Building Global Ventures from Japan
Mr. Shozo Aoi, Manager, Nippon Technology Venture Partners (NTVP)

Nippon Technology Venture Partners (NTVP)’s mission is simple but meaningful: to help talented Japanese entrepreneurs build great technology companies. Founded and managed by former JAFCO venture capitalist, Mr. Kazutaka Muraguchi, NTVP is unique for its independence from corporate Japan. NTVP’s four funds feature investors that are individuals or entrepreneurs, lending the firm and its portfolio companies a powerful sense of self-determination. Kanabo Consulting recently met up with Mr. Shozo Aoi, Manager at NTVP, while he was in the US, as part of his role in helping NTVP’s portfolio go global. Mr. Aoi kindly agreed to be featured as this month’s Bridge Builder.

Q. Mr. Aoi, will you tell us about your background and your current role at NTVP?

A. Right after graduating university, I joined Japan Associated Finance Co.,Ltd–former name for JAFCO Co., Ltd.. I learned about Japan Associated Finance Co.,Ltd. through a job information magazine from Recruit and this motivated me to want to get involved with fostering venture companies that could promote new industries. I assume that it had less than 100 employees back then, and my colleagues and junior fellows of University were skeptical about me getting into venture capital. However, it was pretty surprising to me that some of these same junior fellows turned out to be founding members at Rakuten, Inc. and Index Corporation later on.

At Japan Associated Finance Co. Ltd. I got involved in venture capital initiatives for the Asian region over 7 years, and was assigned to be a resident officer in Hong Kong, Singapore and Malaysia. During my assignment, Asia successfully brought its economy out of its quagmire from the late 80’s, and had just began to undergo sharp growth. In addition, Japanese firms were actively entering Asia, and as a result, our venture capital investment, attractive as a gateway to the Japanese market, rapidly defused all throughout Asia. Therefore MIT Professor Paul Krugman’s “Foreign Affairs”(1995, from Chuokouronsha Inc.) really had an impact on me. In 1997, the Thailand-based currency crisis in Asia became a turning point for me as well. It made me return to my original insights into venture capital- ventures based on technology. In that same year, the company changed its name to JAFCO, and at HQ I spent my last 5 years in our restructuring. During that time, JAFCO switched over its market from OTC to the first section of the TSE: taking part in JAFCO’s IPO initiatives became a valuable experience for me.

I joined NTVP last December and have mainly been supporting venture companies when they look for international markets. I have only been here for three months so I’m still in the process of getting close to each of our venture companies.

Q. Will you describe the background of NTVP and its current focus?

A. Our founder Kazutaka Muraguchi’s desire for getting involved in the total nurturing of ventures, as an individual, came together after he left JAFCO in 1998. Stakeholders for funds that are currently in use (total of four funds is 6 billion yen= approx. 51 million USD) mainly consist of independent business entrepreneurs that truly agree with our investment strategy, not corporate investors. Our investment strategy is to get deeply involved with and foster start-up companies through the operation of the board of directors. Our companies need to be qualified by having technological capabilities that are internationally viable, with a market value exceeding 10 billion yen (approx. 85 million USD) at IPO. 2/3 of our 14 portfolio venture companies have been funded by NTVP since their startup, and we have board of directors’ seats at 11 of them, at this point.

More than half of our ventures are done with development and now ready for getting into operation. NTVP has begun helping their sales growth through two major themes: “partnership” and “doubling sales”. We recently started seeing outcomes from the business ties between public companies and our ventures in Japan. And our next step is to find a way to make these ventures partner with foreign firms.

Q. Would you specify some successful examples among the portfolio companies at NTVP?　

A. The following two companies have successfully achieved IPO: one is called ImageOne Co.,Ltd. which went public on Nippon New Market Hercules (FKA:NASDAQ Japan) in 2000. The other is North Corporation- public on TSE Mothers since last December. We put 700 millon yen (approx. 5.9 million USD), a big investment, into North Corporation. This company takes advantage of high-density 3D packaging (AKA: System in a Package) technology to enable packaging 4 bare chips at 1mm vertical intervals and low-cost flexible multi-layer printed boards, which we believe will satisfy the demand associated with the mobile devices required in ubiquitous computing.

Q. How is NTVP helping its portfolio companies with U.S. market entry?

A. We spent all last year researching the Chinese market and searching for gatekeepers there; to be honest with you, we have only just stood at the door of the U.S. market as of now. Although some of our portfolio companies have already established their subsidiaries by themselves in U.S., we are in the stage of looking for U.S. partners to help these businesses go global. I’m planning to visit U.S. several times in this year for that purpose. Q. In which industry or market are you specifically trying to identify U.S. companies? A. There are three major segments that we are interested in: Internet Infrastructure, Semiconductors, and Life Sciences. We consider companies dealing with: digital security systems, high speed internal memory driven database engines, ultra short-wavelength UV ray LED with aluminum and nitride gallium, and lithium-ion batteries as candidates for U.S. entry. Therefore, U.S. firms in these areas and those especially with appropriate distribution networks would be the best to approach.

Thank you Mr. Aoi. Mr. Aoi can be reached via e-mail at aoi@ntvp.com . For more information regarding NTVP, please take a look at their website at http://www.ntvp.com .

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