Money enables life — How Filipino FinTech Startups Elicit Financial Inclusion

Written by Filipino FinTech Startup CEOs- Carmina of InvestEd, Ruel of Cropital and JC of Investagrams- for Ideaspace Philippines’ Demo Day last December 6, 2016.

Our society revolves around money. We all need money to live. But as money brings life, ironically, it can also take away the essence of it.

Lack of money leads to poverty. Without it, basic necessities such as food, water, and access to health care are compromised. Eventually some learn the skill of survival, while others die trying. Unfortunately, for some people, the need to survive makes them steal and even kill.

On the other hand, abundance of money breeds greed. It’s not just drugs that people get addicted to, money can also consume our soul.

With extreme greed comes unethical and immoral practices, taking advantage of people and the environment for the sake of money. In a society where money is power, greed kills more than hunger does.

Money- whether in shortage or abundance- can both build and destroy lives. Whatever facet or social class we belong in, we encounter burdens rooted from money.

Now, let’s take a closer look on the day-to-day impact of money to us Filipinos.

Money and its Impact on Filipinos

Mang Arsenio, a 67 year-old vegetable farmer from Tuba, Benguet earns less than PHP 100 (~$2) a day. He works around this amount to feed his 6 children. In his home , there is no electricity, no water, no bathroom. But what’s worse is he lives in a vicious cycle of debt.

Among him are 11 Million other farmers, wherein the majority highly depend on debts. They often go to loan sharks or private individuals offering easy access to cash but with interest rates that could go as high as 20% per month. Some of the lenders also require the farmers to sell their harvest to them at a lower price, making life even more difficult for these farmers.

Jessa is 17 and eldest of five. Their family makes just enough to eat and live, which is why college is unthinkable for her. 4.5 million Filipinos share Jessa’s dilemma. And in a few years, her younger siblings will be just like her.

Even if Jessa managed to go to college, she would need at least 59 thousand pesos per year. This is a big problem- since 2003, half a million Filipino college students drop out each year because of financial problems.

And Jessa doesn’t actually have many choices of funding. Scholarships are too few and too competitive. State and Cooperative loans are insufficient or limited to its members. In fact, for every peso that Jessa needs to attend college, the government can only lend 8 centavos. And this is why, for every five Jessa’s who find their way to a classroom, only one makes it to graduation day.

Henry, is a 27 year old call center agent. Like many others in the Filipino working class, he doesn’t have other sources of income besides his salary. He barely saves money, because of all his monthly expenses and other wants, which makes him stuck for so long relying solely in what we call the ‘salary cycle — working our way up the ladder till we’re 60.

While there is no dishonor in working honest jobs, the problem is, many in our society get stuck in the comfort zone — where we are merely working for ‘money’, often being unhappy in our roles in life.

While our economy is booming and having the strongest growth in the world — 99% of our population, including Henry, is missing out the chance to ride the growth of solid Filipino companies due to the lack of education and awareness in the stock market.

The Gaps

You see these individual instances depict how money hinders opportunities.

Money was created by human beings, in order to establish a system for equality and fairness. While it is supposed to mediate transactions in our day-to-day living, why are there still so many gaps in society? Why are there so many problems that root from money?

For instance, 1 out of 9 people in the world do not have enough food to live an active and healthy life. This world hunger can be remedied with $30 billion dollars a year. But, the US defense budget was $600 billion in 2015. The value of one of the largest companies in the world, Apple, is currently worth 588 billion, while a social media app like Snapchat is currently valued at 26 Billion.

How about in the Philippines, how can we solve our problems?

We need around 120 billion Pesos to eradicate poverty. How hard is it to get 120B? You know the valuation of two of the most prominent companies in our country? SM is at 760 Billion. While Ayala Corporation is at 450 billion.

We see that the whole problem of the Philippines, and much more the World, could be answered singlehandedly by any of these institutions, what more if we help each other out.

With all of these in mind, why is there such a huge imbalance caused by money today? More importantly, what are we doing about this situation?

Right now, more and more people are becoming aware of what’s happening around the globe. With the right expertise and technology — we can take action.

