[Podcast] Foreign founders are changing how Japanese start startups (Part 3)

For the last 150 years Japan has made a science of borrowing the best ideas from the West and transforming them into her own.

The startup world is no exception. Japanese startup culture is heavily shaped by western ideas, but not in the traditional top down way where leadership chooses which ideas are introduced. Japan’s startup ecosystem is being shaped by bottom-up experimentation by both Japanese and foreign founders on the ground here in Japan.

Today we talk with Sandeep Casi, an entrepreneur and Partner at Antler. We talk about the challenges foreign founders still face in Japan and how they are changing Japanese entrepreneurship for the better.

It’s a great conversation, and I think you’ll enjoy it. 

Welcome to Disrupting Japan, Straight Talk from Japan’s most innovative founders and VCs.

I’m Tim Romero and thanks for joining me.There is a truism in venture capital that states no one invests in an idea.

This references the fact that ideas are easy to come up with and they have very little value on their own. But it seems that this truism is not completely true.

Today we sit down with Sandeep Casi, the general partner at Antler Japan, and he explains how Antler does in fact invest in ideas. I mean, in one sense, the truism is still true. Antler only invests in companies. But if you come to them with an idea, they’ll invest a lot of resources to help get you from idea to startup.

We also talk about some of the challenges foreign entrepreneurs still face in Japan, the myth of Japanese founders not being able to speak English. And we dive deep into how foreign entrepreneurs are changing how Japanese founders start startups.

But, you know, Sandeep tells that story much better than I can. So, let’s get right to the interview.

(Continued from the previous part)

Tim: Alright, well, I mean that is kind of ideal. I mean you need that crosspollination within individual teams and within the broader ecosystem as well. Let me ask a bit about the Antler business model, because I mean, this is amazing. You do the founder matching and the zero date checks, and you’re putting in a lot of help with like ideation. And this is expensive. Is this all funded through the VC fund?

Sandeep: That’s right. It’s part of our business model. It’s to start companies from day zero and invest in them. So, which means that our program fee is built into it. When we invest a part of our investment basically comes out of the fund.

Tim: Okay. So is some of that initial investment paying for the program?

Sandeep: Yeah, that’s right. Only for the companies that make it through.

Tim: Okay. That makes sense. And are there ever issues with startups who go through the program, find a strong team, learn how to pitch, and then go take other VCs money?

Sandeep: It has not happened in Japan. And I don’t think that has ever been a case that’s happened outside because the companies, they have pre-revenue, they don’t even have a product yet. They just have a PowerPoint slide and they have a vision. So that’s the…

Tim: That’s pretty hard to pitch. Yeah, pretty hard.

Sandeep: So, if you’re a VC and then the startups say, well I need money to build this product. This is my idea.

Tim: Where you and the team have been working with these guys for a few weeks and you’ve got a sense of who they are. That makes sense. Fair enough. The educational component that you’re providing is really tapping into a need here in Japan. Do you run programs like in a similar way that say Techstars does to to partner with corporates or partner with universities?

Sandeep: So, we are different. When we partner with universities, there is a tons and tons of IP that is yet to be unlocked from the Japanese universities. The partnership is basically to enable us to go out and mine those IP. Whether it is an individual IP or an individual that is associated with an IP, we want them to come into our program. So, we create an avenue for them to participate in that 10 weeks so that we can invest in that. So, we are not asking the universities to pay us, we are asking the universities to open up.

Tim: So, that’s it. So how would this kind of collaboration work? You would approach a university and just say, let us tell your faculty and students about us, or do you run a special workshop for them?

Sandeep: We do workshops for them. For example, I have gone to Okinawa Institute of Science and Technology. Most of the workshops we do is to the faculty, not to the students. Because if I can teach the faculty, the faculty can teach the students.

Tim: It’s their job.

Sandeep: So, that is basically what we have started. So, we have this thing called Antler Academy. It’s a basic course about how to build a company from zero. We have a scouting manager her name is Tomoko. So, she goes out and scouts and she basically brings these people from universities and even from companies, from corporates into our program.

Tim: This seems like right up your alley because If I recall, you did a fair amount of work trying to monetize patents from a previous life back at Fuji Xerox.

Sandeep: That’s right. It’s very close to my heart. Yes.

Tim: So, one of the biggest challenges with university innovation in Japan is that the professors don’t want to be entrepreneurs. They want to life in academia. So, it seems like the magic formulas is having professors highlight what is valuable and interesting and then finding students who are excited about it and experts in the field and have the energy to do something.

Sandeep: It’s different. And I’ll tell you why. Problem here, Tim in Japan is that the amazing amount of PhD candidates and postdocs, they come up with some great stuff. But in most cases what happens is the professors wants to be the CEO of those companies. And they also hold the purses because they can get grants. And this is basically where university spinoffs go and die.

Tim: But I think there’s been a lot of recently, and I mean in the last two or three years, a lot of pushbacks against that where you’re seeing these startups that are the CEO, COO, CPO are all university professors. And then it’s like, okay, well are you going to quit your job? Like, well no, like then.

Sandeep: There was no other choice for these individuals’ entrepreneurs. But to get into the mold with the professor, because that’s where the grants were coming from. But Antler steps in and says, hey, I have a zero day fund for you. You can keep the professor as an advisor, but he or she can’t be a CEO. We’ll have to figure out who the CEO is, whether it’s even you. We need to figure out a business person that actually can align with you. And then we can actually build a company together and we have the resources to provide you. We also have the network.

Tim: Oh, this is a great model. So, where are the CEOs coming from? Are they students? Are they other operators?

In Part 4, we’ll discuss the challenges faced by university startups in Japan, the process of selecting CEOs, and how Antler bridges the gap between technology and the market.

Top photo: Envato

Click here for the Japanese version of the article