Venture Capital’s Large Presence

MASUZAWA Who are the key players in Japan’s startup community?

KAWABE The first person to mention is Nishikawa Kiyoshi. Netage and Digital Garage were always there in the early days, with SoftBank positioned slightly differently. These three companies are what gave rise to Japan’s Internet industry. While Nishikawa always had a strong presence, the actual key players in the formation of a startup community were people like Hayashi Kaoru of Digital Garage and Itō Jōi. Although he wasn’t involved personally, Son Masayoshi contributed enormously to the community.

Venture capital arrived on the scene midway. Globis Capital, led by managing partner Hori Yoshito, became involved in NILS. Out of this came figures like CEO Kobayashi Masashi of ICC Partners and Ono Hirofumi, managing partner of Infinity Ventures LLP. There’s also Watanabe Hiroyuki, president and CEO of B Dash Ventures. Another person is Matsuyama Taiga, a managing partner at East Ventures who has consistently believed and invested in young people. These are the people who established the startup community. Matsuyama was heavily involved in Son’s launching of NASDAQ Japan and did much to prepare an environment for venture capital exits.

Netage founder Nishikawa Kiyoshi (left, photograph from 2006) and SoftBank Group CEO Son Masayoshi . (© Jiji)

MASUZAWA Hearing this history, it seems that investors had a fairly significant presence.

KAWABE The role of supplying growth funds matched the needs of the times. Startups were filled with enthusiasm in the 2000s when large companies lost interest in investing. Since startups can execute their business with a modest amount of funds, they were a reasonable investment target for venture capital.

HORI Matsuyama Taiga, JAFCO, and Globis Capital Partners continued to make investments during this period and played a major role in the growth of startups. The same can be said for Netage.

Outstanding Young Entrepreneurs

MASUZAWA What we seem to be describing is a pattern where a startup village develops in Japan with the support of venture capital. Growth then snowballs from the virtuous circle created by entrepreneurs emerging from this village to become investors.

HORI A recent new trend is the growing number of university students who work as interns at startups and who start their own businesses before graduating.

KAWABE So they’re learning the method during their internship. Years before it was said in Japan that the best students joined the bureaucracy, wihle lesser students joined large companies. The brightest did not become entrepreneurs, as in the United States. This situation has changed completely in Japan. Young entrepreneurs are becoming better and better each year. Seeing such people makes me think that Japan’s startup villages have a promising future.

(Based on an interview that took place on May 9, 2018, at the Yahoo Japan head office in Kioichō, Tokyo. Originally published in Japanese on June 19, 2018. Banner photo, left to right: Interviewer Masuzawa Sadamasa, Kawabe Kentarō, and Hori Shin’ichirō. The large picture on the right illustrates the history of the Internet, which was created to commemorate the twentieth anniversary of Yahoo Japan going public. Interview photographs © Kawamoto Seiya.)