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The founder and managing partner of Lifetime Ventures, a pre-seeded VC from Yokohama, talks about why he is doing business from Yokohama and the strengths and weaknesses of the Japanese startup scene.
Lifetime Ventures is a venture capital firm established in Tokyo in January 2017. We specialize in supporting startups from their early stages and pre-seed investments. We provide a hands-on approach to help entrepreneurs launch and grow their businesses smoothly. As our name implies, our investment target is on long-term business themes that can still exist 30 years from now. Our goal is to help startups develop sustainable businesses that will make our children's generation better and contribute to society.
Last year, we also launched the OIST Lifetime Ventures Fund, a partnership with the Okinawa Institute of Science and Technology (OIST), which promotes world-leading research from Okinawa, expanding our investment territory from digital to deep tech. The fund invests in and supports entrepreneurs from around the world, not just Japanese entrepreneurs.
The fund currently invests in 14 companies, more than half of which are non-Japanese, international entrepreneurs. Even if they are Japanese entrepreneurs, investment committee commonly require them to have presentations and Q&A sessions in English at meetings with an international vision for potential investment.
If you ask us to choose one, we choose people. That’s our belief. Our identity is a venture capital firm that invests in human talent. Of course, the market is important. But our focus is not on transient market trends, but on themes that will solve global and Japanese problems for the next 30 years. Nor is it necessarily an area where successful startups have been accumulated to date. We have five investment themes, and healthcare is one of them, and the same goes for Blue Economy, innovation related to the sea. We have dedicated and unconventional founders who are not afraid to do what they do and challenge themselves as a startup in this area. Many of them are passionate about their fields and are knowledgeable about the market, industry background, and technology background.
We are capable of recognizing entrepreneurial talents by consciously narrowing our investment focus. We strive to be professionals who recognize entrepreneurial talents through ongoing research and our portfolio company support process. Our basic investment philosophy is to focus on people-driven businesses and technologies.
Actually, my wife is from Yokohama, which was a direct personal reason for my relocation. After marrying her 5 years ago, we moved to Yokohama as a couple in 2020, when the pandemic started.
Until then, I had been working as a seed VC in Tokyo for 5 years and had not given much thought to working outside Tokyo. But I think my work style and values changed for Covid-19, and that kind of choice was born. I came up with the idea of moving to Yokohama because at the time I couldn't go anywhere and working online was socially appropriate.
To be honest, I wasn't really comfortable in central Tokyo and was looking for a place that fits my style. And through a strange fate, I ended up coming to Yokohama. Also, thinking back, there were cases where I had invested in entrepreneurs living in Yokohama since I was a VC in Tokyo. Some of them had spent their middle and high school years in Yokohama, and it seemed to me that Yokohama must still have a lot of potential as a startup city.
So, I contacted the YOXO BOX website. A connection was made, and I was surprised at how wonderful the startup environment in Yokohama is. There are many people, including the City Hall and Mitsubishi Estate, who are trying to nurture the startup scene in Yokohama with a very healthy awareness of the issues.
The strengths of the Japanese startup scene may not be a good image from a Japanese perspective. But objectively speaking, it is a huge market with high barriers to entry, with the third or fourth largest economy in the world, and with almost a single language and culture. It also has a large global capital market, the Tokyo Stock Exchange, which is a market where startups/VCs can even go public in a size that makes sense for them. With the exception of the U.S. and China, there are few countries like Japan where the entire process from startup launch to product launch and IPO can be completed in a single country.
There are differences from the U.S. and China, but hardly any companies are making sales in the U.K. alone in the large capital market in London. Japanese newly listed companies have the advantage of being able to do so. Also, VC funding is increasing, so the investment environment is often said to be good.
Japan’s issue is also clear: internationalization is still slow. For investors, there is less incentive for portfolio companies to internationalize in Japan than in other countries, so VCs are not adequately supporting the internationalization of their portfolio companies, and in some cases, they are even acting as stoppers. Few Japanese unicorn companies are recognized abroad as services.
On the other hand, we are familiar with apps created by U.S. startups, as well as those by Swedish startups such as Spotify and web services created by Israeli startups such as Similarweb. In fact, we use them in our daily lives and work. As I mentioned earlier, the reason why Japan has not been able to create international services and technologies despite its fortunate startup environment is, paradoxically, due to this fortunate environment.
Therefore, we are planning to actively challenge the world outside Japan with our "OIST Lifetime Ventures Fund" in cooperation with OIST, an internationally excellent university. Many of the fund's investees are non-Japanese, and they consider both the Japanese and international markets to be of equal difficulty. What’s important for that entrepreneur or business will be to work strategically where the greatest global opportunities exist.
How to promote the internationalization of Japanese startups and VCs in the future is a challenge for everyone involved in the ecosystem. Countries like Israel and Sweden have to look at markets outside their own countries because they recognize their own markets’ limitations from the beginning. Japan has not needed to look there, but the future may be different. I think it will be important to have more entities that can provide startups with capital policy and strategy options.
Their different stances notwithstanding, the international startups I think best suited for us are those who can see their company's value increase as we work with OIST. OIST is a world-class research institute, yet very friendly to startups. It is a miracle that a university, which started out as a prefab shack in Onna Village, has become number 9 in the world in Nature's ranking, which is a metaphor for the World Cup of Science, in just 10 years since its establishment.
This miracle was made possible because of the network of researchers and businesspeople around the world. And I believe that if OIST and startups collaborate on research, there will be more opportunities to meet in terms of technology and networking. This is a very good time, as OIST is looking for this opportunity and willing to open up more and more, so I think it will motivate both parties. We as VC are also capable of supporting startups that take advantage of OIST's network while taking risks.
We would love to talk with anyone who is interested in OIST's laboratories, patents, and talent network, especially startups who want to take on global challenges regardless of nationality or location. Both the university and we have the same vision and look forward to meeting you.
There is an advantage to come to Japan after examples of foreign entrepreneurs like Paidy made a huge success in Japan. Japan is one of the largest economies in the world, but internationalization had been lagging behind. Thanks to those successful cases, I believe that more people will support us in the future.
I think that working in this kind of environment is good for you in terms of leverage. Japan's world-class living environment is definitely attractive, and with the increasing number of success stories by international entrepreneurs and decreasing prejudice, the situation is gradually becoming more favorable for VCs like us to support them without bias. The sooner you come, the better off you will be.
There are not many countries like Japan, and the current administration is making efforts to support them. I also think the timing is right for people in the system to start changing.
It does not have to be Tokyo. I think Yokohama is a very attractive location with easy access to Tokyo. With the convenience of being able to go to Tokyo anytime, yet having a different culture from Tokyo, Japanese people also list Yokohama as a city they would like to live in.
If you are looking to do business globally, I don't think it makes a difference whether you are in Tokyo or Yokohama. If you are doing business targeting the world, it is better to be in a place where you can be comfortable and meet new people. For me, Yokohama is that kind of city.
Lifetime Ventures : https://en.lifetime-ventures.com/
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