On January 24, 1848 gold was discovered in California. Immediately after, word of the Gold Rush had spread around the world. Prospectors and merchants began to arrive, ushering in the era of the Forty-Niners (49ers). What’s more interesting about the Gold Rush was the attitude and acceptance of these early entrepreneurs toward risk-taking. Their perspective that failure is a prerequisite for success is evident today as you look across Silicon Valley with the multitudes of entrepreneurs striking out on their own and starting something new. In that context, Masahiro (Masa) Kinoshita is a 49er.
In the context of a one-hundred year old, traditional Japanese corporation, Masa is a pioneer. Three years ago, he pitched the idea of creating a new type of venture fund to Panasonic’s Board of Directors. The initial concept was to create a new organization in order to make fast decisions without any strategic constraints. The fund would be run and managed by venture capitalists from Sand Hill Road with strong track records and an ability to attract and invest in the top entrepreneurs. It was a significant departure from any Corporate Venture Capital (CVC), past and present. Not surprisingly, he was met with skepticism and disbelief, and was initially unsuccessful in setting up the venture fund.
For the next three years, Masa held firm to his original idea. He continued to persevere in his belief that the path towards innovation existed through start-ups. Through influence and persuasion, he finally broke through and got the venture fund approved. Much like the 49ers before, his steadfast belief paid off.
Masa’s next task was to find and attract a top venture capitalist from Sand Hill road to launch this new fund. Starting a brand new operation from scratch is very different from joining an established operation. He was not only looking for someone with a strong track record, but also someone who was a builder and wouldn’t be afraid of working with a corporation. Through an extensive recruiting process, he selected Carey Lai who was formerly with Institutional Venture Partners (IVP) and Intel Capital. In Carey, he found an investor with that strong track record who had worked at a highly respected firm, as well as a large corporation. Masa and Carey brought on Paul Yeh shortly after, who joined from Kleiner Perkins Caufield & Byers. Along with Takashi Nishikawa and Nori Kondo from Panasonic, the founding team refined Masa’s vision, and developed a $100M venture capital fund with the following unique characteristics:
- Generate superior financial returns
- Make agile investment decisions with no strategic constraints
- Focus primarily on enterprise software and hardware companies
- Invest in 10–15 expansion stage companies that are post-product with customer success
- Invite other investors to join future funds
- Serve the entrepreneur with unique access to Panasonic and its partners
Put simply, the number one goal of this fund is to find and fund the best entrepreneurs. By taking the best of both worlds — financial rigor of an institutional VC and partnership opportunities of a corporation — the team believes that it can better serve the entrepreneur by conducting capital, relationships, and partnerships. This is how Conductive Ventures was born and marches toward its new frontier.