On day two of the New Economy Summit here in Tokyo last week, we heard a panel about how venture capitalists can help entrepreneurs both here in Japan and abroad. Moderated by Daisuke Iwase, the president and COO of Lifenet Life Insurance Company, the session included:
- George Kellerman, managing partner and fire chief at 500 Startups
- Akio Tanaka, partner at Infinity Ventures LLP
- David Lee, co-founder and managing partner at SV Angel
SV Angel’s David Lee kicked off the session by making a brief introduction to his firm. Since its launch back in 2009, SV Angel have been investing in tech notable startups including Twitter, Pinterest, Square, Dropbox, and Airbnb in their early stages.
Akio Tanaka introduced Infinity Venture Partners’ recent activities in nurturing the start ecosystem in China. He gave us a look at the Chinese answer to Angellist, 36kr (one of their portfolio startups), as well as their recently established startup hub in Beijing, TechTemple.
To accelerate the startup ecosystem in Japan, he emphasized that large companies should play a key role. In the US, such companies have been helping startups by circulating capital and human resources around the ecosystem. Even in China, larger organizations such as Baidu and Tencent are investing in tech startups more and more rather than buying them out or copying their business models.
500 Startups’ George Kellerman says that his firm has invested in more than 700 companies in the last four years. Noting that established companies in Japan reserve as much as 150 trillion yen (about $1.5 trillion) as their retained earnings, he insisted that they have to put at least 0.1% of it towards accelerating the startup ecosystem. That could either be by acquiring startups, forming funds, or investing in existing investment funds. Another important effort needed for the ecosystem can be made by inviting more women to the workplace, he says.
Addressing a question about how investors can help entrepreneurs, Lee said that one of the most important roles for investors is to serve as a mentor and role model:
In addition to providing money, investors need to help entrepreneurs hire good people, and advise with their business development and overall business operations, since younger entrepreneurs typically don’t have management experience.
A lot of VC people have operating background from the tech industry. My founder Dave McClure previously worked with PayPal as head of engineering, and I also worked with Yahoo and Dell. For investors, money is the easy part. That’s a commodity. Investors have to pass on their knowledge of operational experience to startups.