Form ‘angel network’ to fund start-ups—venture capitalists

Setting up an “angel network” to help startup technopreneurs in the country is seen as a viable step towards attracting more venture capitalists to invest in technology products developed by young developers in the country.

This is what technopreneur and now venture capitalists Winston Damarillo and Dado Banatao said during last Friday’s press conference held at the Radisson Blu Hotel Cebu.

According to Damarillo, “angels” are existing today in our country in the form of good friends and relatives, who will lend money to their loved ones, starting up their technology business.

A definite and predictable structure of investing and taking in investments however is needed to formalize the practice and perhaps attract the venture capitalists to come and invest in our local developers.

“At present, angels want to invest among angels within a given time frame. No defined structure is determined yet and introducing the concept of ‘Angel Network’ can be a first step towards this,” said Damarillo.

Banatao agreed. He said an “angel” investing could precede a true venture funding infrastructure in the country where terms for both investor and startups were defined.

“We can learn from best practices like the ones in Silicon Valley and see sample term sheets and sample agreements between companies and investors,” said Banatao.

He also asked the government to strengthen the education system so that we could produce more computer engineers with post-graduate degrees to satisfy demand in the industry. (See separate story.)

Damarillo said once a working “Angel Network” would be established, it would then be easier for startups to get investor partners that would help them with funds in the development of promising technology projects.

He said most of his investors in his projects were actually Filipino investors which meant that there were actually many Filipinos who would like to invest in technology today.

“We already have investors who are interested in technology investments. Developers can only build as much condominiums and shopping malls. This is a new trend in investment and many are already looking but just don’t know how,” said Damarillo.

Alvin Gendrano, a global software industry veteran responsible for the Xbox Gamers-on-Demand services, agreed.

Gendrano said the gap was really in the early seed funding which could be solved by the “Angel Network”.

“In Philippine Development Foundation (PhilDev), that is the role they want to play – to be the link between the investors and startup developers,” said Banatao who sits as chairman of the foundation.

While they have recently done a mentorship program for startups last week called Hack2Hatch:From Hacker to Founder, Banatao said there’s still more that should be done to encourage more developers to setup their own companies and encourage investors to also invest in the local developers.

Banatao said PhilDev could initiate the creation of the “Angel Network” and would do more educational events like a Hack2Hatch event for investors in the coming months.