organizations that were able to pivot into that space, then they generally found ways of operating. Those that were doing more leisure and hospitality industries, anything that was face-to-face, were struggling the most,” she said.
“But even there we’ve seen some interesting examples of people who have gone online or turned, for example, restaurants to local supermarkets,” she added.
QBO is retaining its target of on-boarding nearly 150 new start-ups in 2020 to en route to an eventual target of 500 start-ups. Mr. Meily said QBO plans to accomplish this through continued online mentoring sessions, government partnerships, and working with Youth Business International on a competition that will fund start-ups that are working to address needs that arose during the pandemic or have something to offer in the field of sustainability.
The competition, which awards P100,000 each to 10 winners, is part of Youth Business International’s Rapid Response Recovery Program, which is funded by Google.
“The whole focus is immediate support, helping businesses into recovery but also adapting what that support looks like in each country’s context,” Ms. Tiessen said. — Jenina P. Ibañez