Why This Firm Just Made A Twenty Five Million Dollar Bet

Why This Firm Just Made A Twenty Five Million Dollar Bet - Securing Fund II: Why $25 Million is the New Baseline for Philippine VC

Look, the first thing you notice when you dig into the mechanics of this new $25 million Fund II is the sheer scale—that’s a massive 400% spike over their inaugural $5 million Fund I from 2022. But that jump isn't just vanity; it signals the definitive, often difficult, shift away from relying on high-net-worth individual LPs and straight into institutional capital, which is where the real stability lives. And here’s why $25 million isn't actually optional anymore: the market just ran away, pushing the average pre-money valuation for Philippine Seed rounds from $4.1 million in 2023 all the way up to $8.8 million by Q3 2025. Think about it this way: you need the $25 million baseline mostly just to ensure you have enough reserve pooling for follow-on funding, meaning you can actually lead competitive domestic Series A rounds with an initial $1.5 million check, up from the old $500,000 average deployed in Fund I. Frankly, that kind of capital commitment—a 200% increase in average check size—only happens when institutions trust you, which is probably why 72% of this new capital is institutional; I’m talking about the European Development Bank for Infrastructure (EDBI) anchoring the fund, which is the first recorded instance of that specific entity backing a Philippine-only early-stage VC vehicle. I really like that 65% of the committed capital is strategically earmarked for outside the National Capital Region (NCR), showing they’re serious about moving past Manila and specifically targeting high-growth secondary cities like Cebu and Davao. We also need to pause and reflect on the sector bets, because a full 30% of the $25 million is dedicated to RegTech and FinTech infrastructure firms, specifically targeting compliance solutions mandated by the Bangko Sentral ng Pilipinas (BSP) for the burgeoning digital banking sector. Maybe it’s just me, but the most interesting calculation is the projected 5.5-year time-to-exit; that’s a whole 18 months shorter than the regional median because they’re banking on accelerated M&A activity driven by large Indonesian Super Apps desperate for immediate market access.

Why This Firm Just Made A Twenty Five Million Dollar Bet - The Untapped Market: Analyzing the Growth Potential of the Philippine Startup Ecosystem

Honestly, when you look at the Philippines, you’re often wondering where the real, specialized tech talent is coming from, right? Well, the measurable brain drain from traditional Business Process Outsourcing (BPO) firms straight into the startup ecosystem is already solving that problem, with specialized roles—especially in Data Science and Advanced Cloud Engineering—now commanding a massive 45% salary premium in startups compared to legacy multinational roles. That’s an immediate, high-skill talent pool we can tap, and it’s getting geographically decentralized too; think about the aggressive rollout of satellite internet expected by Q4, which is projected to increase fixed broadband speeds in Tier 3 cities by up to 150%, accelerating remote work models everywhere. But the most unique factor is consumption; contrary to every other market, the archipelago remains the undisputed global leader in average daily time spent on social media, currently pegged at 4 hours and 15 minutes per day. Which is exactly why Direct-to-Consumer (D2C) e-commerce platforms here achieve average Cost Per Acquisition (CPA) rates that are about 30% more efficient than the regional Southeast Asian median—it’s fertile ground. And let’s not ignore the massive upskilling necessity of the Overseas Filipino Worker (OFW) labor market, which is why platforms focusing on technical vocational education (TVET) are securing 60% of the EdTech funding right now. I’m not saying government intervention is always the answer, but the "Innovative Startup Act" and its Startup Venture Fund (SVF) have already co-invested in 34 Seed and Pre-Seed deals. That kind of state-backed risk reduction significantly lowers the initial capital hurdle for first-time local angel investors, effectively de-risking the earliest stage. We do have to pause on the cold reality, though: logistics costs are prohibitively high because 85% of last-mile delivery challenges for high-value goods still come down to fragmented cold chain limitations. That’s not a weakness; it’s a specific, massive greenfield opportunity for specialized supply chain optimization technology in HealthTech and FoodTech. And finally, maybe it’s just the structure, but startups with at least one female founder are just plain better at capital efficiency, generating an average revenue multiplier 1.4 times higher than all-male teams in the recent cohort, which is a structural metric VCs shouldn't overlook.

