Kentaro Sakakibara’s opening presentation at the weekly Samurai Night events at Samurai House Israel off of Tel Aviv’s Rothschild Blvd. is quite an experience. His mix of childlike enthusiasm, bold pronouncements, imperfect English and references to traditional and pop Japanese culture creates a “this can’t really be happening” vibe that leaves one slack-jawed in amazement. It’s hard not to crack a smile when “Ken-Samurai” (as Mr. Sakakibara calls himself in Israel) stands in front of a big picture of Tom Cruise and refers to himself as “The Last Samurai” for staying put during last summer’s Hamas rocket attacks while other Japanese businesses were cutting short or canceling trips.
Ken-Samurai’s hyper, comical on-stage persona, however, belies his impressive track record as a driver of Japan’s burgeoning start-up scene as founder and CEO of Tokyo-based Samurai Incubate. Samurai Incubate’s 550 square meter flagship co-working space, Samurai Startup Island (SSI), supports a multi-tiered ecosystem for entrepreneurs, with 90 desk spaces, a large event and meeting space, and a packed schedule of free events (over 200 last year). In addition, SSI’s status as the largest and oldest startup co-working space in Japan, as well as collaborations with large multinationals and other major players in Japan’s startup community, creates a pipeline of up-and-coming startups from which Samurai Incubate selects for investment. Samurai Incubate’s Fund No. 1, raised in 2009, was a modest 51.5M yen (~$442K), but their subsequent rounds have ballooned, with Fund No. 4 having raised 220 M yen (~$1.9M). Samurai’s new Fund No. 5, designated for making seed and pre-seed investments in Japan and Israel, respectively, is currently being raised and is expected to close at about $20M, making it Samurai Incubate’s biggest fund to date by far. Ken-Samurai plans to invest about half of the raised funds in Israel, and hopes to provide about $100,000 each to 100 early-phase Israeli startups over the next few years.
In July 2014, Ken-Samurai opened Samurai House Israel, as Samurai Incubate’s first overseas base of operations. Since the opening, Ken-Samurai has become one of Japan’s most enthusiastic public advocates for increased economic cooperation with Israel.
In a January 8, 2014 Op-Ed in Nihon Keizai Shimbun that was published just ahead of Japanese Prime Minister Abe’s recent visit to Israel, Ken-Samurai was not shy in exhorting Japan Inc. to make up for failing to embrace Israeli technology thus far, stating: “There are many overseas global companies that have acquired cutting edge Israeli technology to provide a boost to their core business functions… However, there are astonishingly few such examples from Japanese companies. Without interacting with Israel, which has become an indispensable presence in the technology sector, Japan faces falling behind on the world stage. (Translated by author)”
Interview with Ken-Samurai (Interview conducted in Japanese. Edited for conciseness and clarity.)
Part I – Getting Japan’s startup scene on the map
Kenichi Hartman (KH): How and why did you begin your work in nurturing startups?
Ken-Samurai (KS): We founded Samurai Incubate in March 14, 2008. In my last position, I helped set up a new sales and marketing team for a startup and realized I was very good at it, and I wanted to be in a position where I could help many startups expand their operations. So we went looking for very early stage companies that we could invest in, who could also use our guidance getting their business side up and running. We were trying to do things a bit differently from the start. What was typical back then was that VC and PE funds would provide funds but take a relatively hands-off approach after the initial due-diligence. So I knew that by taking a more intimate and hands-on approach in advising the companies I invest in, I would be providing something valuable that wasn’t readily available at the time.
I also realized that the IT entrepreneurs in Japan were sorely lacking a peer-based community. The big funds, in typical VC and PE fashion, were happy to just have individual and isolated relationships with their portfolio companies and saw no reason to foster relationships between the entrepreneurs they were funding or thinking about funding. Remember that this was still in the early days of social media, when tools like meetup.com, Evenbrite, FB groups, twitter and others, were not at everyone’s fingertips. So at the time, it wasn’t as easy as it is now for individuals to just go and create a community with no institutional support. I felt that creating an incubator, which would not just provide funding but also provide a platform for community-building and advice-sharing among entrepreneurs, would really help improve entrepreneurship in Japan.
KH: So take me through what happened with Samurai Incubate from March 2008 until now.
KS: So back in 2008, it was just me and tiny team working out of an office in my house. In 2009, I had to move for a variety of reasons, and, as an experiment of sorts, I got a house that was bigger than what I needed personally, and created a shared house for the founders of 3 companies we had invested in to move in to. We called it “Samurai House”, and it was more like a co-living space. A bit more intimate than the co-working space we have now! It was intense, but also a lot of fun.
