A Conversation With Akihiko Okamoto
We’re thrilled to announce that Akihiko Okamoto will be joining our Tokyo office as our new Partner at Headline Asia. A little background on Mr. Okamoto is that he was the former Executive Officer in charge of R&D of Recruit Holdings where he established and managed the following organizations:
- Recruit Strategic Partners, a corporate venture capital company
- Megagon Labs (formerly Recruit Institute of Technology), an AI research institute
- Supervised the operation of “Ring,” a new business launchpad for all employees at Recruit Holdings
He was also the former Chief Investment Officer of MUFG Innovation Partners, a CVC of MUFG. With his tenured and remarkable career in venture capital, we’re excited to have him as part of the Headline team. Read on to learn more about our new Tokyo-based Partner.
What excites you about Headline and made you want to join the team?
I’m excited about the collaboration with the Headline teams in each region. I believe that we can further accelerate examples of overseas startups’ expansion into the Japanese market, such as Groupon and 17Live in the past.
I feel that foreign investors’ attitudes toward investing in the Japanese startup market has rapidly become more aggressive over the past few years. There seems to be a strong perception that they expect to invest in Japanese versions of successful models from the US and other countries.
However, since the market is still limited to Japan, the market scale has to be small, and it could be difficult for a startup to cross the “one trillion yen market capitalization barrier.” Even Mercari, considered a successful startup, doesn’t hit that milestone.
In the future, I hope that Japanese startups will take the initiative to succeed overseas, following the example of the steady growth of US businesses such as Mercari and Smart News. These efforts will further increase the willingness of foreign investors to invest in the Japanese startup market.
We believe that our alliance with Headline will certainly accelerate this trend.
Do you have a message for our LPs or potential LPs you’d like to share?
Headline Asia (formerly IVP) is a fund that has contributed to the success of their LPs in the past, and we believe that in order for Headline Asia to be able to deliver further value to the LPs, we need to have a strong ecosystem.
I will work with LPs to build a strong ecosystem that will help develop the Japanese startup market, and in turn, the Japanese market.”
I also hope to provide value to LPs in Japan’s large corporations and other business enterprises so that they can leverage our startup ecosystem to help them achieve the corporate transformation that is now promptly required.
Since you have been investing with a global vision, what do you think is the greatest strength and the greatest weakness of Japanese startups?
The greatest weakness is that technology backed by science and academia has not been linked to business transformation. In the days when certain technologies had not yet been developed and people’s mindsets were not yet up-to-date, there were customs and habits that were established as rule of thumb, unavoidably or legally at the time, that have been still left in place even though they’ve grown prehistoric.
From this perspective, I believe that overseas startups are excelling in their ability to turn irrationality into rationality by way of technology. Many of the startups I have invested in in the past, such as Veem, Fundbox, and Lawgeex, have implemented complex networks and scale-free nature in their businesses. By using these technologies, they are succeeding with an approach that updates incumbent businesses from the ground up.
This is not to say that there are no such startups in Japan, but there are still not many cases that have survived as businesses in the sense that they include the use of technology. I think that there are not many cases in Japan, including in terms of regulations, where people are willing to make fundamental changes rather than minor changes.
Changing from the ground up will lead to the creation of the next new standardization, making it easier to create a leading edge. Standardization is one of Japan’s weakest points in international competition, not just in startups.
[For strengths], I believe that there are very few startups that can match the high level of precision in the details of their products as Japanese startups can. In addition, I think one of the strong points of Japanese startups is that they are designing interfaces friendly to their users, even though it might backfire in terms of business.
However, now that the speed of information distribution is getting faster, I believe that Japanese startups can take a similar approach to foreign startups, and there are more and more cases of foreign startups creating services that are easy to use in every detail. I hope that we can accelerate this trend.
Akihiko Okamoto, Headline Partner
What are some interesting trends you notice in your areas of investment and what do you expect is coming next to Japan?
In the past, it was securitization technology; nowadays it is SPACs, rolling funds, and other ideas that would not have been born under Japanese laws and regulations that have become the basis for revolutionizing funding mechanisms.
Other than laws and regulations, the investment methods of Tiger Global and Softbank Vision Fund have revolutionized the way VCs operate.
I believe that these are also approaches that do not rely on old habits and customs as a given, but I also believe that not everything new is good. Just as developments in financial technology helped trigger the collapse of Lehman Brothers, if the current surge in emerging stock markets for emerging companies cools down, the gears that have been accelerating growth could backfire.
I believe that the advanced trends, technologies, and businesses founded around 2015 are beginning to blossom now. Five or six years later, companies focused on AI are starting to become profitable. Previously, people didn’t know how to integrate this new technology into their businesses but I think that tech has become more generalized and individuals are becoming more familiar with, and therefore receptive to change and the use of that tech. However, even though we have learned how to apply these technologies to business, it still takes time to monetize it. Entrepreneurs need to know how to work with this time lag, or their business will not have longevity.
From this perspective, I expect to see “empowering individuals” blossom earnestly in Japan, taking over the trend that was once expected to be “the sharing economy” and “human cloud."
*This interview was translated from Japanese, and edited for content and clarity.