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Startups untapped resource for Japan Inc., says venture capitalist

by

Staff Writer

Venture capitalist Anis Uzzaman has a special affinity for Japan, where he spent five years studying at a university on government scholarships. It’s for that reason he is frustrated to see many Japanese firms struggling in global competition.

“When I became a VC, I really wanted to help Japan and Japanese corporations,” Uzzaman, CEO of Silicon Valley-based Fenox Venture Capital, said in a recent interview with The Japan Times in Tokyo.

His firm now invests in a number of Japanese ventures, including DLE Inc., a flash anime maker best known for its animation “Himitsu Kessha Takanotsume” (“Eagle Talon”), and Terra Motors Corp., which is Japan’s biggest electric motorcycle maker.

Fenox also plans to invest about ¥20 billion in Japanese startups over the next few years.

He was in Tokyo earlier this month to host an event to connect Japan’s big firms and ventures.

Uzzaman studied in Japan from 1995 to 2000 at Osaka University of Foreign Studies and the Tokyo Institute of Technology. He then worked at IBM in the U.S.

He said his background of knowing Japanese culture and a large U.S. firm and his experience as a venture capitalist meant he could offer useful suggestions to Japanese firms.

Last month, he published a book in Japan called “Sekai no Toshika wa Nippon Kigyo no Nani wo Miteirunoka” (“A Global Investor’s Viewpoint on Japanese Companies”), in which he offers his insight into what Japanese firms should do to become more globally competitive.

As he points out in the book, Japanese firms continue to boast advanced technologies in such fields as energy, robotics and seismology, which they can market overseas. As well, Japanese employees are generally skillful and loyal to their firms — a big advantage for employers.

But to facilitate innovation, big corporations and ventures in Japan need to work together more closely while adopting more outside perspectives, such as partnering with overseas firms and creating more international teams, Uzzaman argued.

“In Japan, there is no good ecosystem for large corporations and startups,” he said.

“They just do not have . . . good relationships with startups and venture companies because most large corporations probably do not trust startups.”

Emphasizing that many innovative ideas come from ventures, Uzzaman said large Japanese firms should look into acquiring more startups.

Big U.S. firms, such as Google, Facebook and IBM, constantly purchase startups to boost innovation, he added.

Yet this is not something Uzzaman sees Japanese firms pursuing, as they have traditionally tried to create everything in-house.

And because big firms do not buy ventures, it is discouraging people from launching startups, he said.

“Big corporations don’t like startups, and startups are not getting the opportunity to make more money.”

This is having a bad effect on Japanese companies, he added.

Uzzaman’s Fenox has invested in more than 50 startups globally.

Its focus is firms doing business in relation to the latest technologies, such as the mobile Internet, social media, cloud and big data.

Uzzaman stressed the importance of considering outside ideas, stressing Japanese firms should more actively collaborate with foreign companies, consulting agencies and venture capital funds.

“I see 8,000 companies a year, he said.

“So Japanese corporations can borrow my eyes and see 8,000 new things every year and they can improve their ideas, visions and process.”

Uzzaman said even multinational companies such as Microsoft and Disney partner with Techstars, which is a U.S.-based startup accelerator, to gather innovative ideas for their businesses around the world.

He said teaming up with outside sources, Japanese firms can also be more up-to-date with global technology trends and not miss business opportunities.

Indeed, Japanese handset makers were slow to shift their focus to smartphones, resulting in them falling behind global competition.

Other ideas, Uzzaman said, were internal structural changes, such as having a merit-based personnel system instead of the traditional seniority-based system.

With innovative ideas often coming from young people, seniority made it harder for companies to turn those ideas into businesses, he added.

Japanese firms needed to hire more people from different countries to have a wider perspective, Uzzaman said.

  • Pedro

    Uzzaman has clearly never worked for a large Japanese company.

  • Ken Gai

    hmm.. “more globally competitive”.. (like Toyota for example?).. look forward to see Fenox dedicate a fund here and roll-up their sleeves.. talk is cheap.. $_$