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Helping passionateEntrepreneursbuild
Successful global businesses
CreatingCreatingGlobal VenturesGlobal Ventures
The next challenge for
Japans evolving venture habitat
Allen Miner
Chairman & CEO
SunBridge Corp.
Helping passionate entrepreneursbuild successful global businesses
2
AgendaAgenda
Introducing SunBridge
Japans Evolving Venture Habitat
Concentration of Creativity
Entrepreneurism
Venture Ecosystem Improvements
Venture Finance
Competing Globally
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Helping passionateEntrepreneursbuild
Successful global businesses
IntroducingIntroducingSunBridgeSunBridge
Helping passionate entrepreneursbuild successful global businesses
SunBridgeSunBridge Founding Goals (2000)Founding Goals (2000)
Create a Dynamic Venture Habitat thatcombines the best features of Silicon Valleyand Japan
to influence and improve Japans VentureEcosystem, helping to create
World-class Global Ventures, and
World-class (top-quartile) investment returns
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Helping passionate entrepreneursbuild successful global businesses
SunBridgeSunBridge Venture HabitatVenture Habitat
AffiliatedAffiliated
VentureVenture
Sales &MarketingSolutions
TechnologyServices
IT VendorsIT Vendors
IntegratorsIntegrators
ISPsISPs
End UsersEnd Users
ConsultantsConsultants
PR FirmsPR Firms
DesignersDesigners
AgenciesAgencies
VCsVCsBanksBanks
AccountantsAccountants
LawyersLawyers
IncubatorsIncubators RecruitersRecruiters
UniversitiesUniversities
NPOsNPOs
Etc.Etc.
AffiliatedAffiliated
VentureVenture
UnrelatedUnrelated
VentureVenture
Established
Enterprise
Alliance
Information exchangeand collaboration
HumanResourceServices
AllianceAlliance
Established
EnterpriseVentureCapital
andStrategicSupport
Information exchangeand collaboration
150 Professionals$100M invested
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Helping passionateEntrepreneursbuild
Successful global businesses
JapansJapansVenture HabitatVenture Habitat
Concentrated CreativityConcentrated Creativity
With strong creativity and power toinnovate, Japanese inventions havechanged the world, the way we work andthe way we live while creating newindustry sectors and employment.
Helping passionate entrepreneursbuild successful global businesses
Tokyo and Osaka: leaders of the Spiky WorldTokyo and Osaka: leaders of the Spiky World
#1 and #9: Worlds largestmetropolitan areas
Fortune 500 Headquarters#1 Tokyo: 51#8 Osaka: 7
Global patent leaders
Leading per capita GDP
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Japan is anInnovation SuperpowerJapan is anInnovation Superpower
2004 patentsJapan: 342,726vs. US: 167,183
Leads the world in Patents Issued
Helping passionate entrepreneursbuild successful global businesses
Patents in VCPatents in VC--favored Technologiesfavored Technologies
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Japan leads the world in R&D investmentJapan leads the world in R&D investment
(Source:Eurostat, OECD)
R&D Intensity (%)
R&D Intensity
AAGR (%)R&D Intensity (R&D expenditure as a % of GDP)
in 2004 and average annual growth rate (AAGR)
of R&D Intensity (99-04)
Japan R&DInvestment:3.3% andaccelerating
R&D share of GDP significantly leads US and Europe& growing faster
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Lifestyle IT leadersLifestyle IT leaders
Japanese introduced the world to most of its Lifestyle IT products
Lifestyle IT (non-computer computers)Game consoles, digital cameras, car
navigation, entertainment robots, mobileinternet, IPTV, Mobile DTV, etc.
Key enabling technologiesLCD, Flash Memory, CCDs, magnetic and
optical storage density and miniaturization,micromotors, IPv6 technologies, battery &fuel cell advances, mobile browsers, laser-scale hard disk servos, etc.
The result is an ever-richer technologyecosystem underpinning the success ofnumerous Japanese startupsAccess, Index, Faith, Cybird, Shicoh, g-
mode, Advanced Media, byD:sign, etc.These are the kinds of products(not enterprise-productivity tools)that are driving global IT innovationand growth today
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Helping passionateEntrepreneursbuild
Successful global businesses
JapaneseJapaneseEntrepreneursEntrepreneurs
Contrary to popular myths, in Japan, aseverywhere else, innovation is driven byindividual heroes not by industry associationsor government. Increasingly, these heroes areinnovating in entrepreneurial settings rather thancorporate or government laboratories.
