In the world of startups, "sustainability" carries a double meaning: one tied to Environmental, Social, and Governance (ESG) principles, and the other to the long-term viability of a business. At Foxmont, both aspects are critical when evaluating potential investments. We consider not only a company's impact but also its ability to excel in the long run.
At the core of our investment thesis is a commitment to improving the lives of the Filipino people. Although our portfolio spans a wide array of industries, their collective impact is evident. In the past year, over 40% of our deals have focused on companies within the ESG space. Through Foxmont’s investments, we’ve created 565,000 income earners, and our second circle impact—people indirectly benefiting from these ventures—now stands at 2,362,370.
In recent years, impact investments have gained significant traction, and for good reason—they're far from just a passing trend. These investments tackle real-world challenges, from climate change to social inequality, and the solutions they offer hold the potential for long-lasting, transformative change. By addressing pressing issues with innovative business models, impact investments not only generate financial returns but also create positive ripple effects across communities, industries, and economies. At Foxmont, we recognize that these ventures are critical to shaping a more resilient future, one where businesses thrive by solving problems that benefit not just the present, but future generations as well.
While impact is crucial, we equally prioritize the scalability and sustainability of our portfolio companies. This begins at the pre-investment stage, where we assess a few key factors to ensure their long-term potential.
What does Business Sustainability mean for us at Foxmont?
Unit-Level Profitability: We pay close attention to unit-level profitability because, in the long run, if each part of the business can be profitable, the entire company can be too.
Cash Efficiency: While we aim to consistently drive growth in our startups, it's important to ensure that growth happens at a pace where it remains balanced with costs. By comparing Annual Recurring Revenue to cash burned, we can ensure that both are increasing at a sustainable rate.
Management of Operating Expenses: Typically, people can be profitable at unit level, but if they are over spending in their operating expenses, they can negatively impact the financial health of their company. It is important that companies find a balance and optimize their operations so that they are not excessively spending.
Strength of the Founding Team: While experience and expertise are important, what really stands out is a founder’s ability to adapt as the market changes. Founders who can stay flexible and steer the company through challenges tend to lead their teams to long-term success.
While these can be evaluated at the pre-investment stage, we understand that market conditions are ever-changing, and therefore post-investment support is just as important in helping companies achieve business sustainability. This means consistently monitoring and working closely with portfolio companies on:
Monthly Burn: Assessing the monthly burn and cash flow of a company allows us to see if there are ways in which they can avoid overspending.
Margins: By monitoring the margins of a business, we can evaluate the profitability and efficiency of costs in relation to revenue.
Performance vs. Projections: Through comparing actual results with forecasts, companies can assess if they're hitting targets and adjust operations as needed to stay on track.
Runway: Knowing how long a company can operate without additional funding helps guide planning and decision-making.
Month-on-Month Growth: This metric tracks the percentage change in key areas like GMV, users, AOV, or revenue, offering a view of a company's momentum and performance trends.
Due to good deal sourcing, close monitoring, and attention to sustainability, over 93% of our portfolio companies are either profitable or have more than 12 months of runway.
What does ESG Sustainability mean for us at Foxmont?
Contrary to traditional views that sustainability and rapid growth cannot coexist, we believe the opposite is true. Strong ESG principles often push companies forward. As the world becomes more environmentally and socially conscious, we are seeing increasing mandates from governments that encourage corporate responsibility. Strong governance, in particular, strengthens internal processes, contributing to a company’s longevity. To remain competitive, businesses must prepare for these evolving requirements or risk falling behind.
Our belief in these values extends beyond the Philippines. As our portfolio companies grow, their influence reaches a global scale. With the increasing importance of ESG in today’s world, the global impact of our companies is becoming more evident. For instance, Nibertex materials, produced locally in the Philippines, are now being utilized by international corporations. Similarly, PCX’s customer base extends beyond the Philippines, serving clients across the broader region.
Rooted in a developing nation, Philippine startups have a unique advantage when it comes to business sustainability. From the start, they must be resourceful, optimizing limited resources and operating efficiently. At the same time, being immersed in a society where inequalities are still prevalent, they are naturally more attuned to the importance of ESG principles. This combination of financial prudence and a deep awareness of societal impact positions them for long-term success on a global stage. We are excited to see how more Filipino companies will find the balance between the double meaning of sustainability.