Lesson Learned from Investing in Various Ventures

I’ve been investing in various ventures since 2015. I do not invest alone, we invest as group. There are ups and downs. There are no failures, only lesson learned along the way. Risk is part of it and we continue to take more risks to venture.

Our goal is to make our money grow, make passive income and retire early. Most of us are OFW’s and looking forward for a life in the Philippines.

Up to this date, our group have ventured in more than 30 companies/farm in the Philippines with more than PHP 160 million investment. More than PHP 100 million of that funds are invested in Agriculture. We have a very diversified portfolio, investing in various opportunities all over Philippines.

Here’s some of the learnings I’ve made throughout this journey. Hope you learn something from it and won’t make same mistakes that we had.

1. Always look for new venture to invest with. Early 2015, we found a venture that is giving us 3% profit monthly. Contract is just few months. However, as we renew our contract, the profit drops from 2% then become 1% monthly. Most of the time, need lang naman nila ng investor during initial stage ng company nila. Once they already have the money to run their business, di na nila need ng investment natin. Same with a short term contract, renewal is subject to them. So you need to look for new ventures to park your money, otherwise you might end up spending it.

2. Take caution if you the owner of the business is in a relationshiop status. Chances are, pag naghiwalay sila, baka maapektuhan ang business venture. That’s what happened to one of our venture. Ng maghiwalay sila, napabayaan ang business. Preferably family or single person will do. Kung single naman, we make sure yong ka relationshiop is walang pakiaalam sa business.

3. Control of the business and decision making. Though we just invest our money, maganda pa rin if we have a say in decision making or at least kunin man lang yong side natin if may mga important decision silang gagawin. This is an important lesson we have from our 2 failed venture. Moving forward, nakikipag venture na lang kami from those na we can control or recommend something from the management. Yong tipong they will inform us muna and ask our opining if the move makes sense or for the good of the company. On that way, we can advise na rin and will not end up having bad decisions na ikakagulat namin.

4. Under promise, over deliver. Sometimes, we get hyped by an investment kaya tayo nag iinvest. Malaki ang return, malaki ang kita. But once mag start na ang venture, we got frustrated kase it’s not what we expected. So moving forward pag nakita ko pa lang yong proposal and income projection, I’ll advice them to slash it. Kahit pa gaaano nila sabihan na very profitable ang venture kaya ganyan yong figures, I’ll still advice them to make it under promise. They can give bonus naman in future kung talagang profitable ang venture.

5. Don’t deal with newbies. Eto yong mga financially illiterate ika nga. Yong mga tipong sasali lang ng investement venture just for the sake na maka invest at mag grow yong pera nila, kase na hype sa projected income. Minsan papangutang pa yong pang invest. Walang emergency fund, walang insurance, walang proper knowledge. Sasakit lang ulo natin sa kanila. Since we are active in giving financial literacy event, alam ko na kung sino mga active members, yong risk appetite nila and yong capacity nila to be a co-investors. I’ve seen lots of them posting rant in facebook for a venture na nadelay lng ng payment or may konting issue.

6. Farm visit is a must to monitor their activities and be familiar with the operations. Get a farm na madali mapuntahan and accessible. No matter how good the venture is kung mahirap naman mapuntahan, prone na mapabayaan. That’s why we only choose venture partner in Luzon area para we can visit pag may time.

7. Look for a middle man. Sometimes, mahirap makipag deal sa individual farmers. Especially since OFW kami, no way na monitor namin lagi sila or ma visit yong farm regularly. So a good middle man or point of contact is really necessary. For example, our hog growing venture is a social enterprise where we give hogs sa mga partner family sa Laguna area. The agreement is a 50/50 sharing ng net profit between investors and farmer. So how does we compensate our partner? We don’t pay him, he is earning money from supplying the feeds. Being a point of contact on this kind of venture is not easy. He needs to earn money for his family din and make this venture work. We don’t care how they make money, as long as the farmer do their work and we get the venture runs smoothly. Usually, sila talaga yong may alam sa venture and expert sa business. If you need to pay them, pay them to make a smooth venture. Need din natin ng middle man to facilitate and look for ventures. Since OFW kami, sometimes we rely on them to refer us to ventures. Whether they have agreement with the farm/business owner, we don’t care as long as we have the venture.

