See the original article in Japanese
The partnership between investors and entrepreneurs is an interesting one. In the seed money round, investors not only invest funds, but they cooperate with entrepreneurs on many aspects of the business. But what’s actually going during the very early funding round? We spoke with an investor and an entrepreneur to find out more about this. Kentaro Sakaibara is the CEO of Samurai Incubate, a pioneer among independent incubators in Japan. Naoki Yamada is the CEO of Anydoor, the startup behind crowdsourced translation service Conyac, a portfolio startup of Samurai Incubate.
In the previous article, they talked about how they first met, and how they started working on a translation service. In the following conversation, they continued to discuss the early stages of their cooperation.
History of Anydoor
* February 2009: Naoki Yamada and Tomohiro Onuma founded Anydoor.
* May 2009: Conyac, a crowdsourced translation service, was launched.
* March 2010: Yamada met Sakakibara, and became one of the first portfolio startups of Samurai Incubate.
* December 2011: Anydoor raises funds from United.
* February 2013: Conyac for Business was launched.
* October 2013: Anydoor raises funds from three VCs.
The Bridge: How was your cooperation at the beginning?
Yamada: First we decided to make KPIs. Before that, we had been just trying to increase our users. But we decided it’d be better to set another measurement. Me and Sakakibara-san had meetings every week to evaluate the performance of the previous week, and we then decided our plan for the coming week.
Sakakibara: We provided the service for free, temporary.
Yamada: Yes, right. After half a year, we realized we were totally in the red. The more the service was used, the more our loss increased. We had difficulties setting the right price for quite a long time.
Sakakibara: Onuma-san had lots of information about services outside Japan, and we got some ideas from that.
Yamada: Yeah, during a small chat. We enjoyed that kind of small talk, since we concentrated so hard on the work.
Sakakibara: Onuma-san was a sort of healer.
Yamada: The toughest time for me was when I was juggling the business and my other part-time jobs. So Sakakibara-san was really a sort of angel for me.
Sakakibara: Conyac is now widely recognized, but it was quite hard to get the recognition those days. I feel now I should have put more effort in to get the recognition. It was hard to raise funds as well.
Yamada: It had been quite hard until the investment from United (formerly ngigroup) was fixed. In the first year, even the term ‘crowdsourcing’ was not well known. We had to use overseas cases to explain.
Sakakibara: And the market condition was not so good either. Even Nobot was struggling.
The Bridge: Sakakibara-san was the one who proceeded with negotiation with VCs?
Sakakibara: No, I was supporting other aspects like human relations, since Yamada-san was better at creating concrete documents. I had thought VCs don’t like it when investors actively make suggestions, but I heard that is changing. It depends on the person though.
Yamada: For almost a year after we raised funds from United, we had no clear direction and couldn’t used the funds. We’d been providing our service only for consumers.
Sakakibara: It took time to change the target to corporate users. We used to meet almost every month at the time.
Yamada: We should have focused more on data analysis earlier. We should have looked at the data and the users.
Sakakibara: I recently visited Silicon Valley. We visited there a lot together.
Yamada: Yes, we visited many places.
Sakakibara: Our recognition among overseas VCs is improving. Perhaps we could raise funds from them now.
Yamada: We and Kiyo-san (Kiyo Kobayashi, CEO of Nobot, acquired by KDDI) used to visit Silicon Valley together. We visited many VCs, but it was tough when they couldn’t catch what we were saying.
Sakakibara: It was exciting.
Yamada: We struggled together like partners, beyond the business-like relations between VC or incubator and an entrepreneur.
Sakakibara: You joined our visits to Silicon Valley a lot.
Yamada: I kind of felt like I had to…
Sakakibara: Many people used to join the visit, three years ago. But they don’t join anymore.
Yamada: What makes you keep visiting there?
Sakakibara: I’d like to develop services that succeed overseas. To achieve that, it is necessary to make connections with local angel investors, such as Sean Parker.
Yamada: Sean Parker… what a big name.
Sakakibara: But actually, the connections I’ve been building long term help recently. So, I’m going to work harder on that.
Yamada: Now that I think about it, Samurai’s first startups were quite bold, like jumping outside Japan without connections.
Sakakibara: Many startups now first focus on the domestic market, since they think it would be impossible to be successful overseas.
Yamada: The first time we flew together to Silicon Vallley, I had no plan honestly. Sakakibara-san said “We’ll go see VCs there”, so I replied “Okay, let’s go.” Then I was totally knocked down by them. I got negative comments like “Is there a market for such a translation service in English-speaking countries?”
They developed their business step-by-step though trial and error. They continued to talk about how they grew their business. And we’ll cover that in the next article.