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An Investor's Lesson to Entrepreneurs

Entrepreneurs have the power to transform societies for the better. But how do you attract investors to start or grow a business? Or to sell one? Check out this seminar for the answers to these and more, straight from a master venture capitalist!

Alan Patricof and I first met in April 1998. At that time, his company, Patricof & Co Ventures Inc, was looking for development opportunities in Asia. In particular, he was seeking a partner in Japan. GLOBIS was on his list of candidates, so we flew over to New York to make a presentation.

We’ve been partners ever since.

A lot has happened during these last five years. Being friends with Alan Patricof is an honor and an adventure. We’ve had many heated discussions. I’ve experienced indignation and complained to other partners. Yet, to be absolutely frank, our trust in each other has not flagged even once. Alan once kindly said, “Over these years, I’ve never doubted you, Yoshi.” He’s a partner in the truest sense of the word. We can say anything to each other at any time.

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An Evening in Dialogue with Alan Patricof

Whenever Alan visits Japan, I try to create opportunities for GLOBIS University students to hear him speak. Many of them wonder how to get into venture capitalism themselves, and if there’s one person they can learn from, it’s Alan Patricof.

An Investor's Lesson to Entrepreneurs

Entrepreneurs have the power to transform societies for the better. But how do you attract investors to start or grow a business? Or to sell one? Check out this seminar for the answers to these and more, straight from a master venture capitalist!

For this most recent occasion, we decided to divide his presentation into two parts. First, he gave a speech, and then he and I joined him for a dialogue. GLOBIS classrooms were already booked for classes, so we rented a classroom at the Marunouchi Building by Tokyo Station. In addition to the usual GLOBIS students and interested staff, we made it open to the public. Many people at the front line of venture capital in Japan turned up.

After some opening remarks, Alan stepped up to speak. As I listened, I began to mull over the questions I would ask. I had referred to this second portion as a dialogue, but this was a great opportunity for me to learn, as well. I wanted to take in as much as possible.

Alan started up a venture capital fund when he was thirty-four. Now, at sixty-eight, he has spent exactly half his life in venture capital. What a fantastic chance to ask a legendary venture capitalist frank questions! Though I’ve known him for years and spoken to him many times, there’s always more to learn.

I opened with some basic, but heavy questions:

  • What is the difference between a good venture capitalist and a bad one?
  • Tell us about a time when you were wrong. What caused you to fail, and how did you recover?
  • What creates a successful venture capital investment?

I asked a number of other questions, but what most fascinates me is the topic of instinct.

Top venture capitalist Alan Patricof speaks with Yoshito Hori at GLOBIS University
Mr. Alan Patricof (left) speaking with Yoshito Hori (right) at a special GLOBIS seminar | ©Hiroyasu Mizuno

The Role of Instinct in Venture Capital

Alan has always said that in terms of the elements behind a successful venture capitalist, after you have polished all your skills to the ultimate degree, the vital integration factor is instinct. The harsh reality is that instinct is a vital ingredient to the success or failure of venture capitalists everywhere. No matter how hard you work, you cannot become a good venture capitalist without sound instincts.

So I asked this question to Alan: If instinct is the root cause of success as a venture capitalist, is there anything we can do to acquire good instincts?”

True to form, Alan had a lot to say on this. “First,” he said, “you have to be curious. Adopt the attitude that you can learn from everything. You have to learn from failure and success and keep on thinking during times of trial and error. You need to experience a variety of situations. But above all, find a good mentor and learn as an apprentice.”

As I listened to what he was saying, I thought about my own career as a venture capitalist. Like, Alan, I started a venture capital fund at the age of thirty-four, back in 1996. Alan’s first fun had been small, as had ours. We operated our fund with the absolute determination not to lose a single yen that investors had placed in our care. And we did everything we could to honor that . . . but I was never sure whether our approach was on target.

Thankfully, that’s right around the time I met Alan.

The presence of Alan Patricof in my life as a VC partner allowed GLOBIS to focus intensely on absorbing the Western investment method. Sometimes, this meant spending up to half of the year overseas. We spent time learning all the methods Alan had to share, while at the same time seeking to improve them. Now we’re developing methods of our own tailored to Japan. Thanks to the foundation Alan helped us build, both the GLOBIS No. 1 and No. 2 funds are doing well, despite difficult economic conditions.

Alan is at an age when most men are thinking about retirement. He remains energetic as ever, but on the off-chance he does choose to retire, we intend to learn as much as we can from him. Every time he visits Japan for one of these talks, he disseminates his invaluable knowledge to budding VCs. As for me, I’m learning about more than venture capitalism. Alan has taught me about life, philosophy, worldview, and his Jewish business methodology. There seems to be no end to what he can teach me or the world, just as there is no end to the gratitude we have for him.

Even if the business relationship between Apax, his current company, and GLOBIS should someday come to an end, I will forever count Alan as one of the most valuable people in my life.

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