People | The Big Questions

Venture capitalist James Riney on startup success and Japan’s next unicorn

Spearheading the next generation of entrepreneurs

by Jane Kitagawa

Contributing Writer

Name: James Riney
Title: Managing Partner & Head, 500 Startups Japan
URL: www.jamesriney.com
DoB: March 6, 1989
Hometown: Tokyo
Years in Japan: 17


Twenty-nine-year-old venture capitalist James Riney has some ideas on who may be the nation’s next Mercari Inc.

Mercari, the phenomenally successful Japanese startup and mobile flea market app creator, raised ¥130.5 billion (roughly $1.2 billion) through its initial public offering on the Tokyo Stock Exchange’s Mothers market for startups earlier this year.

However, Riney — managing partner and head of 500 Startups Japan, and on the 2016 Forbes Asia 30 Under 30 list for Finance & Venture Capital — is mum on who may be Japan’s next startup unicorn (private firms valued more than $1 billion).

“There are definitely some unicorns in the pipeline. A lot of companies are rushing to IPO before the Olympics because there’s this strange, irrational feeling that after the Olympics, the music’s going to stop playing,” Riney said with a laugh.

Riney sees Mercari’s success resulting from numerous factors. “One is timing,” Riney said, speaking with The Japan Times at his Otemachi office. “There was an opening to build a marketplace that was focused specifically on mobile and whenever you have these platform shifts, you have opportunities to do something better than the incumbents in the previous platform.”

Riney also attributed the firm’s success to Mercari CEO Shintaro Yamada’s speed and execution. “Yamada-san is a serial entrepreneur and could raise money very quickly … he was also aggressive about spending that money in ways to get market and mind share (that earlier players like Fril did not).

“He’s also hired top talent, so Mercari continues to have this gravitational pull for the best talent in the Japanese tech ecosystem,” Riney said.

A third culture kid from the United States who first lived in Japan until he was 12, Riney himself has a unique perspective on culture, talent and what is needed to make it as a startup in both Japan and overseas. His father was a professor at International Christian University — “I got my curiosity from him” — but it is his mother — “She ran different businesses” — that he credits his entrepreneurial ambition and drive.

To Riney, growing up in monocultural Japan was both foreign and yet familiar. “For me it’s complicated … you’re always an outsider, yet this is your home. I’m American by passport, but I also feel like an outsider there.” Riney expanded by sharing that his exposure to two cultures has unlocked an unconventional perspective or “high-level view” where he can see the positives and negatives of each space.

“I think it kind of gives you maybe a little bit more objectivity. … And it gives you sort of an advantage in terms of being a bridge to both societies and cultures,” he said.

Riney’s pathway back to Tokyo as an adult was as a banker via JPMorgan Chase & Co. However, after feeling dissatisfied, he started a company with a co-worker, “initially as a hobby,” and had his first taste of venture capitalism meeting Japan’s nascent startup culture.

He later left the company to work with DeNA Co.’s corporate venture arm covering Silicon Valley and Southeast Asia. Viewing his time with DeNA as a chance to assess the ecosystem from the venture capital side, network and build a team, his path crossed with high-risk venture firm 500 Startups from the U.S. Asked to launch the Japan-specific fund, Riney felt an affinity with “… ideas how the local fund (specializing in seed-stage startups) could contribute to the Japanese ecosystem and help it grow so that it’s actually recognized as respectable.

“For someone like me that has grown up in, and really benefited from Japan, I felt like it was something that probably very few people could do; I was in that small group of people that can actually pull it off,” he said.

On the lookout for companies with ideas that could spur societal trends, Riney bemoaned that while Japan is somewhat risk-averse — “that’s cultural, we all know and agree about those barriers” — he instead sees challenges as universal, with differences boiling down to details.

“Let’s look at hiring. People complain about hiring in Silicon Valley because of the prices and the competitiveness. Job retention is hard. Whereas in Japan, the reason hiring is challenging is because not everyone is on LinkedIn. You can’t just click on ‘Google’ on LinkedIn and find out all the people that work at Google and then send them an email,” he said.

Working with 500 Startups, Riney is instead enthused about the state of startup culture and innovation in Japan. “We’ve seen the caliber of entrepreneurs in Japan increase; that’s really encouraging. Dynamics are changing. One is the type — the caliber of founders going into the market is getting much, much better, and then also having more capital to actually back those founders,” he said.

Professing, “I love all my children,” Riney cited the CEO of his portfolio company Infostellar, a software-driven space communications infrastructure firm, as a prime example of Japan’s new breed of entrepreneurs.

“She wasn’t necessarily thinking that she wanted to be an entrepreneur, but she wanted to do this one thing. Entrepreneurship is the path to execute that. I think that’s important.

“Historically, it’s been mostly people in their 20s giving it a shot; if it doesn’t work out, they go to a big company like Toyota and get a real job,” Riney said. “Now we’re seeing people in their 30s starting companies. That happened before, but not in the traditional startup sense. This is important because if you’re looking at the remaining pockets of opportunity, like insurance, health care, logistics, etc., you can’t really do that as a college startup, right? The people that we’ve invested in primarily have had really strong careers in their particular industries who’ve realized that the old, traditional ways of doing things are not the future.”


A jam-packed career of investment success

America-born but Japan bred, James Riney is the co-founder and head of 500 Startups Japan. A seed investor in over 30 companies and managing approximately $50 million across two funds, the firm’s significant investments include Kakehashi, Infostellar, Zehitomo, Coins.ph, Within and Penrose Studios. Riney is also a board director at SmartHR, where he was an early investor. Prior to 500 Startups, Riney covered early-stage investments for DeNA’s venture arm, focusing on Silicon Valley and Asia, driving DeNA’s first investments in Thailand, Indonesia, the Philippines and India. Before investing, he was the founding CEO of ResuPress (now Coincheck cryptocurrency exchange) and the creator of Storys.jp the “Medium.com of Japan.” The site published the hit story “Biri Gyaru” that was later made into the movie “Flying Colors.” Riney also worked at J.P. Morgan in New York and Tokyo.

The Big Questions is a Monday interview series showcasing prominent figures who have a strong connection to Japan.