I recently had the opportunity to interview Akio Tanaka, Managing Partner and Co-Founder of Infinity Venture Partners from Japan. I asked him about his background, investment philosophy and if there is another internet bubble growing.
From Adobe to VC
Akio was formerly the CTO of Macromedia Japan. When headquarters in the US he saw how quickly high-speed broadband and mobile were developing in Japan and Asia, they realized this it was an area where they need to give investment. So the CEO of Macromedia asked Akio to join him in the U.S. to help run part of the Asia Investments and M&A program. Later on Adobe and Macromedia merged and during that time Adobe already had a long successful investment fund that focused only on the U.S. but they felt they wanted an Asian investments focus, so Akio became the head of Asia investments for Adobe.
Then in 2008, Akio left to start his own fund with two partners which is now Infinity Venture Partners. It is a private fund focused on early stage consumer mobile and internet in Japan and China. “We are supported by an interesting family of LP’s (limited partners) such as SNS’s Mixi, DeNA, the second largest operator in Japan- KDDI and the largest advertising agency – Dentsu, we are an industry backed fund, also with connections to Gree.”
Last year, Infinity Ventures seeded what later became Groupon Japan, “we built from zero.”
Investment philosophy – search and conquer
“Knowing what happened in Japan over the past 5 to 10 years in the internet and mobile industry, we realize certain market opportunities. For example we knew that the Groupon business was still blue ocean in Japan, so if we had the right team behind it, we could take over the market so we created the company. This year we are launching a classifieds service like CraigsList or 58.com, because no one has filled that space. So we have a specific market segment that we know we want to go after and if there is already an existing early stage company doing it, we try to work closely with them. If we can’t find the team, we create it. We are super hands on initially, and then we become hands off.”
The team repeated the same strategy two and a half years ago, when they knew that the social game wave was coming to Japan. They saw that the players in Japan were too small to scale but liked what they saw in China, so consequently invested in Rekoo. “We took them to Japan to launch with Mixi and now they are the number one social game company in Japan. Now they are 350 people and the next largest competitor in Japan is only 50 people.”
What we look for in entrepreneurs
- Some experience – “We like people who have start-up experience because if you have worked in an internet company that has gone through some growing pain that is valuable. For example, the reason my partner invested in Gree’s founder was because he was already part of a successful e-commerce company called Rakuten in Japan, so we knew this guy wasn’t a fresh entrepreneur.”
- Young -less than 30 years old
- Product and market focused – “because it is very important to get the intitial product launch”
China investments
The company has invested in a social mobile MMORPG called Moca, which was also recently invested in by Tencent. They launched a game on Tencent’s platform which has become phenomenally successful with several million users, good ARPU, profitable and one of the most successful 3rd party games on Tencent’s platform. Tencent also later became a strategic investor in Rekoo.
Is there another internet bubble?
“I don’t think there is a bubble like in 2000/2001 because the Chinese companies still have strong fundamentals. I really like the e-commerce plays here and game companies have a strong revenue base. On the VC side with private companies, some of the valuations are going crazy right now especially with series A and B. When you are seeding companies, you don’t have that issue.”