From 'piso' repairs to being an IoT leader

OCT 01, 2022

"I DIDN'T begin with the end in mind," Clixlogic Inc. Chief Executive Officer and President Charlie Fernando said in recounting the company's origins.

After leaving his previous job where he had worked for 30 years, Charlie went into business with some acquaintances. Their ventures, however, failed in just a few months. Charlie eventually decided that if he truly wanted to succeed, he had to have his own business.

Clixlogic began in 2005 as a service center for uninterruptible power supplies (UPS), which are devices that keep computers and electrical hardware running in times of power outages. At that time, a 500-VA UPS cost P3,000 to P5,000. Most businesses rarely had them repaired if they broke down, preferring to throw them away, especially after the warranty expired.

Charlie, however, saw an opportunity and Clixlogic came up with a promo: It would repair a UPS for "piso" (P1). Thousands of units came in for servicing. "Ninety-five percent of the time we only had to change the battery," Charlie said. "Five percent of the time we had to replace parts. We started growing from there." By playing the numbers game, the piso repair promo took off. He soon became known to peers as "the repairman."

As Clixlogic started earning profits, the company worked on innovations that other UPS providers weren't exploring. At that time, it was the only strategy that could give them an edge. "When you're put in a corner, you don't have a choice but keep on thinking of ways to make money," Charlie explained. That was how Clixlogic expanded its offers to information technology and telecommunications solutions such as energy-saving systems, building automation systems, data center maintenance and more.

Cash flow, however, became tighter as the company grew. While still cash flow positive, Charlie decided to get credit lines to serve as a backup fund. One of those he reached out to in 2020 was First Circle, which provided a revolving credit Line of less than P2 million, which increased quickly as the business relationship deepened.

The additional funding gave Clixlogic room to expand its product and service lines, completing an evolution into a full-fledged Internet of Things (IoT) provider. Local government units (LGUs) bought earthquake monitoring systems. Terminals providing unbreakable internet connectivity and backup power grew in demand during the pandemic. The lockdowns that kept people out of office buildings also had the unintended effect of helping Clixlogic finish system installations much faster.

The additional products and services also expanded the industries Clixlogic could serve. In addition to outsourcing firms and LGUs, they also served hospitals, semiconductor manufacturers, e-gaming companies, hotels, schools, residential buildings, malls and more. By enabling research and development, funding also helped Charlie learn which IoT products and services brought the most value.

"We tried so many things that didn't work," he said, citing complicated solutions that tried to answer all of their clients' requirements. "So, what is our approach? You have to keep it simple." This ethos clearly paid off as Clixlogic ended 2020 with P99 million in revenue.

In 2022, Clixlogic ranked 16th on the Philippine Daily Inquirer's Growth Champions List. The report, created in partnership with international market research firm Statista, ranked the SMEs with the biggest growth from 2017 to 2020. Clixlogic posted an absolute growth rate of 95 percent over the four-year period with average annual growth of 25 percent. Thus, when First Circle launched their Growth Partners Program, Clixlogic was the first client it had in mind.

First Circle approached with a unique offer: free financing equivalent to 10 percent of Clixlogic's annual sales in exchange for a 25-percent passive stake. The Growth Partners Program would also provide Clixlogic access to First Circle's other SME growth tools such as B2B payments, corporate cards, and FX and cross-border remittances. Growth Partners is First Circle's own version of venture capitalism: providing zero-cost financing to selected fast-growing companies in order to unlock up to 10 times their current potential.

The partnership was finalized this September when First Circle granted Clixlogic P15 million with zero interest. Charlie has high hopes for the new partnership as First Circle's funding will solve a lot of the company's hyper-growth pains. The money will improve production lead times, help nab more government permits, and mitigate shipment delays and forex (foreign exchange) volatility. More importantly, it can help Clixlogic go public, which Charlie said could be achieved in five years.

Charlie now has a goal in mind: Make the Philippines the IoT capital of the world. "We used to be the texting capital of the world and now we are the social media capital of the world," he said. "It doesn't have to start and end with me, but I want to tell everybody how easy it is to start the Internet of Things. IoT is ubiquitous, everyone will keep using it. It is revolutionary."

Clixlogic looking at IPO in 2027

Jess Jacutan is the content marketing lead for First Circle, an SEC-registered financial technology company that has been empowering SMEs through funding and free growth tools since 2016.

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