Changing the perspective is priceless. Thoughts after Kauffman Fellows Asia VC Summit in Japan
Asia-Pacific is currently the most dynamically growing market in the world, both in terms of GDP growth as well as VC activity ahead of the USA and Europe in these respects. In order not to cause any outrage among my friends from other strong ecosystems, let me just say that this region is one of the few centers of today’s world. No wonder we have finally arrived with Kauffman Fellows to Tokyo. Yes, Japan is a different planet, especially for a European. And yes, I would stay much longer if I could, to experience more of this country’s remarkable culture and taste more of its many flavors. But Kauffman Fellows VC Summits always left me with a lot of material to think about and inspire me to take further action. What have I learned in Tokyo?
1. Changing the perspective builds your competitive advantage
If you’re a local or — like us — a regional VC, nothing will refresh your approach better than zooming out for a while. Knowing your ecosystem is a must, as well as deal sourcing and co-investing internationally. But only getting the big picture will let you see and understand the trends in this always changing tech world.
2. Japan, now!
Why Japan? Because it’s one of the fastest-growing tourist destination worldwide? Because they are having Olympic games in 2020? Nope.
Take this: there was practically no VC market over there five years ago! Of course, Japanese Venture Capital Association (JVCA) was established in 2001, and there have been VC firms even earlier, but due to Japan’s economy ups and downs and deeply rooted corporate culture, the VC market has been dwarfed by the American in terms of its share in GDP or AUM. In 2018 Japanese startups raised an all-time high $3.5bn. What’s interesting is that typical seed-stage valuations reach around $5m post money and the most common investment ticket is around $500k-$1m. More than in Poland, but comparable. I see this as an opportunity for both Polish and Japanese ecosystems. We have great talent pool, in fact — one of the best IT personnel on the planet. Japan has the capital coming from global corporations. And global corporations.
As our market is still at the beginning of its journey — there’s a lot we could do together to speed things up. To have a look at how ’s already happening, check out Marek Kiisa’s (Kauffman Fellows Class 19) nordicninja.vc.
3. Coopetition is a steroid for young VC markets
SoftBank - one of the most prominent VC players in the world, has had a crucial role in reviving the Japanese ecosystem both as a FoF and a direct VC. Most of this can be credited to its already legendary Vision Fund which supported the likes of WeWork, Slack, Uber just to name a few. It has currently around $100bn AUM in its first fund, with over $70 bn already deployed in about 2 years. Just to put things into perspective, its $30bn of dry powder is still almost 4 times more than the capitalisation of Sequoia’s largest ever $8bn fund launched back in 2018. Take a moment to process that. What’s more, Masayoshi Son, Softbank’s founder is already putting things in motion to launch Vision Fund II, reportedly with a fresh $100bn coming in. But what’s really important for Softbank’s origin market is the fact, that through strategic alliances (Toyota, Alibaba, etc.) and stimulation of cooperation between competing businesses, SoftBank has managed to integrate the market and shaped the Japanese ecosystem.
4. AI is everywhere
AI is now what industries, businesses, founders and investors do. The technology has matured and is already rolling out. The disruption it may cause is still yet to come.
Do you know a company called SOMPO? They currently invest in Insurtech projects all over the world and have an impressive digital lab in Tel Aviv. Their long term vision is, that thanks to AI, no insurance will be needed. They believe that with big data on health, fitness and geolocalisation they will be able to predict and prevent events like for example strokes.
5. Captain Obvious here: Your Network is Your Net Worth
Highly connected professional network is the real power on any market. But it’s VC industry that makes this rule a commandment. David Cohen — Founder and co-CEO of Techstars shows how Startup Weekends and Techstars programs create a global network that catches projects at an early stage like UBER where Techstars was the first investor.
What is the real strength of networking and how do you quantify it?
- VCs in the Kauffman Fellows network have outperformed the industry over the past 20 years by 226% with an average Realised Multiple of 5.8x
- With 500 VC institutions onboard, fellow portfolio companies have resulted in more than 8,5 trillions of dollars in exits for LP’s over past 25 years
- Two out of our recent 6 investment deals have come from the connections I’ve made with my fellows from Kauffmann and they are all among our portfolio’s stars: Insly was brought to us by Ewa Treitz (AWS, Class 19) and Baris Aksoy (Google, Class 17), Teamscope — by Tonis Arro (ExecutiveLab, Class 19).
What does all of this have to do with Black Pearls VC activity? First of all — we stay highly connected to the global network through Kauffman Fellows and Invest Europe participation. We use it to access global deal sourcing potential and continue to work with coinvestors to find and support game-changing companies. Our regional presence has increased and now we want to take it to another level. We aim at the Hanseatic tradition-based cooperation of Gdańsk, Tallinn, Helsinki, Oslo, Riga, Stockholm, Copenhagen as a Northern and Central Europe VC. We feel that by utilizing these historic links, we are in a position to deliver significant value both to our portfolio companies and our investors. But that’s just the sneak peak of our investment thesis, more to follow soon, so stay tuned!
To finish off and put our money where our mouth is, we’re going to Oslo’s this week. Our friends at Concentric are putting together the Oslo Tech Excursion — a yearly event bringing together the best early stage tech companies Norway has to offer with key stakeholders from across the European venture ecosystem. Feel free to reach out if you’re around!
If you feel like you could join the network: contact us firstname.lastname@example.org