See the original story in Japanese.
Tokyo-based Anri, the startup-focused investment fund led by Anri Samata, revealed on Thursday that it has formed Anri Investment Fund Limited Partnership No.3. Participating investors in this fund include Yahoo Japan, SME Support JAPAN, Mizuho Bank, and Seibu Shinkin Bank as well as existing investors such as Mixi, Gree, Adways in addition to Voyage Group. The fund is worth about 6 billion yen, or $55.6 million US.
The fund also unveiled that it will form an in-house team with expertise necessary to build and manage companies, aiming to give their portfolio companies intensive follow-on support from the aspects of legal affairs, intellectual property, team management, public relations, marketing strategy, among others, which we have seen at US firms like Andreessen Horowitz offering to their investee companies. The fund currently has two offices in Shibuya (Tokyo’s largest startup neighborhood) and Hongo (near the University of Tokyo), each of which has teams undergoing incubation. It plans to add some locations to nourish more seed startups which are typically comprised of one to three team members.
Samata says that his firm has invested in 47 companies through its No.1 and No.2 funds. Renowned investees include UUUM (multichannel network offering business opportunities to YouTubers), Raksul (on-demand printing), Coincheck (bitcoin exchange), Coiney (SaaS-based credit card processor), Smart Drive (automobile data tracking), Schoo (online learning for business skills), Kanmu (rewarding platform for credit card holders), Clue (drone service), and Hacosco (instant VR solution). The firm has made an exit regarding five startups from the No.1 fund by selling their stake, namely Mery (women-focused fashion curation site), Mamari (mom-focused Q&A app), U-note (collaborative event summary platform), and Anydoor (crowdsourced translation).
Actively supporting “high-maintenance” seed stage companies
Six years since the establishment of Anri’s first fund, it was Uuum, which IPO-ed on the TSE Mothers Market on August 30th, that began to attract significant attention to the company. Four years ago and before YouTuber-related businesses heated up, Uuum secured seed round funding from Anri and successfully led the Japanese livestreaming sector. According to Uuum’s securities report, Anri has a about 17% stake in the YouTuber management startup.
Samata explained that the company’s style will not change, holding 10% in the seed round, raising that to 15% to commit to the business as the lead investor, and after additional follow-on investment their plan is to keep the final shareholding ratio at about 25%. It is a concept that includes actively engaging in the business without taking over the big corporate decisions.
On one hand, this method requires a lot of work. If we look at the investment style of other funds, the IPO (TSE) ranges from a 10 billion yen ($91M US) to 20 billion ($181M US) yen scale, or with acquisitions the range is in the tens of billions of yen. By making a big commitment to businesses, investors can expect a big return upon exiting, or they can invest many times and take a hands-off approach.
However, at the young age of 33, Samata chose such a thorny path out of the desire to show himself working hard as an entrepreneur. Since the size of the fund increased this time around, the company is prepared to offer up to 500 million yen (about $4.5M US) as a follow-on investment.
The potential of collaborations with ICO funding
Another characteristic of Anri is their belief in aggressive investment in technology-centric seed companies. Some of these examples include Hacosco (instant VR solution) and Smart Drive (car telematrics), as well Sapeet (avatar-based 3D try-on) launched by Eiji Tsukiyama, a student majoring in fluid mechanics at the University of Tokyo. According to Samata’s explanation, although seed companies in these technological and research areas have administrative funding support, for most there is a deep “valley of death” situated between them and a series A round when these startups can finally turn their idea into a market-ready product.
According to Samata’s explanation, although seed companies in these technological and research areas have administrative funding support, for most there is a deep “valley of death” situated between them and a series A round when startups can finally turn their idea into a market-ready product.
Masahiro Sameshima, a partner participating in Anri, is originally from the University of Tokyo’s Edge Capital and has a deep knowledge of technical fields. Nonetheless, seed investment is difficult in that there is no guarantee of success 100% of the time.
I asked Samata about the possibility of using ICO (Initial Coin Offering) funding, which has become increasingly popular recently. In the US there is information that firms like Union Square Ventures and Winklevoss Capital are seeking to form a “hybrid” with VC funding.
In regards to this, Samata expressed his thoughts by referencing the investments in Branch, a matching service for children with developmental disorders and experts.
I believe a fund is a product of venture capital. For example, I, myself, am donating 10 million yen annually, but the problems that can be solved in the non-profit and for profit sectors are different. However, at first glance, it looks like even problems that can only be solved through donations may also be able to use VC funding. Currently information regarding this is being gathered through making donations.
The method of token sales is also fundraising, which also leads to the possibility of exit (management buy-out for entrepreneurs and, in some cases, dividends) for investors and backers.
This is my personal opinion, but I think that the destiny of the stock market includes always being under pressure from shareholders to “rise”. However, it is difficult to confirm every company involved in social activities, such as the above-mentioned Branch, with their advanced technologies in specialized areas, as a “rising” one. If the business is rich in variety, it stands to reason they should have more funding and exit options.
While the conversation never drifted to the discussion of concrete information this time around, Samata definitely demonstrated his deep knowledge of token sales. Anri aims to support 100 companies with their 3rd fund.
Translated by Amanda Imasaka
Edited by Masaru Ikeda