Kentaro Sakakibara Interview Part II – Samurai Incubate’s investment philosophy, and bridge-building in Israel
Click here for the intro and part I of the interview.
KH: Let’s talk a bit about your investment activity. So far, Samurai Incubate has invested in about 80 companies…
KS: Yes, that’s right, and we’ll be breaking the 100 mark in the next month or two.
KH: It seems like a characteristic of Samurai Incubate’s investment style is to make many small investments in the seed and pre-seed stage.
KS: Yes that’s right.
KH: So you’re not planning to move up to doing, say, Series A type investments in the future?
KS: We’re really not. A major goal for us as investors is to create a community, a culture, a movement of entrepreneurship, and to achieve that, we need a mass of people. And making many small investments to many companies allows us to create the big community that’s needed to create lasting social impact.
KH: One thing you told me before is that most of the other investors working with start-ups, so traditional VC and PE, or corporate VC, tend to prefer larger investments, and you’re filling a need for small early stage funding that most other large investors find tedious.
KS: Exactly. I’m not just in this to get a great monetary return, but also to get a return in terms of lasting impact on society. Simply put, and to maybe overstate things a bit, my goal is to change the world. The best way to do that is to invest in as many people as possible to create a community with as many people as possible. I think that with what we’ve done so far, we’ve already had a big impact in changing how Japan does innovation. These days, Docomo, KDDI, IBM Japan like we mentioned before, and all of these big players are establishing accelerators, and other start-up co-working spaces are popping up around Tokyo and Japan overall. I’d like to think that Samurai Incubate helped kick off this phenomenon in Japan by showing that this kind of community-based innovation with small start-ups is possible in Japan. Of course, a lot of this may have happened anyways without us, but I really think we played a significant role in accelerating this shift.
Related to this, I was recently asked why we’re planning to invest in so many companies in Israel. So my thinking is similar to how I approached creating an entrepreneur’s community in Japan. What we’re doing now is in a way recapitulating what we did with the first Samurai House in Tokyo, and applying what we’ve learned about community building in the last 7 years or so to a different context. I’m really interested in building a bridge connecting the two countries, and I can’t do that effectively if I ‘m just going to invest in one or two companies. I want to invest in many, many companies.
KH: So you’re saying that the community you want to create here will itself become the bridge that connects Israel and Japan.
KS: Exactly! The resulting community will naturally come to serve as that bridge. The community-as-bridge will then hopefully have the effect of engendering further connections, in the form of, say, increased tourism from Japan to Israel and getting more Japanese multinationals to deepen their involvement here.
KH: So how has the community-bridge building been going so far in Israel?
KS: Better that we ever expected. My English is still really bad, and I was initially worried that it’ll turn people off, but Israelis have been just incredibly nice and welcoming! It’s really amazing. Another thing I’m seeing in Israel is that people are really passionate here, and it really encourages me to think even more than before that as long as you have passion, you can change the world! I think that, even more than in Japan, I’ve been running largely on enthusiasm and passion, and that has helped carry the day many times despite my broken English. We are really fortunate to have already been able to gather a great group of collaborators and allies in our short time so far.
KH: Another thing I’ve noticed is that founders in general have a knack of gathering allies and, for some reason, having people offer their help. I think you really have that in spades.
KS: I think about how that happens, and I think that as long as you really pay attention to the needs of the potential partners, friends, and allies, thing naturally fall into place in a good way.
KH: One very characteristic feature of your public persona is the big announcements, like saying “I’m going to stay in Israel for five years!”, or “We’re going to build the next Google or Facebook from Japan!” And for some reason, it doesn’t sound boastful. If anything, it sounds too innocent, even naïve. For example, when I met you guys in one of your first visits here about three years ago, I was thinking, “Who are these guys. They just seem so goofy!”
So we seemed too innocent? (laughs)
KH: So after that, I checked over what Google came up with about you guys. I also made some calls to my friends in Japan to ask, “Hey, who are the big players in the start-up scene over there?” or “Who are these Samurai Incubate guys?” With all that, it took me a bit of time to piece together that you guys are kind of a big deal in Japan.
KS: Thanks. I think that the word “Samurai” has a scary, serious image, so I can see that people might get confused when they meet me, because I really try to be friendly most of all. On the other hand, I do wonder if I sometimes come off sounding too boastful with those announcements…
KH: As I said, the strange thing is that you don’t come across that way. I think one key is that when I see your Facebook posts, you don’t just talk about your successes, but you freely share your challenges and the many things had to be overcome along the way. Also all the help you got along the way. I think that helps a lot.
KS: Also, I’m really non-confrontational, and actually get hurt rather easily, so I just really want people around me to like me (laughs). Thankfully, the people that have been around me lately have all been just nice, good people, so I haven’t had to worry about that much. You know, but people on Twitter seem to have no trouble getting negative and lobbing off verbal attacks towards me…
KH: Oh no, really?!
KS: Yeah, like “What are you doing in Israel in the first place?”, and things like that.
KH: So that’s one thing I wanted to ask you about. What made you come to Israel?
KS: A couple of reasons. One thing is, we in Japan used to have all of these entrepreneurs who built these amazing world-famous companies, and I think that connecting Japan with Israel’s start-up culture can help the Japanese regain the entrepreneurial spirit that they used to have. It would also be great if this connection can provide to the existing Japanese entrepreneurs examples and knowhow on how start-ups can expand and succeed globally. I also hope that the big companies that are already global but currently struggling can be re-energized though this cultural exchange, as well as through business partnerships with and acquisitions of Israeli technology companies. Also, because there are so many American investors and multinationals that have been so enthusiastic about Israel, I feel that being among the first Japanese investors to be truly active in Israel can have great advantages, just by not being afraid to be the first. Just being the first start-up incubator in Japan gave us an advantage which allowed Samurai Incubate to expand as we have in the last few years, and I hope to repeat a similar or greater level of success by being another “first” here.
KH: And will you be investing in companies that primarily have links to Japan or Japanese members, or will you be investing in straight-up Israeli start-ups?
KS: Probably about 90% of the start-ups we will be investing in Israel will be regular Israeli start-ups. For the foreseeable future, the number of Japanese start-ups coming here will remain low. I would love to see more start-ups like Aniwo and Zerobillbank come here from Japan. We are definitely encouraging it, but most Japanese still find going to Israel to be scary. Maybe because Japan is so safe, many have a hard time with even the smallest possibility of being exposed to danger.
Click here for part III – What do the Japanese know about Israel?