A brief historical digression
A Japanese samurai was once a loyal servant and protector, an imperial guard, a warrior with a strict code of honor. They lived according to the “Hagakure”, which contains about 1,300 lessons and dealt with both daily life and the relationship between lord and follower. The traditional warrior nobility of the samurai experienced its heyday in the 11th and 12th centuries A.D. The samurai, originally in the service of the emperor and nobility, became the ruling class of society with the rise of the shogunate and the establishment of a military aristocracy. The demise of the samurai 150 years ago also represents the rise of modern Japan. However, the myth and fascination with these warriors still exists today far beyond the borders of their homeland.
Between past and future
Japan is a country of (supposed) contrasts, performing a daily balancing act between tradition and modernity. While moving between centuries-old shrines and the most modern high-rise architecture, between traditional teahouses and eccentric maid cafés, and yet, despite the apparent contradictions, you can easily find a way between the centuries.
Let’s draw mental parallels and dare this balancing act for our business. Today, our “servants” are our digital or high-tech companions. From artificial intelligence, robots and drones to countless apps, that now make every facet of our daily lives easier. In Japan, you will find a large number of world leading corporations. They almost naturally have large powerful corporate venture vehicles. The few investment banks, some of which manage over 100 corporate venture funds, could be described as shoguns (rulers) in the ecosystem. Perfection is a social and cultural requirement, and this is achieved by specialists. Accordingly, these funds are often managed externally by specialists.
Behind the scenes
Japan’s technology giants are global players, but in Japan itself they like to keep to themselves. To this day, there are hardly any non-Japanese top managers, and the global subsidiaries’ leadership always contain Japanese managers. English as a foreign language is a matter of course for the educated Japanese, but they prefer to do business in their mother tongue. It is therefore advisable for Western business people to be able to speak at least a few bars.
If we stick to our mental balancing act, these technology giants are the modern samurai of their industries. The innovative leadership of these “Samurai of Tech” goes far beyond Asia. They invest, develop spin-offs together with research institutes and have a strong presence in the international “super hubs” of the startup scene – for example in Israel, Silicon Valley or India. For the corporations, close ties with global startup hubs seem not only practicable, but actually extremely important in terms of their claim to long-term honourable cooperation with innovators. A good reputation ensures access to the best talent and thus the samurai’s superiority in the innovation race.
How to deal with crisis
Right now Europe is just learning to deal with the next and arguably most severe crisis in recent history. Japan has meanwhile perfected living in the crisis. Interest rates are still negative, inflation is not a major issue, the domestic market is strong and the country’s international position is excellent. Japanese are strategists, so it’s not surprising that the appetite for risk to increase activity in Europe – especially venture capital and Web3 – is growing strongly.
In Europe, however, Japanese corporations and corporate venture vehicles are currently hardly present. The European market is considered attractive, but unfortunately also very complex. Various hubs, regional cultural differences, many languages and different laws (depending on the region) in Europe are understandably deterrent. Those who want to be successful therefore ally themselves with strong partners – although this requires some patience. Strong partnerships are based on trust and building this trust does not work overnight.
Building Bridges between Japan and Austria
Venionaire Capital has very good experiences in working with Japanese co-investors and business partners. Attending the City Tech Tokyo Conference and speaking at an official Deloitte side event has greatly strengthened our bi-directional relationship. We are looking forward to a strong delegation from Japan attending the World Venture Forum in Kitzbühel.
You have questions regarding the Japanese market, or would like to find a strong partner for corporate venture funds (full service), or as a scale-up to enter the European market? Please contact our Advisory Team, led by our Managing Partner, Berthold Baurek-Karlic.