02 Dec An angel for entrepreneurs
By: Catherine Pillas | December 2, 2014
Angel investors may still be a minority in the entrepreneurial community but 23-year-old financier Maria Francesca “Mica” Tan isn’t seeking safety in numbers and is bullish on the investing trend through her firm, the MFT Group of Companies.
Angel investing, or infusing capital in start-up businesses from personal finance, may now be a nascent trend in the Philippines especially among high-earning individuals with disposable income, but it’s one that Tan, has already been doing when she was barely out of her teens.
“I didn’t know there was a term for that. I’ve been doing that since I was 20. I met a lot of people when I started product distribution at 19 and some of the people started approaching me for funding. I didn’t have money at that time so I’d call up another friend who has the money and I’d say I’ll vouch for it. I’d get the cash to help my friend’s business and when it profits, I’ll get back the capital from whoever lent it,” Tan explained.
Anyone harboring doubts in the young investor should know she started exceptionally early in the investing game. Tan was 13 when she began trading stocks with the help of a mentor who gave her access to the trading floor at the Philippine Stock Exchange and at 15, still with a mentor, she dabbled in currency trading until she was 18.
Inspired by business magnate Donald Trump, the young entrepreneur set her sights on the tycoon’s alma mater, Fordham University, and was accepted by the prestigious institution. However, Tan ultimately decided to forego college, and went straight to starting her business.
“When I started distributing beverage products in Singapore and Palawan, that was my ultimate college; I met a lot of people and established relationships. I wanted to start a business and earn money right away,” Tan said.
MFT Group of Companies, the business that evolved from financing friends’ enterprises, operates on a hybrid angel investment model: while traditional angel investments cater to start-up businesses, MFT looks for companies that have operated for at least three years but whose growth has, for various reasons, hit a roadblock.
“These are businesses that need funds to get through to the next stage, or, their family business has been very established then they go through a dip because of one reason or another. It became like an advocacy or a passion for me; I’ll plant my feet and get dirty if they experience difficulty, so I’ll infuse cash and push them back up for their upswing to help them back,” Tan said.
With the hybrid angel investing model, the high risk normally associated in investing in start-up companies is eliminated, while keeping intact the core principle of helping a business grow.
According to Tan, what MFT offers is “tailor-made financing” combined with angel investing. Following the principle of angel investing, MFT will buy a percentage of the companies’ shares which means a seat on the company’s board, plus a three-year partnership depending on the deal struck, in exchange for helping the business get back on track.
“So far we have six clients from sectors such as manufacturing, equipment, printing and publishing, agriculture, and financial service and for now we’re focusing on these areas,” Tan said, explaining these are the areas that have the best return on investments.
Inkwell Publishing Co. and footwear firm Ralph Raven are among the current clients of MFT.
After the three-year partnership, the client or MFT can choose to either extend the partnership after hitting set growth targets, or buy back their shares.
MFT’s percentage of a company’s shares can range from 25 percent to as much as 80 percent, depending on how much the client offers but the average, said Tan, is 40 percent.
MFT, which registered at the Securities and Exchange Commission just this year, evaluates companies that are worth at least P12 million as partners, but Tan says the collateral of a firm and its worth are not the only factors it looks at.
“We want to sit down with them and figure out the problem with them. There are some companies worth hundreds of millions but in terms of growth, they’re stagnant. We look at other factors too such as why the business is failing, as most of our clients are family businesses,” Tan said.
The services MFT offers falls into three categories: legal, taxation and accounting, and marketing.
As angel investing is usually done by experienced moguls and entails not just infusion of capital but by sharing of expertise in a particular field, one may question Tan’s ability to carry out the funding trend, considering her age.
However, Tan concedes that what she lacks in experience, she makes up for with her network of relationships with those who do have the needed expertise to aid her clients.
“I may not be the most experienced or have the most money but I can build you a team, it’s more on the network that the relationships I’ve built with them, so that’s my ultimate investment; I have access to the best people,” Tan said.
MFT Group of companies is comprised of four fellow angel investors/directors, in the fields of construction, agriculture, taxation and accounting, and finance.
Moving forward, MFT may take the traditional angel investing route and fund start-ups but for the moment, the 23-year-old says the goal is just to beef up their client portfolio.
“We want to have a very long list of existing businesses that bounced back already, we want to be that seed that allowed them to get back on track,” Tan said.