Aoyama Gakuin Open Lecture: VC Funding and Venture Management in a Time of Rapidly Dropping IPOs

Pina Hirano from Infoteria is a regular at the monthly Tokyo Blog Dinner in Gotanda. At last week's event, we got chatting, and he was kind enough to invite me to a lecture at Aoyama Gakuin, where he leads a business course. Most of the lectures are just for the handful of postgrad students on the course, but this one was open to others, and about a dozen other guests attended.


Guest Speakers:

Kazutaka Muraguchi - CEO of Nihon Technology Venture Partners. Yuji Sakai - CEO of Japan Software Investment

Programme: 16:20 - 17:50 Muraguchi-san's Presentation 18:00 - 19:30 Panel Discussion with Muraguchi-san and Sakai-san

Wandering into Aoyama Gakuin University was like stepping back in time - reminded me how long it's been since I've set foot on a University Campus. I found the lecture theatre, and sat myself down in the front. I think it was only the presence of the other guests in their suits that stopped me from having flashbacks to 20 years ago.

Here are my notes from the lecture:

Pina-san introduced the lecture, and Muraguchi-san began his talk. Muraguchi-san is a fascinating guy. He was originally in theatre, having trained in Shakespeare, and only later in life moved into business.

His main focus for the evening was exploding myths - or superstitions as he called it - about Japan. Remember that is is speaking to a Japanese audience. First he talked about Japan's lifetime employment system. This, he said, was a recent phenomenon - in the Taisho era there was no guarantee of employment, and it was only with the introduction of labour standards that the "Salaryman" was born. This is, of course, becoming much less relevant in modern times, and venture businesses are "designable", in "constant beta" and may have "bugs" - "Humanity is in Constant Beta"

Muraguchi-san was critical of the adherance to such superstitions, and said that this was one of the main drivers for him leaving JAFFCO and starting out on his own.

"Humans are just Monkeys who invest in the future."

Next Muraguchi-san talked about "Capital" - what is it? For a start up, venture capital is "enough gasoline to get through the desert" .. as you watch the dial go down and down!

Momotaro's Mother was Japan's original Venture Capitalist

In the Japanese fairy tale, Momotaro's old mother gives him millet dumplings (キビ団子) to take with him as he goes off to battle demons. He picks up some staff on the way, and eventually defeats the demons and brings back the booty they have stolen from the villagers over the years.

Muraguchi says the current economic situation is "the End of Fake Digital Capitalism". To explain this he drew a sketch showing a straightforward investment fund path, but as he added more cross holdings and intermediate funds, it was soon clear that - with disparate reporting dates - structural problems could remain hidden until it is too late to do anythung about them. This is the result of the ability of computerised systems to generate an unlimited number of funds without regard for transparency.

He finshed up quoting Descartes - "Consider all propositions to be superstitions" (I'm not sure if that's an accurate translation).

The Panel Discussion followed, and contrasted the approaches and personalities of the two VCs, with Sakai-san being the devil's advocate.

When asked what they would look for in their next investment, they replied:

- Excelling in some area (obviously)
- The personal power (energy) of the founder
- Activeness in early stage
- The market conditions
- The technology, specifically looking ahead to Post-Android, Post-Web and Post-Cloud computing.

Both gentlemen are refugees from large VC companies, who have struck out on their own. Having just come out of a startup that was funded by large VCs, a lot of what he said resonated with me, and it was refreshing to hear the inside view.

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