The final frontier isn’t space. For venture capitalist investors, it may be Japan. Because Japan’s financial tech ecosystem is still in its infancy compared to the United States’, some VCs consider investments risky. However, with Japan’s advancements of AI (artificial intelligence) technology, the robot may be courting venture investors.
Koichi Hori, head of Boston Consulting Group Inc. thinks that Japan’s strength in engineering is changing its chances of getting investments.
“Digital media will only be in the mainstream for about three years, or five years at most,” Hori, said. “From that time on, robots and robotics will be the eye-catchy industries. Japan has a good chance, particularly in the area of hardware for robots.”
Japanese Prime Minister Shinzo Abe hopes to woo investments, creating a sort of ‘Silicon Valley annex’ in Japan. One of the defining differences Abe noticed was the reluctance of Japanese patrons to bet on up-and-coming startups, which affects the prospects of any real tech innovation.
Hori adds, “In the U.S., people who start their ventures are to a certain extent respected by society, and in contrast in Japan entrepreneurs have been considered as those who couldn’t become bureaucrats or employees of big corporations.”
Abe’s recent trip to California provided him more motivation to replicate the tech culture of Silicon Valley, with the the robotics industry to start. To do so, the prime minister will delegate plans to insert $19 million into robotics by 2020.
Things are starting to shift in Japan, though slowly. In order for the country to compete with Silicon Valley, it needs to ramp up, and quickly. With Google Inc.’s investment in Japan-based Schaft Inc. two years ago, American VCs are taking calculated risks on entrepreneurs that Japanese firms are turning down. According to data from Japan Venture Enterprise Center and the U.S. National Venture Capital Association, Japanese VCs investments into Japanese startups were overshadowed by U.S. investments into startups by a large margin.
In order for Prime Minister Abe to create a culture similar to the one he witnessed in California, the attitudes towards tech entrepreneurs will have to undergo some modifications. Japan’s robotic industry may help pave the way.
There has long been talk and rumors that the tech bubble will burst but, so far, no bubble has burst. However, that is not to say that there haven’t been missteps in Silicon Valley leading VCs (Google Ventures being one) that no amount of investment money can fix.
Case in point: the Secret App. The startup announced it would be closing its doors last month to some VC investors’ chagrin. The app that allowed users to post anonymous, often scathing posts about people, places or things without their identity being revealed. The app was a big hit last year but has since fallen flat.
Founders David Byttow and Chrys Bader garnered the interest of Google Ventures and Kleiner Perkins Caulfield & Byers (two of the largest venture capital firms) early on after Secret generated a substantial following. The problem could’ve arisen when Secret attempted to raise a second round of investment of $25 million. This time, Google Ventures did not bite on the advice of Google Ventures managing partner Bill Maris:
“We told them [Secret] didn’t need the money. And raising that much money that soon, it was going to be impossible to meet the expectations in the future.”
But the startup did not heed the warning. Through Index Ventures and Redpoint Ventures, along with other angel investors, the company raised the $25 million; the two founders wanted $3 million each.
With the announcement that the startup would be closing their doors, they are vowing to return the remainder of the investment money, though no mention of the $3 million they took for themselves.
Mr. Maris compared them to bank robbers and should return all money, though he later retracted his harsh comments about the founders on a Medium post. Regardless of how the VCs and angel investors who invested in Secret think behind closed doors, it’s no secret that the startup was the epitome of a bad investment.
Happy Earth Day everyone! As consumers care more and more about the societal impact of the companies they engage with, it is becoming increasingly more important for Venture Capitalists to invest in companies that prioritize the environment.
Inc.com has provided the top 10 biggest venture funding events for green companies over the last year. Here are the top 7: