The Talented Mr. Fernandez
/Engineer-venture-capitalist-attorney Dennis Fernandez (Source: Silicon Valley Business Journal)
Engineer-venture-capitalist-attorney Dennis Fernandez recalls his attempt to manage a patent team in Manila some years back. “These were smart people from Ateneo,” he adds.
“In the Philippines, (when you criticize their work) you get a call from their moms. And I don’t know what to do when (the moms) yell at me. But in India we don’t have this issue.”
Although word is that the Philippines is about to become a major, global high-tech player, Fernandez is not repeating claptrap from press releases. He can speak about the big picture with an unflinching eye, having also introduced one of the earliest venture capital funds in the Philippines.
Despite some misgivings about the Philippine tech scene, Fernandez says, “In comparison to our offshore team in New Delhi, India, I believe the Philippine talent pool is globally competitive in terms of work ethic, team collaboration and engineering skills.”
Juan of All Trades
An engineer and a strategic advisor for several ventures, Fernandez is managing partner for the patent law firm Fernandez & Associates LLP in Atherton, California. He’s also an active inventor with close to a hundred patents in the U.S., Germany, the U.K. and Japan.
His gospel is respect for intellectual property, and he has been to Asia where piracy is a religion to some industries. “Even the U.S. struggles today with effective enforcement of intellectual property rights,” he explains.
In fact, there’s a raging debate about the so-called “patent trolls” who acquire patents solely for the purpose of profitably suing producers for alleged infringement. The debates about who owns original ideas, from Edison vs. Tesla to Apple vs. Samsung, may never end.
“I was involved in the early semiconductor disputes. I even got involved in patent litigation in one of Dado Banatao’s early start-ups, Chips & Technologies, Inc.”
For Fernandez, the journey began when he began his career as a product engineer at different Colorado and Massachusetts companies in 1983. He “got bored” and by 1989, he was an associate doing patent licensing and litigation in Boston.
He got his electrical engineering degree from Northwestern University in Evanston, Illinois and his law degree from Suffolk University in Boston, Massachusetts. He moved and quickly adapted himself to Northern California. He married in 1989 but they’re “not together anymore.”
But he didn’t hit the big time until 1990 when he joined Fenwick & West, LLP in Palo Alto, CA. “At that time, there were about 50 lawyers. Now they have about 500. Some of the more interesting Silicon Valley companies got their start at Fenwick & West—the incorporations, the venture capital set-ups and patents for the likes of Apple, Oracle and Symantec.”
Before Banatao Was a VC
“I was involved in the early semiconductor disputes. I even got involved in patent litigation in one of Dado Banatao’s early start-ups, Chips & Technologies, Inc., the company that developed logic systems for IBM’s old XTs,” Fernandez recalls.
“Dado was not yet a venture capitalist, he was an engineer building his start-ups. I hadn’t met him yet. But in time, I worked on his S 3 Graphics (the company that launched the first Windows Graphics accelerator), then Marvell (a designer of high volume storage and semiconductor products) and SiRF (the pioneer GPS company).”
“Dado is the only remaining VC I know who does semicon deals even as nobody will touch it. He says he’s the last man standing. It’s really risky for him because there hasn’t been a real semicon IPO in Silicon Valley for a really long time. Either he’s stubborn or he’s got the right strategy,” Fernandez laughs.
Introducing the VC Model
Fernandez had the unenviable task of introducing the venture capital model in the Philippines. Barely getting respite as a transplanted East Coaster, he had to contend with typhoons, floods, earthquakes and political instability when he set up the VC fund in the Philippines.
Nevertheless, Fernandez helped set up one of the earliest venture capital funds in the 1990s as country manager for Walden International, a leading Asian VC fund based in San Francisco.
At the time, Fernandez says even the leading Philippine technology group of companies listed in Forbes (Ionics Inc.) that had gone public was underwritten by professional investment bankers.
“Our VC fund in the Philippines was supported significantly by the Asian Development Bank, World Bank, Ayala Corporation and other partners. Even though the fund probably had limited success, we helped set the stage for building a mindset in risk-based equity capitalization especially targeted at globally competitive technology-based ventures.”
One of Fernandez's inventions: the local emergency alert for cell-phone users (Photo by Raymond Virata)
The biggest difference between getting your business funded by banks and VC is that banks expect to be repaid, VCs don’t, he explains. “Banks lend money on interest, often against collateral assets. But VCs truly become co-owners by buying early stock ownership with the company. Hoping that such privately held equity interest will one day be more valuable and publicly tradable at some stock exchange.”
Moreover, in the Philippines important private, even public companies, are closely held family corporations. “So stock/equity rarely trickles down to worker bees. Reaction to using equity/stock options as recruiting tools just didn’t resonate with founders or entrepreneurs or their local investors,” Fernandez observes.
He believes that the VC, angel investor and risk capital market is still evolving in the Philippines. But with the seeds he helped plant and programs like Balik-Scientist, Fernandez says some of the things they’re doing in the Philippines are influenced by what they had done. “I expect the stock-option model to attract expat/foreign talent to join local ventures,” he also predicts.
Never at Rest
At 52, Fernandez has a son in high school and a daughter about to start college in two months. Naturally, she asked him what would be the best engineering major.
“There are two areas I like,” he told her. “One is material sciences or material engineering. This has to do with nanotech, materials other than silicon to build new devices. It’s a combination of physics, chemistry and some electrical engineering. I think there will be a shift to using other materials than silicon. So, there will be work on proto-typing alternative materials.”
Even when he’s relaxing, Fernandez needs to tinker and improve things, actively inventing and licensing his patents in his free time. He estimates that the shortest wait he had to get a patent approval was two and a half years.
He talks about inventing the video-conferencing parts of the X-box and PlayStation (“I’m up to my neck in litigations with Sony and Microsoft”). He’s also fiddling around with smart software that manages the switch from battery to gas in the Prius (“Add Toyota to that”).
Fernandez also started scuba diving and is now a certified dive instructor. “So I have an excuse to go to places like Palawan,” he chuckles.
Harvey I. Barkin
Harvey I. Barkin is a freelance general assignment reporter who covers, community, features and technology. He is also a tech writer and copywriter.