Target Information

RISE Group, founded in 2018, is a Manila-based provider of Internet acceleration solutions. Its mission is to enhance the Internet experience across the Philippines by collaborating with local industry players, thereby improving services for businesses, telecommunications firms, and property developers. The company operates in varied sectors through its three main business units which include RISE as an Internet service provider, GetaFIX as a commercial carrier-neutral Internet exchange, and OpenAccess, which aids property developers in expanding telecommunication accessibility.

Industry Overview

The digital landscape in the Philippines is on a significant growth trajectory as the country aims to achieve a Gross Merchandise Value (GMV) of US$35 billion by 2025, according to the E-conomy SEA 2022 report from Google, Temasek, and Bain & Co. This growth, representing a 20% Compound Annual Growth Rate (CAGR) from US$20 billion last year, will be largely driven by the e-commerce sector, projected to reach US$22 billion by 2025.

Research indicates that as of now, 53% of Filipinos have Internet access, with median download speeds improving to around 68 Mbps. Despite these advancements, challenges remain, particularly in terms of internet access affordability and quality, as paying for internet services constitutes 12% of a person's income in the Philippines compared to only 5% in the rest of Southeast Asia.

Furthermore, there exists a notable disparity in internet speeds compared to the ASEAN region, where the median download speed exceeds 100 Mbps. The continual improvement of internet infrastructure is essential for the region to truly optimize its digital economy potential.

To address these issues, a collaborative effort involving large telecommunications companies, small Internet Service Providers (ISPs), infrastructure players, and the government is crucial for bridging the internet access gap. RISE Group is positioned to play a pivotal role in this ecosystem.

Rationale Behind the Deal

Core Capital’s investment in RISE Group is based on the necessity to enhance internet infrastructure to facilitate the anticipated growth of the digital economy in the Philippines. Jason Gaisano, Managing Partner at Core Capital, has emphasized that improving internet quality is paramount for the digital economy to meet its projected goals by 2025. The strategic partnership is identified as a potential solution to an underserved market, driving innovation and development within the internet services sector.

Investor Information

Core Capital is a Manila-based venture capital firm established in 2018. The firm specializes in early-stage financing for technology companies in the Philippines. It operates through its Gobi-Core Philippine Fund, which it manages in co-operation with Gobi Partners, boasting a significant presence across Asia with US$1.5 billion in assets under management.

Gobi Partners, headquartered in Kuala Lumpur and Hong Kong, has invested in over 350 startups and facilitated the development of 10 unicorns. The firm is committed to sustainable practices, evidenced by the launch of its inaugural Sustainability Report in June 2022, indicating a forward-thinking approach in its investment strategy.

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The investment in RISE Group appears to be a prudent decision by Core Capital and could likely yield favorable returns, given the growing demand for improved internet services in the Philippines. With the rising digital economy, characterized by increasing e-commerce activities, RISE Group is well-positioned to capitalize on this growth. The solution-oriented business model of RISE is expected to address the significant gaps in internet access and speed.

Moreover, the focus on collaboration among various sector stakeholders, as advocated by leaders within RISE Group, underscores the potential for community-driven solutions that could greatly enhance internet quality. This aligns with broader economic objectives, advocating for inclusive growth within the digital landscape.

However, investors should remain mindful of challenges such as regulatory hurdles and infrastructure limitations that may arise as the digital economy expands. Therefore, a holistic approach involving various stakeholders will be critical for the successful execution of RISE's mission to enhance internet service delivery throughout the Philippines.

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