PLDT puts up venture capital unit in California

Philippine Long Distance Telephone Co., the country’s biggest telecommunications service provider, announced Wednesday that it had established an office in California, United States, mainly to invest in “market-ready” companies there.

PLDT chief strategy officer Winston Damarillo, who will head the new venture capital unit called PLDT Capital, told reporters the company planned to invest at least $50 million for the remainder of 2015 to close at least three deals.

PLDT Capital could spend $50 million or more yearly in the coming years in line with the shift in the parent company’s strategy, which is to expand from traditional telecommunication services to more digital and Internet-related businesses.

Damarillo said PLDT Capital could invest in five to 10 companies yearly starting 2016, since not all of those ventures were expected to pan out.

Apart from its Silicon Valley focus, PLDT Capital differentiates itself from PLDT’s other investment vehicles as it would focus on PLDT’s core businesses, Damarillo said.

He said a large part of that focus would be directed toward mobile, which had been declining in some areas due to intense competition apart from the popularity of social media and instant messaging.

“We are trying to regain the momentum,” Damarillo said.

He said PLDT Capital was seeking market-ready companies, meaning they should have working business models and customers, run on mobile and could expand on e-commerce and social media platforms.

In return, doing business with PLDT Capital would allow those companies to expand to the Philippines and the region via PLDT’s subscriber base of about 70 million, which Damarillo believes will give PLDT an edge over other investment-hungry venture capital funds.

PLDT has made investments in this space, including a minority interest in Germany’s Rocket Internet. For PLDT Capital, the plan would support PLDT units like Smart Communications, ePLDT, Digital5 and Voyager.

“Silicon Valley is where most of the successful technology ventures are located,” Astro Del Castillo, First Grade Finance Inc. managing director, said in an interview. “PLDT feels it should be in the gateway for possible opportunities.”

Damarillo noted that the whole PLDT group could benefit from having physical presence in the area.