Helping passionate entrepreneursbuild successful global businesses
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( : Global Entrepreneurship Monitor, 2002: www.gemconsortium.org)(TEA=that percent of the labor force that is either actively involved in starting a newventure or the owner/manager of a business that is less than 42 months old)
World laggard in new business formationWorld laggard in new business formation
Consistently ranks near bottom of annual GEM Entrepreneurial Activity study
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Highly entrepreneurial at timesHighly entrepreneurial at times
In times of great change many new companies are formed
0
50
100
150
200
250
300
1880
1890
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
Founding year of apanese Public Companies
(compiled in 1998)
1/3 (599) were formed
in the 1948-53 GHQ
era of dramatic social
change and economic
recovery
Helping passionate entrepreneursbuild successful global businesses
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WorldWorld--class Japanese Entrepeneursclass Japanese Entrepeneurs
Winners of Nikkeis annual Entrepreneur Awards
PlusOffice Furniture andSupplies ManufacturerFounded: 1948.2006 Employees: 4,2642006 Turnover: private2007 Mkt. Cap: private
Yoshihisa Imaizumi 2001 Winner
Park 24Automated Parking LotMgt. 20,000+ stallsFounded: 1971 . Age 332006 Employees: 6382006 Turnover: 6532007 Mkt. Cap: 2,323
Kiyoshi Nishikawa 2000 Winner
H.I.S. GroupDiscount travel & tourism70 international branchesFounded: 1980. Age 292006 Employees: 4,3282006 Turnover: 3,2892007 Mkt. Cap: 1,267
Hideo Sawada - 1999 Winner
Culture Convenience ClubTsutayaMedia RentalChain, Online mediaFounded: 1982.2006 Employees: 3,0782006 Turnover: 2,2832007 Mkt. Cap: 1,219
Muneaki Masuda - 2003 Winner
NidecWorld leader in brushlessmicro-sized DC motorsFounded: 1973. Age 292007 Employees: 80,0262007 Turnover: 6,2962007 Mkt. Cap: 10,264
Shigenobu Nagamori -20 06 Winner
TempstaffJapans second largesttemporary staff agencyFounded: 1973.2006 Employees: 2,0162006 Turnover: 2,1292007 Mkt. Cap: 1,028
Yoshiko Shinohara - 2007 Winner
Fast RetailingInexpensive casual-wearmanufacturing and retailFounded: 19632006 Employees: 3,9902006 Turnover: 4,4882007 Mkt. Cap: 9,048
Tadashi Yanai - 2004 Winner
SoftBankSoftware Distribtution toInternet ZaibatsuFounded: 1980. Age 232006 Employees: 17,0752006 Turnover: 11,0862007 Mkt. Cap: 27,188
Masayoshi Son 2005 Winner
PiaTicket retailing and eventinformation publishingFounded: 1972. Age 222006 Employees: 3082006 Turnover: 9612007 Mkt. Cap: 182
Hiroshi Yanai - 2002 Winner
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Helping passionateEntrepreneursbuild
Successful global businesses
Japanese VentureJapanese VentureEcosystemEcosystem
ImprovementsImprovements
How to create more world-class entrepreneurs?
From the mid-1990s MITI officials began to haveserious concerns about the lack of high-potentialtechnology startup activity in Japan andlaunched a 10-year initiative to study SiliconValley and replicate its features as much as
possible.
Helping passionate entrepreneursbuild successful global businesses
Dramatic changes in a short timeDramatic changes in a short time
From the perspective of entrepreneurs starting companies and the Venture firms backingthem, Japans regulatory environment, capital markets, labor mobility and social attitudeshave changed so dramatically in the past6or 7 years as to be nearly unrecognizable tosomeone whos knowledge of Japan is rooted in the common sense of the 1980s bubbleera or1990s lost decade.
2000-04 Dramatic structural change Commercial code and IPO rule changes Shift in domestic VC focus from very
late stage to very early stage University TLOs, spinouts encouraged Restructurings, Layoffs
-end of lifetimeemployment
2004-6 Recovery Economy, Stock Mkt. Emergence of
Serial Entrepreneurs 2008-09Collapse of IPO markets- J-Sox, Global FinancialCrisis
Over20,0001-yen companiesregistered in first two yearsafter regulation changesallowed them.
Quicker exitson new markets.Better IRRsfor VCs & LPs
New access toWorld-class R&D
Dramaticregulatorychanges
Top 5
Waseda 65Osaka 46Keio 43
Kyoto 37Tokyo 33
Entre-preneurialRenaissance?
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Helping passionate entrepreneursbuild successful global businesses
Where HighWhere High--Growth Companies Start TodayGrowth Companies Start Today
Because of the world-famous examples of such companies as Oracle, Cisco,Google, and Salesforce.com, it is widely believed that Silicon Valley createsmore high-growth companies than any other region in the world.
Number of publiccompanies formed after1997which had salesgreater than $50M in 2007and three consecutive
years of growth above50% from 2005-2007.
(source: SunBridge analysis of Bloombergdata)
ByCountry:
By Metro:
China 27US 22Japan 12India 10
Tokyo 10Silicon Valley 6Shanghai 4
Helping passionateEntrepreneursbuild
Successful global businesses
VentureVenture FinanceFinancein Japanin Japan
A shortage of private capital and lowbarrier to public offering led to
exceptional VC returns while limiting thelong-term growth potential of Japanese
startups.
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Comparing VC Investments GloballyComparing VC Investments Globally
2.
23.
5
3.
7
4.
1 7.
9 11.
0
14.
6 20
.9
53.
6
104.
8
40.
8
21.
6
18.
9
21
.0
21.
7
7.
28.
8 12.
6 18.
8
32.
7
45.
5
31.
6
27.
2
2.