8. Look for a financially literate venture partner. In TGFISG, we promote financial literacy seriously. Sabi nga, our goal is to be rich not to look rich. So we also take note of this sa mga venture partners namin. We have to make sure na marunong din sila sa pera and they can take care of our investment. There are instances where may mga ka partner kami na nagbabago ng lifestyle once nagkapera lang ng konti. Maganda rin kang mamomonitor natin sila sa facebook, para may idea din tayo sa ginagawa nila. It’s difficult to check this at the start of the venture. Most of the time, naka invest na tayo before we knew them. We just wait for our contract to finish then vow never to partner with them again.

9. Parner with big farms only. With our pre-settlement funding services, we don’t venture with small time farmer directly na maliit lang funding capital or maliit lang yong farm. As much as possible, we venture kung ang funding requirement is 1M and above. Baka sa sobrang liit ng requirement, malugi pa kami sa farm visit and monitoring. Unless someone will act as middle man or point of contact to consolidate small farmers, we can consider. Kung small farm, direct to individual investor is ok. Not for group like us.

10. Trust is the most important of all. Without it, there’s a good chance the venture will not work. I’m a risk taker. When I invest, gentleman’s agreement lang ok na. Though contract is good for every venture, when shit happens, we cannot rely on it. That’s why we need to invest extra money we can afford to lose always. But at the start of the venture, good trust relationship must be established.

11. Don’t go all in, test the water first. There are some ventures na super laki agad ng need ng venture partner or super laki ng farm na possible maging venture. For this scenario, we usually ask them na mag start muna kami ng small, wag all in agad lahat. We test the water first, pag ok ang result then we go big. Funding is never an issue, yong management ng farm usually don nagkaka problema. So we always make sure na we test the water first before we go big. It depends din naman kng talagang may market na sila and need talaga ng malaking production.

12. Diversify. This is a lesson for investors and for us na rin na naghahanap ng mga ventures. It’s one great way in managing our risk. Diversify in agri products, diversify in location, diversify in time horizon, diversify on people, etc. For example, we have one venture partner na nag open ng multiple business venture. We only venture with them on 2, not for all. It’s too much of a risk for us. Sa part din ng venture partner, it’s too much diversity sa farm nya. The risk is too high.

13. All investment have risk. No matter how we want to make sure everything is ok, there are times that this will happen. What we can only do is anticipate it para di na tyo ma surprise. Make it a part of our venture. For investors, this is one of the first lesson I want them to realize. Invest only money they can afford to lose. Yong mga nakakaintindi lang nito ang dapat kasali sa venture.

14. Make a signed waiver. Learned this lesson the hard way when one newbie investor send me a demand letter from his Little Rock social security attorneys, asking for compensation for his losses on one of the venture. There’s really no case, as this investor invested money directly to the farm, even before the venture was introduced to us. In short, out of desperation, pinalabas nya na he learned the venture from me. Huli na lahat, gumastos na rin ako for my lawyer to answer the allegations. In the end, wala naman syang habol talaga. Just a typical example of a newbie going all in a venture. He’s not even a TGFI member, pinapalabas lang nya to get money from me. The lesson here is that moving forward, let all investors sign a waiver that they are investing on their own free will and hind pinipilit na mag invest. Para sa mga venture partner naman, make a signed affidavit that you are not connected to their company and not part of it, just an ordinary investor lang din. On this way, you can protect yourself sa mga cases na ganyan. Kaya newbie is not a good part of the venture. Let them learn financial literacy first, before investing their money.

15. Agri venture is not open to all investors. There are lots of people who wants to participate in the ventures. Kaya lang limited lang talaga ang agri ventures. We cannot accomodate all investors. Once mapuno na yong pooled investment for the farm, close na yong venture. Next venture na lang uli. Unlike stocks and mutual fund investment, agri venture is limited base on the farm size and the capability of the farmer to manage the farm.

16. Build a group of investors. In facebook, we have a close group called Pinoy Investors Group. I created it and add only those active TGFISG friends and clients. I know they are financially literate and understand investment well. They are high risk investors like me. So for all our ventures, sila mga priority investors ko. Most of the time, sa kanila pa lang nauubos na yon slots and no need for outsiders. This way, I can make sure that high risk investors at madaling kausap mga co-investors.

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