Takahiro Shoji and Masayuki Sarukawa, managing directors of DG Incubation, are spending this week in Israel as a part of mHealth Week, culminating in the mHealth Israel Conference taking place on February 18, 2016.
Prior to joining DG Incubation in 2011, Takahiro was part of Baidu’s internationalization team based in Tokyo and in charge of web search. Masayuki is a VC veteran in Japan, having been at JAFCO, Japan’s largest VC, before joining DG Incubation in 2013. Currently, as managing directors of DG Incubation, they make investments on behalf of DG Incubation and provide support for its portfolio companies. Takahiro is also a manager with Open Network Lab, a leading seed accelerator in Japan.
DG Incubation and Open Network Lab are the venture capital and seed accelerator arms, respectively, of Digital Garage, a Tokyo-based internet media and marketing company. Digital Garage, among its many activities, operates kakaku.com, Japan’s largest price comparison site, and has been the Japan localization partner for Twitter.
I had a chance to speak with Takahiro and Masayuki (T+M) last week as they were preparing for their trip to Israel.
Q: Will this be your first trip to Israel?
T+M: Yes, it will be the first time for both of us.
Q: What’s your expectation?
T+M: We can’t help but be a bit worried about the security situation because of what we always read about in the news, but everyone has been telling us that Israel is a great place to visit, so we’re looking forward to the trip! Of course, the tech and startup scene is the main attraction. We’ve never personally been to Israel, but DG Incubation already has an Israeli portfolio company that we’ve met with outside of Israel. We certainly know about the exciting scene here, and we are looking forward to seeing things up close and personal.
Q: The Israeli portfolio company you’re talking about is Glide, right?
T+M: Yes. We became involved as co-investors in the Series A round. We were very excited about getting to know them, and it also has made us excited about other opportunities Israel might have to offer.
Q: Can you tell me about DG Incubation and how you invest?
T+M: We are centered around web and mobile, and we make investments in a wide range of stages. We make seed investments typically in the USD 50K-200K range. For Series A-B rounds, which we may lead or participate as co-investor, our contribution is typically around USD 1-3M. We participate in later rounds as well, but so far not as a lead. Another feature is that we invest all of our own money, at an annual budget of about USD 20M to 30M.
Q: So you operate as Digital Garage’s CVC?
T+M: That’s basically what we are, but our investment approach is to focus on returns rather than to focus on strategic considerations for Digital Garage. We will consider investments more as a strategic investor at later rounds like Series D or E, but not at the earlier seed-A-B rounds. At the earlier rounds, we care about the synergy of startups with Digital Garage only to the degree that the synergy can improve our own returns by boosting our ability to help the portfolio companies succeed. Naturally, Japan localization and market penetration for websites and apps is a specialty of Digital Garage, so we are particularly well equipped to help foreign startups who have an interest in the Japanese market.
Q: And how about Open Network Lab, the seed accelerator?
T+M: A driving concept in starting Open Network Lab was to bring the Silicon Valley experience to Tokyo and to get early phase startups off the ground through a combination of funding, mentoring, and community-building. We have been around for almost 6 years, have worked with over 90 startups so far, and recently closed applications for our 12th class (applications for the next batch will open on April 2016). We provide an intensive 3-month program, during which the startups receive mentoring from domestic (Japanese) and international mentors, as well as support in advertising and payment/monetization. Each program ends with a Demo Day to give the startups an opportunity to showcase themselves to VCs and potential corporate partners. Each startup receives funding upon acceptance – typically USD 20K at USD 400K valuation.
Q: You’re coming to attend the mHealth Israel conference. How active are you in mHealth and/or eHealth?
T+M: DG Incubation’s roots are in web and mobile, but we have a lot of, and growing, interest in the mobile health space. We have already started to invest in companies that take advantage of mobile technology and data to improve health and healthcare delivery, and we’re looking to further grow our portfolio in this direction. In that sense, it’s really great to have Masayuki on board, who has already had a lot of experience with healthcare startups, starting from when he was still at JAFCO. We’re really looking forward to see who we’ll meet in the coming week.
If you’d like to meet Takahiro and Masayuki, as well as other international leaders in mobile and healthcare who are here in Israel this week, make sure to register and attend the mHealth Israel Conference on February 18, 2016.