Venture capitalists bet on web-based businesses

MANILA, Philippines - Silicon Valley-based venture capitalists (VCs) are betting on software-as-a-service (Saas) and other web-based business, confident that these can generate revenues and a good return on investment. Executives of VCs Global Gateway Venture Capital (GGVC) and Acuity Ventures said in a youth IT conference on Tuesday that Software-as-a-Service (SaaS) is one of the more promising business opportunities that can be done online these days. The VCs have presence in the Philippines as they are keen in funding Filipino technopreneurs. Winston Damarillo, managing director of GGVC, urged conference participants to use the internet as a development center. The Filipino technopreneur who made it big in Silicon Valley spoke before participants of the 6th Philippine Youth Congress in Information Technology in the University of the Philippines Diliman, Quezon City campus on Tuesday. His presentation focused on encouraging the youth to become technopreneurs, adding that as a VC, he is looking for these technopreneurs to fund their projects to become global businesses. A venture capitalist pools funds from other investors and manages these funds by investing them in new ventures or start-ups. The presence of VCs is Silicon Valley, California is said to be one of the key factors for the success of many start-ups which eventually became global. Among these are Hewlett-Packard Company and Sun Microsystems. VCs, most of which are led by Filipinos who worked in Silicon Valley, have recently expressed interests in Filipino entrepreneurs. Damarillo calls himself a “start-up-a-holic" since he is on the look out for start-up companies to fund and nurture. Damarillo has successful founded and nurtured his own start-ups, some of which have been bought by Silicon Valley companies. These include Gluecode Software, which was acquired by IBM Corporation in 2005, and LogicBlaze, which was acquired by Iona Technologies, Inc. last year. Aside from managing a VC, Damarillo also founded Exist Global, and engineering services and software company, and Morph Labs, a company providing SaaS. Damarillo, an open source advocate, said software projects which allow cooperation and collaboration would be a good business opportunity as he encouraged the youth to become entrepreneurs themselves. He said SaaS is big business, estimated to reach $19.3 billion by 2011. Paraphrasing Moore’s Law, Damarillo said “the cost of becoming an entrepreneur in SaaS will become cheaper every two years." Morph Labs, for example, is offering SaaS for only $1 a day, he added. Echoing Damarillo’s confidence in SaaS is Acuity Ventures, a pool of VC funds willing to invest in web-based software. Acuity managing partner and general counsel Denny S. Roja told the youth participants that more VCs are putting their money in SaaS, a new way of acquiring and maintaining software through service providers. In this business model, the service is delivered via the internet. Roja said “software is the ticket these days," meaning VCs are no longer funding capital intensive semiconductor and equipment manufacturing companies. He said going into web-based enterprises has lots of market potentials. Damarillo said that aside from SaaS, other opportunities using the internet include web advertising, Web 2.0, online gaming and web-delivered content. - GMANews.TV