1. Building Great Companies
and Industry
- Startup Strategy and Finance -
Jakarta Venture Night
Jakarta – 12th Jan 2012
Shinichi (Shin) Takamiya
Globis Capital Partners
Principal
s-takamiya@globis.co.jp
www.globiscapital.co.jp/
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2. Agenda
1. Intro
2. Defining the Business
3. Strategizing
4. Organizing Resources
5. Outro
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3. About Me Shinichi Takamiya
Principal, Globis Capital Partners
• In charge of consumer internet investments
Portfolio:
Q Entertainment, Indisoftware, Yumemi,
Shimauma Print System, RocketStart, iStyle,
Kayac, Pixta, One of Them, Aucfan
Prior to Globis:
• Project Leader, Arthur D. Little: management
consulting
• MBA Harvard Business School (Second Year
Honor)
• BA Economics, University of Tokyo (graduation
thesis Honors Award)
• 8+ years of overseas experience in UK, US,
Holland
• Internet geek (but unfortunately not an engineer),
avid tennis player, and Jazz lover
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4. About Globis Capital Partners
Leading VC in Japan with JPY38.5B under management:
• Globis Incubation Fund (1996 JPY 540M)
• Apax Globis Japan Fund (1999 JPY 20B)
• Globis Fund III (2006 JPY 18B)
Specialized in value-added investment:
• Lead/co-Lead investors with board seat
• Management value add – best practice venture management
• Deployed 50+ executives/managers to portfolio Companies
Industry insider
• Bus. dev. and partnership for portfolio companies
• Hub of the startup and internet industry since dawn
• CEO Conferences (G1 and Asuka) and Globis Business School Network (14Kstudents/y)
Pioneering Japan VC & Venture Industry:
• 90+ portfolio companies
• Proven track record: IPO 25%, buyout 25%
- GREE (Mobile social network) x97
- ngi Group (internet ad tech & incubator of mixi) x31
- Works Application (No.1 ERP in Japan) x20
• Teach at Japan VC Association training program
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5. History of Japanese Startups
The system of creating new companies and industries is
working in Japan (although cyclical).
Number of Companies Going Public
Number of IPOs
250 5 years 5 years 5 years 5 years+?
204
200 187 188
167 169 175
150 158
144
150 121
124 121
107
100 90 86
49
50 36
27 19 22
0 0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2 Key to the successful establishment of the system…
GLOBIS CAPITAL PARTNERS Source: Azusa KPMG as of Sep 2011

6. Key to Success Ecosystem
Ecosystem within and surrounding the startup community was
crucial.
Investors
Corporations Investment
Banks
Startups
Professional
Banks
Services
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7. Key to Success Entrepreneurs’ Aspirations
Entrepreneurs’ started to “think big”.
Entrepreneurs’
Aspirations
Social Impact
Self-Actualization
Financial Return
Means of Living
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8. Agenda
1. Intro
2. Defining the Business
3. Strategizing
4. Organizing Resources
5. Outro
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9. Vision - How High Do You Want to Go?
You can only get as high as you envision.
Entrepreneurs’
“The Summit” Aspirations
Enterprise
Value
$ Multibillion Social Impact
Self-
$ Multimillion
Actualization
$ Million Financial Return
t Means of Living
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10. Business Domain
Sweet spot of a company’s business domain resides in between
vision, capabilities, and market attractiveness.
• Future view of the world
• Value proposition and the
Vision difference the company makes
• Values and culture
• Basis of
competition – • Market size
“Necessity” Market • Market growth
• Competitive Capabilities • Degree of
Attractiveness
advantage – competition
“Differentiator”
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11. Business Model
The business portfolio and the profit model is key to feasibility.
Business Portfolio Profit Model
After Service/ Self-Branded Bus.
