Japan’s gumi Launches $30M Blockchain VC Fund Led by Miko Matsumura
Hi Miko Matsumura, thank you for coming on our podcast series again. Before delving into this podcast I first wanted to congratulate you, Kunimitsu san and Gumi on behalf of HGR. A few days ago Japanese mobile game publisher Gumi announced they’ll be launching a $30 million investment fund focused on cryptocurrencies and blockchain with you and Kunimitsu san at the helm. (You can find the entire press release below)
Taotao: Everyone these days are always talking about the next step for cryptos is predicated on corporate and mainstream adoption. By forming a fund Gumi Inc is showing that corporate adoption is on the rise — what do you was the catalyst for this decision? Do you expect other companies to follow suit?
Miko: Gumi is a sizeable and successful publicly traded game company in Japan, but in some ways Gumi is not a very traditional enterprise. The founder CEO Kunimitsu san is a very bold and creative visionary and has run multiple venture capital funds already in gaming as well as in AR/VR. I expect with the coming regulatory clarity and mass adoption of crypto assets that many institutional players are trying to find a way into this industry, some in the form of a hedge and others with stronger conviction. Since our thesis is that we are in the middle of the transformation of our global economy, there should be no way for any surviving enterprise to stay out of it. The right question for any organization to ask is whether they should consider incentivizing the value-adders in their ecosystem including their developers, their users, their partners and their employees. Once things are framed in those terms, it becomes clear that any organization that refuses to incentivize their ecosystem becomes vulnerable to competitors who do.
Taotao: The new fund has a lot of inherent synergies between you and Kunimitsu san. You having years of experience and a deep understanding of the crypto space and Kunimitsu from a business and corporate standpoint. This isn’t the first time you started a fund, how is this time different?
Miko: One of the incredible ways in which this partnership has a strong synergy is how connected Kunimitsu san is in Japan and how deep his operating experience is. This enables him both to strongly diligence new companies as well as to make them hugely successful in Japan through his deep and well established contact network. Contrast that with my role as a visible speaker, analyst, advisor and blogger and you will find that I would be able to source high quality deal flow and work with partners across the world, but at the same time rely on the partnership to deliver Japanese business connections. To me this is a very strong offering designed for not the early stage of cryptoeconomy but for the more mature and growthful phase where the best deals in the world are oversubscribed and will only provide allocation for strategic investors. Gumi wants to be strategic to them by delivering them Japanese business networks, which most foreign entrepreneurs outside of Japan find difficult.
Taotao: How do you plan on sourcing deals and finding promising projects?
Miko: We principally would like to source deals through our relationships with great investors. Part of our model is that we would like to maintain our own humility and station in the market as a great partner and humble servant of the crypto economy and it’s most successful entrepreneurs. So instead of taking the model of having a large number of analysts who do intense diligence, we would rather invest in delivering value to our portfolio post investment. This means that we will appreciate and likely follow some of the best VC firms and partners in the world. We would like to earn our allocation and their trust by delivering on our promises and building those relationships through helping them navigate in Japan.
Taotao: What are you most excited about this new fund and what do you hope to achieve?
Miko: I love the Japanese culture and gamers, so it’s excited to be involved with both professionally. It goes without saying that I am 100% dedicated to the emergence of the global cryptoeconomy and feel grateful to be offered an opportunity to accelerate global adoption of crypto assets. Through our initial fund, we hope to accelerate at least 50 new ventures with capital infusion and Japanese business networks which will further the growth of the global crypto economy, generate millions of new wallets, establish new infrastructure tokens and platforms, popularize cryptocurrency worldwide and further establish Japan as the world’s largest and most liquid cryptoeconomy.
Taotao: From a corporate and institutional angle how would you go about analyzing the ICOs? You mentioned in our earlier podcast you place a lot of emphasis on team and governance — going forward with gumi cryptos do you have additional criteria’s?
Miko: The main thing I obsess about are teams. We look for experienced teams who have shown responsibility and execution power by delivering shareholder value through past exits. We also look for what I call “Time-to-Cryptoeconomy” which is a bit like time to market for companies. This means that already shipping product with existing users and a pre-existing fiat revenue base are all traction signals that convert well to real-world crypto economics. Governance is an important final criteria for us, as we are experienced VCs and we want to ensure that there are proper controls over the use of proceeds. Nobody wants to see misappropriation of funds and we all want clear accountability of the management team to deliver the vision in their white papers. We understand how dynamic young companies can be and we deeply respect entrepreneurs who can find “the pivot” which can catapult their business to the next level. But there’s a world of difference between changing your business plan and simply pocketing the ICO proceeds. So governance is of course important to us and to the entire industry.
Taotao: Instances like this remind us how receptive the Japanese community is receptive and understand the potential of cryptocurrencies. You mentioned a lot of high quality projects struggle to find traction in Japan — how do you plan on addressing this?
Miko: Yes, Japan is surprisingly not the first country most token startups think of. I say surprisingly because it is the largest single cryptoeconomy in the world and is the friendliest large economy in the world to this emerging phenomenon. The exciting thing is that Gumi has build very deep and trusted networks in Japan by taking a large gaming company (Gumi the game company) public on the Tokyo Stock Exchange. These networks as well as the new relationships already created by investing in a half dozen global crypto companies will form the basis of a Gumi Japan Crypto business network. This will allow all of our portfolio companies to come to Japan and have an instant network of friends and supporters including regulators, exchanges, investors, enterprises, users, bloggers, meetups, review sites, marketing agencies and an entire Japanese crypto ecosystem ready to deploy on your behalf.
