Who Needs a Philippines PE Fund?
Today, more than ever, we need PE that's all about the Filipino
WELCOME to the inaugural installment of Santiago’s Lookout, a column that we hope might become one of your monthly habits. We realize the investment community has by now largely switched into summer holiday mode, so we’ll try to keep this maiden installment breezy and finance-light.
We’ve named this column after the corner turrets of Fort Santiago, the core of the Spanish settlement overlooking Manila Bay that was established in 1571. Although notorious as a symbol of subjugation, and for having served as prison for that great Philippine genius, patriot and martyr, Dr. Jose Rizal, Fort Santiago also played mute witness and crucible, for many centuries, to the burgeoning society and economy that would in time form the kernel of the Philippines. During its long heyday, the fort also gave Manila’s inhabitants their first glimpse of ships bearing new people, money, merchandise, disruptive technologies, and, above all, dangerous, new ideas.
It is in this sense – of being a surveillance platform – that Fort Santiago’s turrets are a suitable metaphor of our column. From a turret’s vantage point, we can comment upon (though will stoutly resist sniping at) goings-on both within the walls (“Intramuros”, literally) and without.
Speaking of outside, nowadays it’s a golf course which rests at the feet of the ancient, crumbling stone walls. It’s so much healthier to have to dodge mere golf balls instead of grapeshot, to say nothing of Commodore Dewey’s 200-mm shells, which were well capable of reducing any outcropping turret to Boracay-fine powder. (Oh, but sniping is so tempting. One could plead that sniping is more fun in the Philippines.)
Even in this more-enlightened age, the hurling of unconstructive commentary by Filipinos at fellow Filipinos remains a widespread practice (notably by mainstream media), almost as if it were a national sport. The crude art of the put-down, most especially when liberally laced with wit, and even if occasionally directed at non-Filipinos as well, is but another expression, we suspect, of the old “crab mentality”, under which we prefer to pull our neighbors down into the gutter alongside us rather than celebrate their accomplishments.
Perhaps this is a coping mechanism, a way to minimize any cognitive dissonance with an overriding inferiority complex. Generations of Filipinos have been trained by culture and custom to become masters of self-abasement and self-deprecating humor – a legacy of having been at the wrong end of the colonial musket (not to mention the pastoral staff of the Iberian strain of Christianity) for centuries. “Foreign” often meant “better”, and nothing bold or new ever came out of the Philippines. Or, if there was anything bold or new, this was not sustainable.
And yet we Filipinos have been selling ourselves short throughout those same centuries, energetically ignoring the creativity, inventiveness, entrepreneurship, and capacity for endurance that is but common to all human beings and nations. This, then, is the short answer to the question about why the Philippines has fallen so far behind other developing countries, across so many metrics, since the end of the Second World War. It bespeaks a fundamental lack of appreciation of the Filipino’s self-worth, an insufficient belief in ourselves as a people. We have preferred to blame others (foreigners, Filipino politicians, plutocrats, government bureaucrats) rather than acknowledge the learned helplessness of the man in the mirror.
This self-image problem is arguably the key reason why the Philippine economy has punched below its weight for decades now, and why most businesses in the Philippines are (no offense to hobbits and dwarves) midget-sized. Many entrepreneurs, especially those counted among the 30% of the population aged 35 and older (yours truly included), are burdened with a mental illness called “failure of the imagination”, i.e., the inability and/or unwillingness to picture themselves as captains of world-beating industries. Molded by what strategies proved successful for them, the more-senior entrepreneurs are more risk-averse, have shorter capital budgeting horizons (“hasta la next president, baby”), and have generally bet against the Filipino rather than on him (or her).
Fortunately, the current generation under the age of 35 (a baby boom, in demographics-speak) has shown more promise, and greater awareness of how the Philippines and Filipinos fit into the larger world. This cohort has discovered that it can hold its own against others, and therefore need not be bashful about claiming its modest patch in the sun. Unlike its parents’, grandparents’, and great-grandparents’ generations, this one is unafraid to place its wits, time, capital, and reputation on the line in order to earn such a patch.
We believe that the modern Filipino entrepreneur is worth taking a bet on. We’d like to lend her a helping hand, not extend the usual crab’s claw. But far more than receiving equity growth capital and strategic business advice, she needs to have fellow Filipinos affirm her sense of self-worth, because the entrepreneur’s faith in herself and in other Filipinos does cut against longstanding cultural grains. The Filipino business leader needs to see homegrown, professional private equity managers support her and partner with her, and share in both her risk and her achievements. Local PE managers could potentially foster a community of like-minded, forward-thinking entrepreneurs to demonstrate that the culture of negativism is indeed reversible.
The up-and-coming cohort represents an unusual opportunity to break cleanly with the dysfunctional zeitgeist of the past. It would be a shame for us to stand idly by and allow this generation’s exertions to die on the vine; if hope were a plant, then it needs to be pruned and watered. Today, more than ever, we need PE that’s all about the Filipino, (managed) by the Filipino, and for the Filipino.
The opinions expressed herein are the writer’s own, and are not necessarily official positions of Angeon Advisors Ltd. Neither the writer nor Angeon makes any representations or warranties as to the accuracy or reliability of the materials contained herein.
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Angeon Advisors is an independent alternatives manager specializing in private equity and venture capital growth themes in the Philippines and other markets in Asia. Angeon also provides financial advisory services to very select clients.