Our Vision

I’m Ruel, CEO of Cropital. My grandparents together with our smallholder farmer relatives used to get financing from private lenders at high interest rates. After graduating from UP and having enough savings, I started funding our own farm and eventually our relatives. This started my Cropital journey.

We, in Cropital, envision a world where farmers no longer live in debt. Providing farmers with sustainable access to capital and providing agricultural support that reduces risks in farming and increases productivity. Through financial solutions and innovations, we can make the farmers break free from this vicious cycle of poverty.

I’m Carmina, CEO of InvestEd. I used to lead three youth organizations that had a large membership of financially in need youth — and my job was to find funding opportunities and part time jobs for those members. It took a lot of effort, even though help was available if you looked in the right places. Our startup was born out of my team’s frustration to make that process more efficient. We wanted to make it easy for anyone to help financially in need students.

We figured out that a technology platform was the way to tackle financial inclusion in higher education. It was a simple solution to a complex problem. And we went ahead and did it not because students couldn’t find financing on their own. We did it because we knew we could increase their chances of success, by making the process easier for them. And by that, they are free to focus on the task of ending poverty in their own lives.

Hence, InvestEd is here to make higher education possible for deserving students, through a crowdlending platform that connects them with lenders.

I’m JC, CEO of Investagrams. I used to work in two of the top foreign stock brokerages here in the PH. I saw that while foreigners were making billions from our stock market, regular Filipinos weren’t really benefiting from it. It is a sad fact that only 1% of our Filipino brothers are investing.

I’ve realized that almost half of our lives we dedicate in our aspiration of a good career with the main goal of earning well. But while many of us are able to survive through our salaries, only a few of us can really say that we are financially free and happy on our current standing in life.

We Filipinos work so hard in our respective day-to-day work, but still, many of us are not able manage and grow our finances due to the lack of awareness on investing opportunities. We deserve better, and all it takes is just that one extra step.

This is why we established our start-up, Investagrams, a platform that provides education and tools to guide you in your stock market journey

Financial Inclusion Through Platforms that Connect

We are millennial founders, who grew up with the technology. We saw how the internet and innovations drastically changed the way we lived.

Similarly, our background, personal experiences and knowledge of the limitless potential of technology, triggered us to develop platforms that will elicit financial inclusion to farmers, students, and working professionals.

These platforms aim to connect and to create synergies. We are driven by our purpose to bridge the gaps and restore balance in our society.

Ruel of Cropital

There is indeed hope for the farmers. Cropital has existed for a year now and have funded over 3 Million pesos for more than 40 farmers in the Philippines. This was made possible by the trust of over 300 investors all over the world. And yes, we are growing, through the partnerships and recognitions from global organisations such as Forbes, Facebook, and US Embassy, more than 75,000 individuals from 128 countries globally have visited our platform and showed great interest in financing farmers. By 2030, our goal is to make sustainable agricultural financing accessible to all Filipino Farmers.

Carmina of InvestEd

Just three months into its conception, InvestEd is able to help finance the education of thirteen students. At present, we are partnering with local government units and public and private higher education institutions in Region III, in order to reach more financially in need students. We also collaborate with employers and other institutions for the job security and personal and professional development of our students. By 2030, our goal is to ensure that all Filipino students have access to financial aid.

JC of Investagrams

Investagrams seeks to provide everything that an investor needs in one website and app. So far we are reaching 2 million views per month with 50,000 registered users. To further our reach we are partnered with PSE and the biggest online brokerage in PH, COL Financial. We have also reached out to 5,000 students by providing them seminars and competitions to engage our future generation in the world of investing.

Our end goal by 2025, is to have at least 10% of our population in the stock market, by providing them with education and tools to support them in their journey.

Cropital, InvestEd and Investagrams are living testaments of how money and technology can enable financial inclusion. Individuals from different walks of life, view money and life differently, but are united by the need to survive and our aspiration to have a better quality life.

We, millennial founders, are a proof that age is not a barrier in developing impactful ventures. Through organisations like Ideaspace, anyone can be the change they want to be.

Money enables life. Fin-tech platforms will enable Mang Arsenio, Jessa, and Henry access to financial services fit for their needs which were previously out of their reach. With your support- by investing in farmers, students and our local companies- we will achieve financial inclusion to create synergies and move the Philippines forward.