High
Subscription Model Model
Cash Flow Cash Flow
Profitability
t t
• Stable cash flow • High scalability &
• High profitability profitability after threshold
• “Deep J” - big upfront
• Organic scalability
investment
Low Revenue Share/
Contract Work Model
Low High Project Finance Model
Cash Flow Cash Flow
Growth Rate
Issues to Consider
• Synergy v.s. conglomerate discount
• Fast growth by focus v.s. Stability by t t
diversification • Short term cash flow &
• Moderate scalability &
profitability
• Resource allocation – balance and speed capacity utilization
• Shared risk
• Low sustainability
GLOBIS CAPITAL PARTNERS • Control and collaboration
• Low scalability

12. Agenda
1. Intro
2. Defining the Business
3. Strategizing
4. Organizing Resources
5. Outro
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13. Growth Strategy
Evolve strategy per different stage
Cash Flow
Startup Stage Growth Stage Later Stage
t
“Proof of Concept” “Auto-Pilot” “Power Play”
• Fast validation and • Setup processes and • Fueling growth with
Essence iteration of the system ample cash & resources
of the service/bus model • Operational excellence • Strategic alliance to
Strategic • Cash management – fast PDCA leverage partnership
• Key management • Team assembly • Exit planning
assembly
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14. Competitive Strategy
Establish defendable and sustainable advantages – not a mere
relative strength
Type of Competitive Advantage
“Participate”
Necessary
Capabilities
Crystallizing Strengths
“Perform” • “Only One”
Key Success • “Structural Sustainability”
Factors
Reverse Leverage
• “Sunk cost”
“Win” • “Segregation”
Competitive
Advantage
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15. Finance Strategy
Essence of finance strategy:
1 Leverage outside funding to accelerate business growth
2 Design the capital table deductively according to the goal
Self Funding Outside Funding
& Organic Growth & Accelerated Growth
Cash Flow Cash Flow 2
IPO IPO
Mngmt Share 33.4%
1
Seed Round: 85%
t Series C: 40% t
Series A: 66.6%
Series B: 50.1%
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16. Agenda
1. Intro
2. Defining the Business
3. Strategizing
4. Organizing Resources
5. Outro
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17. Funds
Suitable finance per different stage of a startup
Type of Financing Instruments
Instruments and Stage for Startups
Cash Flow
Investment/
Cost of Loan Size
Debt Capital (Image in Jpn) Provider
Equity Debt Low Mid-Large • Bank
($500K-5M)
• VC
Large • Angel
Convertible Bond Equity High ($500K-10M) • “Friends &
Family”
Stage of
a Startup
Variable Small • Angel
CB Low (-$1M) • VC
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18. Funds Fund Raising Tips
1. Cap table is irreversible
2. Blindly high valuations are not always good – balance
dilution and the following rounds
3. Design financing rounds around business milestones
4. Save management time for business – finance enough to
keep you running for18-24 month
5. What does the investor bring other than money?
6. Long term relationship starting way before and after
financing
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19. Team
Vision/Passion
• “Make sure you only hire people that really love
your product or service and are capable and willing
to make decisions on what is best for your company.”
• “It's hard to tell with these Internet startups if they're
really interested in building companies or if they're
just interested in the money. I can tell you, though: If
they don't really want to build a company, they
won't luck into it. That's because it's so hard that
if you don't have a passion, you'll give up. ”
A-Team
• “A people hire other A people, B people hire C
people, who the f*ck hired you?”
Shuffle
• “What kind of person could you get to run a small
business if you told them that when they came in,
they couldn't get rid of people that they thought
weren't any good?”
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20. Process
Operation excellence crucial to the success of a startup
PDCA Cycle Key Performance Index
Search
Sales = Registered Users Listing
Action Plan x Affiliate
Step 1
Retention Rate Step 2
x Step 3
Item A
Conversion Rate Item B
Check Do
x Item C
Heavy Users
ARPPU Mid Users
Light Users
• Speed, speed, speed
• Measurable
• All level of the organization –
• Aligned with strategy
management to operation
• Actionable
• Culture
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21. Agenda
1. Intro
2. Defining the Business
3. Strategizing
4. Organizing Resources
5. Outro
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22. Take Aways
1. Huddle around – ecosystem is the key
2. Think big!
…and the rest is “hows”
3. Management is about constantly balancing the trade offs
• Defining the business domain: attractiveness v.s. feasibility
• Business model: growth v.s. stability
4. Things that have to change and that cannot change
• Growth strategy: flexible recalibration per stage of the company
• Competitive advantage: defendable and sustainable
5. Securing and allocating resources with speed are critical to
the success of the “have nots” – startups
6. Processes key to operational excellence required in the
internet ear
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23. Thank You!
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