Founder Spotlight: Morningtide Capital Partners’ James Pacaba Shares his Success on Leading a Data-Driven Financial Consulting Firm
by Jessica Baniaga
Ericson James Pacaba is a finance expert, an entrepreneur, and a financial consultant. He is one of the great minds behind Morningtide Capital Partners (MTCP).
Morningtide Capital Partners is a financial consulting firm founded in 2018 with its goal to promote optimal growth in small, medium, and large enterprises through providing their expertise in financial competencies, fundraising through financial modeling, monitoring, valuation, accounting, and strategic financial advisory.
Techshake sat down with James to talk about his insights in the industry:
Tell us the story of Morningtide Capital Partners.
I think about three years ago now, I met a bunch of people who would want to become my partners and we felt that there was a gap in the local Philippine financial ecosystem for a firm that specializes in valuation, financial management, and corporate governance, that’s how we got our company started.
What I used to do is a corporate valuation for medium to large size companies. They want to figure out how much their worth or they want to use their valuation as a set of a compass for making internal decisions. And what I noticed is that there is a gap in terms of the ability of these businesses to access funding. The companies are too small but they need funding in order to get bigger and they can't get funding because they are small. So there is a gap. And you know, there is a problem in the financial institutions. Banks are very focused on commercial lending here. So it is the big conglomerates that are building the game in town. They can be choosy and can really nego [negotiate] you down in terms of your valuation because it is really hard to get funding anyway.
But we felt the problem is structural and addressable from inside the companies. Also, the problem is that we have a sort of lack of respect for financial information systems in companies. There are real structural problems in your finance that you can't identify, you can't solve by looking at your bank statement [which] makes you incapable in making good financial decisions because your financial information system is designed to hide what is happening in the company.
So it’s kind of where we come in. What we do sort of two likes for it — we envision a world where companies are able to envision funding and connect with some of our clients’ investors but the core business is really to help companies have a CFO level financial advisory.
Managing Partners of MTCP. (L-R) Sevatian Romberg, Ericson James Pacaba, Nisha Alicer, Quintin Jose V. Pastrana, and Dr. CP David.
What impact do you think Morningtide Capital Partners can make?
What we bring to the table is sort of a robust financial view of the organization so a lot of companies here, for example, just raise but they don’t understand what their finish line really is - at what point do we come a real business, with real unit economic, with real cash conversion cycle, real customer acquisition. You need to understand that and contextualize it in terms of the funding landscape of the Philippines. You need to understand who are the available investors in the Philippines, when do they invest in you, and what sort of funding milestone do you need to raise for in order to survive as an organization.
What inspires and motivates you in helping the community?
If you’re talking about my motivation at the end of the day, it’s really [that] I’m passionate about finance and I love learning about new companies.
So even just three years ago, we were helping a few companies. They are in the cosmetics and the challenges that they face are super unique — the way that their finances are structured is really different from a company say doing baby products, one of our clients, or a company that's doing right now, one of our best startups is a company that is doing soil stabilization technology, that's infrastructure. These are really different kinds of companies and I get to learn about those industries. I get to speak to experts in those fields and I think it’s very interesting to learn about.
What are the key interests that you are looking for in the industry?
We’re pretty agnostic in terms of industry. I mean, if you look at the startups we have right now -- we have one that’s in payment, in media, and in infrastructure. And the really common thing across these companies is that we have a really experienced CEO in all three - they’re 40+, really expert in their fields — we sort of build the company [MTCP] around people like that. So we’re kind of, I guess, founder focus would be the term. So we’re really looking for a certain kind of attitude resilience -- that’s the baseline. Someone who’s comfortable with how hard it is going to be but for us, it's really also important to have a tremendous amount of experience in the space. Because that gives you an insight in order to identify what's next and what are the gaps in that area and also obviously if you already have a lot of experience, normally you have a lot of networks also in the area which helps the sales process a little bit, so there’s a lot of advantages in investing in this executives if you want to start your own business.
How did you overcome the challenges along the way?
Well, team is super important. We have a fantastic team. We have a strong company culture. One of the things I was really proud of is [that] we’re passionate about our work, we take our work seriously, our stuff with our clients. We’re really getting great people and inculcating the great company culture has enabled us to weather some really tough challenges over the course of the past three years of operating and ultimately you know companies are made mostly of people so you have to have really great.
Do you have any essential tips for someone who wants to start a business?
I don't believe that there are shortcuts. Maybe you may get lucky or you’re in a space that is so new that it can accommodate like a 20 year old founder. Like social media, for example, when it was so new — so there’s no expert in the field. But I think the opportunities here in the Philippines, there are so many opportunities in search of a founder.
I think you need to really take a long hard look at yourself and ask yourself, “Am I the expert? Am I at the leading edge of the innovation in the space?” [for] which will allow you to identify that next lead is. The second thing is the team. I believe that it's definitely more than half of the startup fails simply because of the team. And then the third thing would be is to know the economic fundamentals. Simple things like your unit economics.
What is your principle in life?
For me, it is to succeed with friends - that’s my purpose in life. I think that's why my business’s the way it is because I don't need to be the one who is succeeding. I'm really happy being next to someone to succeed and to have contributed to that.
What to expect in the near future?
We have very big aspirations obviously. We want to be advising a good chunk of the next 1,000 corporations. We want to be advising the ones that are in the next 10,000 -- the medium to large size companies. Because as we get companies better run, more money can flow into these companies and these companies can also invest down the line into newer ventures. And we are seeing that in some of our companies we advised already, we have companies where [because] their cash flow has been improved and they have more resources, they are interested in putting money into startups and early-stage businesses. I think if you have a healthy medium to large size businesses you will have more funding for the local startup ecosystem as well.
Click here to know more about Morningtide Capital Partners.