When kompany first welcomed Global Brain onboard as an investor, it marked an exciting milestone for our regtech. As one of the largest venture capital firms in Japan, Global Brain has touch points in nearly every sector with offices throughout Asia, as well as San Francisco and most recently, London.
They focus their support on start-ups that tackle numerous problems and prioritise innovation, which immediately made it clear they were the right fit for us as an investor. It’s also why I couldn’t wait to sit down with Mr. Naoki Kamimaeda, Partner and Europe Office Representative at Global Brain, to learn a little more about their organisation, the world of investing, and how one of Japan’s largest VCs thinks about the future of regtech.
First off, I just wanted to extend a sincere thank you for making the time to speak. I have a feeling you might have a little more on your plate than me at the moment [Laughs].
[Laughs] Of course, no problem.
Can we start with you explaining a bit about your organisation?
Certainly. So Global Brain is one of the largest venture capitalist companies in all of Japan. We invest in almost all sectors now. Our firm was first established in 1998 and started investing in startups in 2001, making us one of the oldest venture capital firms in the country. You’ll find our headquarters in Tokyo but we also have offices in Seoul, Jakarta, Singapore, San Francisco and, in January 2019, we opened an office in London. For that reason, I have moved from Tokyo to London.
And what would you say makes a VC like Global Brain unique?
We are kind of unique in that way as a VC because we manage not only our pure VC fund but also corporate venture capital funds. So now we have eight funds, one of these is our pure VC fund which is our mothership and the size of this fund is about $200 million USD. Then we have invested in kompany through this fund, but alongside of this we manage 7 corporate venture capital funds which includes KDDI, the second largest telecom in Japan, Sony Financial Group’s fund and also, we manage Epson’s fund and Kirin Holdings, the largest beer company in Japan.
We also manage another fund which we can’t disclose the name of but that’s dedicated to fintech and agriculture tech.
A diverse portfolio of funds for sure. Are you able to disclose what a typical amount of fundraising looks like for Global Brain?
Our typical check sizes are from one to three million...dollars, euros, pounds, whatever [Laughs].
And what is your role in the organisation?
I am a partner and am in charge of the entire European activities. In Europe, we are focused on deep tech, fintech, insurtech and regtech.
Yes. The reason why we have these specific domains is that eventually, we’d like to connect start-ups we invest into Japanese corporations. Essentially serving as the gateway for start-ups to come to Asia. This is because we like to invest in start-ups which have mobility that we can bring elsewhere. It’s why we don’t invest in market embedded ones, for example like e-commerce.
And personally, you used to work in software engineering right?
Yes, I used to be a software engineer specialised in AI/ML and big data analytics at Sony.
Can I just say that I was particularly excited to talk to you once I learned you worked on the launch of the PlayStation 4? Big fan…
[Laughs] Yes, I did. After taking my MBA in the UK I moved to San Francisco to work on the launch. While I have never worked for a start-up, it was definitely a start-up experience. The team grew from 300-400 to 2,000 or so in 2 years.
And also, in my experience there, I was involved in the entire product cycle, from an engineering side to research to business launch so that’s provided learnings that I’ve applied in my career since.
But how do you go from launching a game console to becoming an investor with one of Japan’s leading VCs?
Of course, I could speak for two hours on this but I’ll try to keep it short. [Laughs] When I was at Sony, I was involved in the R&D side but also strategy regarding the products – including several new business creation tasks. I found that in order to create really innovative products, tech guys also needed to experience the business side of things.
That’s part of the reason I approached Sony’s Head of R&D to sponsor me to go do my MBA, I wanted to make the move to the business side of things. And after that I joined the PS4 launch team to apply what I had been studying. After spending 2 years in San Francisco with the PlayStation team I got this opportunity.
At that time, Global Brain wasn’t investing in deep tech start-ups so much yet but the team there wanted to begin focusing on deep tech, fintech and regtech. Their team wanted me to focus on these things specifically and that’s why I decided to move on from Sony. I would be specifically helping start-ups to move from just tech to tech-oriented business, which was a full circle moment for me.
And what do you mean by tech or tech-orientated business?
Tech guys tend to stick with tech. If they develop something innovative in terms of technology then they are satisfied and that doesn't necessarily lead to actual business. The business execution is actually more difficult than just developing the technology itself.
Meaning that deploying it into a real-world scenario is the hardest part?