6
1.
8
0.
8
1.
5
1.
6
2.
4
2.
0
1.
2
2.
3
2.
8
1.
1
1.
7
1.
5
2.
0
1991
1992
1993
1994
1995
1996
9997
1998
1999
2000
2001
2002
2003
2004
2005
US ($1B)
EU (1B)
P (Y100B)
VCas%of2004 GDP__US 0.17%EU 0.10%JP 0.04%
Japans VC industry may be significantly underfunded
Helping passionate entrepreneursbuild successful global businesses
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( : Global Entrepreneurship Monitor, 2001: www.gemconsortium.org)
Japanese VC industry spreads riskJapanese VC industry spreads risk
Many small investments across large portfolios
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Japanese VC Investments byJapanese VC Investments by Company AgeCompany Age
)LJXUHVDUHWRWDODmount invested LQ?100Munits) 1996-2001are percentages
2 3 19 13 10 13
27 32
5954 659 467 596 261
1521 14
1614 194 141 199 125
20
2117
11
7 111 69 101 3639
29 35
1123 285 185 244 113
21 1
25
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1996 1997 1998 2000 2001 2002 2003 2004 2005
0 15Age (in yea
s) of company at time of in
estment
Shift from pre-IPO to earlier stage investing.
Over50% of investments now in companies under5years old
Source: VECAnnual Surveys
Helping passionate entrepreneursbuild successful global businesses
IPO leadIPO lead--time truncated after 2000time truncated after 2000
Quicker exitson new markets.Better IRRsfor VCs & LPs
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Helping passionate entrepreneursbuild successful global businesses
How are we doing? (201
0)How are we doing? (201
0)
A Dynamic Venture Habitat that borrows bestpractices from both Silicon Valley and Japan
to influence and improve Japans VentureEcosystem, helping to create
World-class Global Ventures, andWorld-class (top-quartile) investment returns
Helping passionateEntrepreneursbuild
Successful global businesses
Competing GloballyCompeting Globally
Japan continues to create many world-class entrepreneurs and multi-hundred-million dollar high-growth companies.
Why dont they expand internationallylike they used to?
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Helping passionate entrepreneursbuild successful global businesses
The Middle is MissingThe Middle is Missing
2004 get-acquainted meeting with METIs newestshinkisangyoutantokachou
Dont japanese startups have a hard time raising seed capital?
Japan does not lack seed capital or exit opportunities. But private $10M+C round (and D round?) to enable aggressive sales and productexpansion is missing
Instead the entire Venture Ecosystem pushes Japanese entrepreneurs togo public as quickly as possible
They raise cash that they cant use for aggressive organic growth and oftenunderperform expectations after theirIPO.
Japan needs a chottomatte IPO fund or two.
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Helping passionate entrepreneursbuild successful global businesses
The domestic opportunity is big enough?The domestic opportunity is big enough?
Alexa WW
CompanySite RankRevenueInternational
Rakuten #73 $2.98B fr2010 w/ Baidu
CyberAgent #77 $938M fr2008. neglig.
Index Holdings mob. $724M 13%
DeNA mob. $376M fr2008. neglig.
Mixi #96 $120M 3%
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Globalization of Some Leading Japanese InternetGlobalization of Some Leading Japanese Internet CoCoss..
MyMy most disappointing globalization warmost disappointing globalization war--storystory
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Helping passionate entrepreneursbuild successful global businesses
China/Shanghai vs. US/Silicon ValleyChina/Shanghai vs. US/Silicon Valley
Emerging Economicpower = rapidly growingmarket opportunity
Biggest internet andmobile markets
Current WW Focus ofattention & capital
Cultural cousins
Not a stepping stone forglobal expansion
Established Economicpower = big establishedmarket opportunity
Big internet and biggestsmartphone markets
Gathering place of globalTech talent & capital
Cultural opposites?
Highly connectedworldwide (incl. China)
Repeatedly creates thenext big thing
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Helping passionate entrepreneursbuild successful global businesses
What Can I do about it?What Can I do about it?
Since 2009: Shifted my emphasis from
Bringing Silicon Valley to Japan to
Bringing Japanese to Silicon Valley
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Helping passionate entrepreneursbuild successful global businesses
Launched July 2010 at Plug & PlayLaunched July 2010 at Plug & Play
The most active, dynamic hubfor startup activity and relatedindustry interaction in SiliconValley.
Continuous flow of local VCsand international visitors thatprovides high-valuenetworking opportunities
Launch with 5 high-potential
Japanese startups and anetwork of supporters
Attract US VC expansioncapital and world-caliberexecutive talent
Helping passionate entrepreneursbuild successful global businesses
Globalizing Japanese EntrepreneurshipGlobalizing Japanese Entrepreneurship
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2 of3finalists at Plug-and-PlayInternational Business Plancontest (PACT) 2010
eio University collaborationwith SunBridge Japan pavilion
Fukuoka Univ.affiliated biotechstartup chose to create businessin Silicon Valley instead ofJapan
Profitable Japanese cloudcomputing company postponesIPO to invest in globalization.
100+ visitors to our Lucky sofa
More excitementto Come!