Why This Firm Just Made A Twenty Five Million Dollar Bet - Doubling Down: Kaya Founders' Strategy for Early-Stage Investment Velocity

Okay, so we know they raised the money and the market is running hot, but how do you actually spend $25 million without slowing down? Look, their whole plan—the core of this "Doubling Down" strategy—is pure speed, aiming for 1.2 initial investments every single month over two and a half years, which is an intense, specialized pace modeled after highly efficient Israeli funds. And that velocity isn't random; they formalized the capital allocation, setting aside a massive 60% of the fund specifically for follow-on checks. But here’s the kicker, and this is where the strategy gets focused: a maximum of only four companies can receive 75% of that dedicated reserve pool, meaning they’re placing huge, concentrated bets early to drive returns. To even maintain that filtering speed, they mandate a 14-day maximum commitment period from initial term sheet issuance to final closing, a processing velocity that is genuinely 45% faster than what the region usually takes for similar Seed-stage deals. Interestingly, while we talk about FinTech, their single largest thematic bet—35% of the fund—is actually on specialized B2B SaaS platforms targeting small and medium enterprises. Why? Because they know tech adoption in that SME segment is currently below 15%, which is exactly where the biggest market capture opportunity lies. But they don't just write checks and walk away; every portfolio company must contractually integrate their proprietary ‘Velocity Metrics Dashboard’ within 90 days of closing. Think of it as mandatory standardized IFRS reporting—burn rate tracking and specific 90-day growth targets—so they can intervene the second something smells off. This entire machine is built to hit a tough 3.5x cash-on-cash return within six years, a significant jump from their previous target. And they’re mitigating execution risk right from the jump by heavily favoring repeat founders, specifically those who’ve already achieved a previous exit valued over $5 million. Honestly, considering 80% of regional first-time founders usually fail to secure Series A, prioritizing that experienced 35% of the deal flow is just smart engineering for structural survival.

Why This Firm Just Made A Twenty Five Million Dollar Bet - Benchmarking Success: What Fund I Achieved to Justify This Massive Capital Injection

Honestly, when you see a firm jump from a small $5 million vehicle to a $25 million mandate, you immediately wonder if Fund I actually earned that right. Look, the data says yes, emphatically: they closed Fund II having achieved a remarkable 4.1x TVPI (Total Value to Paid-In Capital), which significantly outperformed the regional 2.8x benchmark for that vintage. But LPs don’t just care about paper valuations; they want cash, and the firm delivered a 1.2x DPI (Distributed Capital) by Q3, mostly driven by a single, successful strategic exit. That means an ASEAN bank acquired one of their FinTech portfolio companies for a whopping 12x multiple on invested capital, proving they can source and exit massive wins. And here’s the metric that really signals operational strength: 81% of their original 16 companies secured successful follow-on Series A funding. Think about that for a second—that portfolio survival rate is nearly double the Southeast Asian average of just 45% for the same time period. Beyond survival, the growth was just plain fast, with the average mark-up on the initial investment sitting at an impressive 285%. Crucially, the median time for a portfolio company to hit $1 million in Annual Recurring Revenue was 22 months, establishing an internal benchmark 10 months faster than their closest regional peers. This performance also validated their core market thesis about decentralization, because the two investments located entirely outside of Luzon generated 45% of the total unrealized gains. Maybe it’s just me, but the best part is that four of the six companies that got follow-on checks were led by first-time founders who graduated locally, challenging that common VC bias against non-repatriated talent. That tells us they don't just pick hot sectors; they're actually identifying founders with execution ability that others are missing, and that's precisely why you write a $25 million check.