Exactly. So of course, I know the entire tech journey and when I learned about how we can build businesses on top of technology, it made sense to transition to the business side myself.
And what has been your investment philosophy and how has it evolved over the years?
So, I have two important things when it comes to investing. The first, is that the start-up should be building something I would not be able to build within a year or so because as an ex-engineer I can see how to build these things. The second part is if I was not working for Global Brain, would I want to join the company or not? These are the two main criteria for myself and if a start-up passes this then I need to check the usual VC stuff meaning team, business model, market size, and of course, the technology itself.
Has the recent pandemic influenced or shifted your investment perspective in a notable way?
Actually, it really hasn’t affected our choice in investments.
Just because the nature of the tech can be done from anywhere?
Yes. And you know, as we are working remotely now, the accessibility and digitization of KYC and KYB related things are more important than ever. So if anything it’s reinforced our interest in regtech.
What potential do you see for the future of regtech?
Many more companies have started talking about this KYC, KYB stuff and kompany, from my perspective, has the largest global coverage compared to its competitors. That’s why it’s such a compelling opportunity to be able to bring you guys to Japan. And also given this coronavirus situation, people are doing this work in a more remote environment now. That means they’d like to have the kind of platform kompany can offer to do their KYC and KYB checks. So, I can see more and more needs for this type of solution.
And Russel, Johanna and Pete are very strong, and particularly Pete who was a leading architect in the Companies House in the UK. In fact, on a daily basis we use Companies House at Global Brain so of course I have confidence in his ability.
Would it be fair to say that you’re noticing a trend of increasing interest in regulatory technology in Japan?
And, as it seems new regtechs are popping up all the time, what would you say stood out about kompany to you?
So we checked other KYC and KYB start-ups to compare of course, but we also use some databases as well for completing our own business verification requirements for our portfolio companies. And when we did our due diligence on kompany, I asked our General Counsel to use kompany’s platform as well to complete these checks. He really loved it which served as a good indicator of course because he uses similar platforms on a daily basis. This really helped to identify the business as the stand-out choice.
What do you feel will be the biggest challenge for kompany in 2021? And how do you see your organisation fitting in?
So regtech is still in its early stage but it’s been predicted that it will be the next fintech. It’s certainly becoming a big interest in the VC world. As regulations are also coming out more often and with more power, it’s really opening up a lot of needs for regtechs like kompany. Globally, it will take maybe 2-3 years for the rest of the world to catch up with where the European Union is at from a regulatory perspective. By that time, kompany will need to mature more with even more big corporations as its clients. And we will make the case to sell kompany to other countries.
Already, I have been warming up some Japanese corporates and perhaps in two years we will be ready to launch a physical presence for kompany in Japan.
I’ll need to start up brushing up on my Japanese then!
What should our readers know about building a successful partnership with an investor like Global Brain?
We should feel that we are working together on a daily basis. This does not mean we need to communicate on a daily basis but we should create that dynamic. Basically, we need to build trust with one another continuously. This is very important.
We also need to be honest with each other. Definitely kompany will need to overcome hurdles to continue its growth, and this will require honesty with investors - but we’re all on the same team so this doesn’t need to be a painful process. Realism breeds optimism.
How do you stay on top of what’s happening in the world around us, and how do you incorporate this knowledge into your relationship with your portfolio companies?
There’s a lot of discouraging news in the start-up and VC ecosystems which is why we’re now making sure our portfolio start-ups can survive through this pandemic. So that’s one thing. Then, just new start-ups were engaging in communication. We’re actually seeing more quality start-ups now because some VCs have slowed down their investing so the it’s cutting a lot of bloat from the market.
Because of the pandemic?
Because of the uncertainty. But seeing as kompany has a legitimate business case it’s been able to avoid this outcome.
And finally, is there a technology or sector that you haven’t explored yet that you’re excited about?
To be honest, no, and I don’t think there will be in the near future. I am already very active in the deep tech scene and now fintech and regtech. This is where my strengths and interests are, as well as Global Brain’s, which is why we’re excited to continue to focus on these sectors in the coming years.
Regtech is already exciting enough.
Global Brain supports startups that tackle numerous problems, create innovation, and contribute to the stimulation of the Japanese economy. Its high-achieving, experienced professionals identify excellent startups through multiple global locations and provide hands-on growth support. The total asset under management is more than US$1 billion, making it the largest domestic independent venture capital firm. To learn more visit globalbrains.com.