Taotao: With all the regulatory uncertainty in the west, we are seeing a shift of sentiment and projects to other areas such as Malta, Japan and Singapore. What are your thoughts on the different regulatory approaches and investor sentiments towards crypto?
Miko: I feel that the culture of open source money and therefore the base of crypto is based on an internet fueled borderless consent model. And because it’s an internet based model it flows seamlessly across borders. The mindset of open source is really one of choosing platforms wisely, and each country and its regulatory framework is viewed as a “platform provider” by people in the open source money movement. So much in the way that open source entrepreneurs choose a database platform or a web application server platform to build their applications on, these entrepreneurs choose their legal and regulatory platform which best runs their “applications”. If you look at regulators like the SEC, we see them attempting to push definitions such as Securities laws from the 1930’s onto crypto assets. To me, this is an extreme form of “legacy code” that will inherently be restrictive towards new asset classes that simply don’t meet those requirements. I’m fully committed to regulatory compliance, to user and investor protections and to the elimination of bad actors including fraud, money laundering, terrorist financing, market manipulation, predatory practices and I’m all in favor of the facilitation of capital formation. Believe me, I respect the SEC greatly and think they are doing a fantastic job so far given how understaffed they are and how fast this phenomenon is growing. But if I were to give advice to entrepreneurs, they should study some of the more nimble jurisdictions who can refactor the legal frameworks such as the Malta VFA legislation for “Virtual Financial Assets”. There’s also great work being done in the state of Wyoming, in Taiwan and many other points around the world. The Internet is global and it routes around damage — and it experiences censorship as damage. So we will see the global talent in ICO, currently a 14 billion dollar phenomenon flow to where it’s most welcome. So far, of the largest economies in the world, Japan is the leader in that. Among smaller economies there are some very nimble countries doing well also.
JAPAN’S GUMI LAUNCHES GLOBAL BLOCKCHAIN
INVESTMENT FUND
$30 Million USD in initial investment secured for gumi Cryptos fund to invest in global cryptocurrency companies
TOKYO, Japan — May 30, 2018 — gumi Inc., a leading global mobile game publisher and developer, today launched a dedicated fund to invest in promising cryptocurrency and blockchain technology companies, called gumi Cryptos. The fund offers its portfolio companies a strategic venture capital investment partner with unique access to the Japan cryptocurrency market through its network of investors and management board. The first projects funded by gumi Cryptos include Basis, Origin Protocol, Robot Cache and Pryze. With an initial investment of $30 million, gumi Cryptos is led by proven operators Hironao Kunimitsu, Founder and CEO of gumi Inc., and Miko Matsumura, founder of US-based virtual currency exchange Evercoin. Matsumura is a Venture Partner at BitBull Capital and an advisor at Arrington XRP Capital. He is an investor in Lyft, FileCoin, Brave, CIVIC, Basecoin, Propy, Polymath and more. Matsumura has also served as an advisor to over a dozen ICOs and startups, having raised over $250 million to date for companies such as Bee Token (Decentralized AirBnB) and Celsius Network (Crypto Lending Platform). The full list is available at http://miko.com.
gumi Cryptos fills a specific void in the investment spectrum of the blockchain and cryptocurrency industry. In many cases, even the top cryptocurrency organizations in the world struggle to understand and access markets in Japan, including investment and industrial networks, customers, exchanges and regulators. Kunimitsu said, “We decided to create a fund that enables us to engage more directly with early-stage blockchain and cryptocurrency startups, in order to be more effective partners and have a real impact in the market. Our team brings tremendous expertise in emerging technology, and with gumi Cryptos, we can truly partner with these companies as they achieve amazing results for all stakeholders.”
Matsumura said, “Having advised top global cryptocurrency startups alongside some of the best investors in the world, I’ve come to realize that all of them struggle to break into Japan, the largest cryptocurrency market in the world. I’m excited to join gumi and their well-respected network in Japan.”
White & Case LLP, a global law firm, acted for gumi Inc. in establishing gumi Cryptos LLC and negotiated the joint venture arrangements between the partners. The Tokyo-led legal team included Nels Hansen, Ayako Kawano, Fumika Cho and Kei Horiguchi. Voyage Group Co., Ltd., an entertainment company, and YJM Games Co., Ltd., a Korean game company, and other major domestic financial institutions are invested in this fund.
Some facts about the Japan market:
• Japan is the third largest economy in the world
• Japan was the first country to legalize Bitcoin
• As of January 15, 2018, Japanese Yen accounts for 56.2 percent of Bitcoin (BTC) volume, according to coinhills.com. Yen is followed by U.S. dollars at 28.4 percent, while all others account for 15.4 percent.
For more information, visit http://www.gumi-cryptos.com.
About gumi Inc.
Founded in 2007, gumi Inc. (Tokyo Stock Exchange: 3903) is a leading global mobile game publisher and developer headquartered in Japan, with overseas operations in France, Korea, Singapore, Taiwan and the United States. The company has proven success in launching titles worldwide, such as the widely popular role-playing games Brave Frontier and THE ALCHEMIST CODE. In 2016, gumi established a Silicon Valley-based investment group with partners, called The Venture Reality Fund, which focuses on seed and early stage augmented reality and virtual reality startups. Additionally, its VR incubation subsidiaries have expanded globally, including Tokyo XR Startups, Seoul XR Startups, and Nordic XR Startups. With ongoing publishing and development projects on a wide array of mobile, AR and VR platforms, gumi aims to change the world through innovative entertainment products and services, including both original content and collaborations with popular IP. For more information, please visit
Media Contact
Kate Pietrelli
Kate.pietrelli@gumi-america.com
+1 760–518–2633