KH: That’s where you started doing events as well?
KS: Not quite. Samurai House wasn’t big enough for holding events. We just had room for living and working. Now, with SSI, we have our own space to do events, but that’s not how we started.
KH: And there wasn’t really so much of an entrepreneur’s community at that point, at least not yet.
KS: Yeah, there really wasn’t. But what happened sometime in 2009 was that I wanted to have some sort of get-together with our portfolio companies. Around the same time, a friend from Recruit wanted to get a sense of what we were up to, so we decided that all of us would go out for a meal and drinks. While we were putting this outing together, it didn’t seem enough to just get together and drink, and so on a bit of a whim, we decided that it might be good do pitches to each other while drinking! And that’s really just like a meetup, isn’t it!? We ended up with about 50 people showing up, and I just remember being so nervous and frozen stiff because I was still at that point not used to getting up and speaking in from of so many people (laughs).
KH: So that was perhaps the first start-up community event in Japan?
KS: I guess you could say that (laughs). I mean, there were other small industry get-togethers and such before that, but that was the time where we first got the sense of a movement, of really thinking that we Japanese entrepreneurs can take on the world.
KH: And now you have SSI, which is a much bigger space than Samurai House.
KS: Yes, we’ve had SSI since 2011. We had our first big exit with Nobot, and we had also begun talking with Terrada, who was developing Tennozu Island in Tokyo Bay at the time, about working together to create a new space for our operations there. SSI has about 550 square meters with a central meeting/event space and desks going around the outer perimeter. We have about 90 seats at about 90% capacity, with about 50 resident startups. It’s really a nice space. Definitely worth a visit!
Now, our policy is that we provide our space only to startups that have at least some funding, like an angel investment. We wanted to create a community of people who are thinking big who would work together and help each other towards reaching their respective big goals. A lot of co-working spaces can just end up as a collection of freelancers, with each person just doing their own thing, with no sense of community. We really wanted to avoid that. We really try to foster a sense of community and teamwork between the participating entrepreneurs, and also between the SSI administrators and the entrepreneurs. For example, we always have the administrators and entrepreneurs work together to create and run events, have communal cleaning and things like that.
KH: So it’s not just a co-working space, but a co-working space specifically for entrepreneurs.
KS: Exactly. The startups could be getting funding from us or from someone else. We’re happy to have the startups at SSI either way. Other than that, we do also provide some space for non-startups, provided they would be a value add to the resident entrepreneurs. For example, we arrange to have various professionals and service providers to sit with us at various times at the co-working space. Another thing we’re doing now is to collaborate with and provide space to folks coming from the big multinationals.
KH: Wow, that’s great!
KS: It’s really great. So for example, we recently completed a startup accelerator program spearheaded by IBM Japan, called IBM BlueHub. SSI hosted the five startups selected by IBM, and we worked together with IBM to put them through a 3-month program to provide them with resources, know-how and contacts to help concretize their ideas into workable products and begin to scale. In another simpler example, we provided a sponsored desk at SSI for (imaging and electronics giant) Ricoh. It’s a win-win relationship, because there are great guys from Ricoh who have been coming by to provide great input to the entrepreneurs, and Ricoh gets to stay informed with the what SSI’s startups are up to. And we also hosted the hackathon with Toyota here in Israel last November. We’re looking forward to see more and more of these kinds of collaborations in the future. What we really excel in is community building, so it’s very satisfying to be able to create this community or ecosystem where entrepreneurs, investors, and large established companies can all interact with and grow from each other. It’s really thanks to the quality of the community that we have managed to foster that we have been successful in attracting sponsorship from the large companies, so the likes of Ricoh like we mentioned before and others like Docomo Ventures (telecom corporate VC), Daiwa Securities (investment bank) and others.
KH: I often hear among Israelis, and Americans too, that entrepreneurship doesn’t exist in Japan. And it’s clear from what you’re telling me is that it’s just not true.
KS: (Laughs) It’s a problem. We were in New York recently for example, and when we told someone that we’re supporting IT startups in Japan, we were asked, “You mean like Nintendo and Kyocera?”
KH: Uh oh! That’s not what we’re really talking about, is it?
KS: So there is still a ways to go in raising awareness overseas.
KH: Well, hopefully, this interview will help…
KS: I hope so!
Click here for Part II – Samurai Incubate’s investment philosophy, and bridge-building in Israel
Click here for part III – What do the Japanese know about Israel?