Venture Capital Gathering in Asia (Part 2)

The Asian Venture Forum (AVF) kicked things off with a panel discussion that included Mr. David Rubenstein, the founder of the Carlyle Group who appears in the film “Fahrenheit 9/11”; Mr. William Price, the founder of Texas Pacific Group (TPG); and Mr. Edward Kane of finance fame and the founder of HarbourVest Partners. Mr. Dan Schwartz, the founder of AVCJ, served as the moderator.

Each of the panelists was a “buyout king”—this was actually the term used in the title of the panel discussion—with operating capital of over a trillion yen. Following this, dynamic representatives of Asian venture capital (VC) and private equity (PE) joined in.

The first day’s discussions had primarily focused on China, so my turn had been assigned for day two. By then, the audience had begun to shrink. Although the forum focused on Asia as a whole, I was the only speaker from Japanーlargely due, unfortunately, to the strong interest in trendy China investment.

I was determined to stand up for Japan. My turn came, and I wasted no time in voicing my opinions.

“With so little discussion about Japan, there is a strong possibility of losing sight of the bigger picture in Asia, given that Japan represents more than 50% of the GDP in Asia. Based on what I heard yesterday, it would seem the word ‘Asia’ refers to China, Hong Kong, and Taiwan. There are more dimensions to Asia: Japan, Korea, India, and South East Asia, with Australia also in the region. I don’t know of many funds in all of Asia who are headquartered in Hong Kong that have succeeded in Japan.”

I then proceeded to share one of my well-worn analogies:

“Viewing the whole of Asia from Hong Kong is almost like viewing the whole American continent from Panama, its geographical center. Just as you can’t get a good view of the US from Panama, you can’t get a proper view of Japan from Hong Kong. To successfully invest in Japan, you have to allocate sufficient funds to Japan and have all the operations, including decision-making, conducted within Japan. There’s just no other way to succeed.”

The CEO of a fund that looks at Asia from Hong Kong happened to be sitting next to me. He contested my statement and sparked off a debate. It felt great. With the panel discussion nearing its conclusion, I jumped in to give a final wrap-up.

“The great thing about Asia is the diversity and differences you find in each country and region. That’s why each fund has its own form and content and can coexist and compete with others. I suspect that the relative success of a pan-Asia fund or an individual country-specific fund differs according to industry and stage of development. They will continue to compete according to the principle of survival of the fittest, with history ultimately judging which has been successful.”

I assume that more than a few participants were slightly miffed at the fact that the debates thus far had predominantly focused on China. After my panel, many people expressed their interest in my comments, including a number of investors and several magazines.

GDH, a digital animation company in which we invested, had gone public just one day before the forum. The timing was just right. Whenever I talked about the active state of venture capital in Japan, I was able to cite GDH as an example.

Next, I had tea with some investors whom I hadn’t seen for ages, and then headed off to return to Japan. The trip home from Hong Kong is nice, since there’s no jet lag from business trips within AsiaーJapan is about a five-hour flight from Hong Kong.

I didn’t have any other overseas trips scheduled for the rest of the yearーthankfully, after three weeks in the US and Europe and just over a week in Asia. With the fruits of these endeavors, I want to make GLOBIS live up to its name as a global business. At long last, after this extensive overseas jaunt, I felt I could put my feet up.