Key Points for Investment and Co-Creation by the Founder of Japan's Only VC Specializing in Food Tech
~Understanding Entrepreneurs is the Key to Success in Open Innovation
vol.1 Insights from my experience with VC, startups, entrepreneurship and CVC

1. Introduction

My name is Hiroki Okada. First of all, please allow me to introduce myself. I will also share what has happened and what I felt in the business scene regarding investment and co-creation so far. These will serve as useful hints and teaching materials for people at major business companies to invest in startups and co-create (new business development, open innovation), and for startups to receive investment and advance co-creation. I think it will. I also hope to provide readers with some insights that will help them think about career development.

2. Self Introduction

Graduated from Waseda University (Law), joined JAFCO as a new graduate and learned the standards of venture investment. After investing in ventures at Mitsubishi Corporation (IT investment division of the Lifestyle Industry Group) and doing business development at Sockets, a mobile app developer, he started Enrest in 2003 and entered the food world. Standing at the restaurant “KEMURI Kagurazaka” for two years as the first manager of Kemuri and raised as a thriving store. In 2012, he started a business with a Hong Kong corporation and a Shanghai corporation (solely owned) as legal representatives, and ventured into the Chinese market with the restaurant “Kemuri Shanghai” (sold the Shanghai corporation and returned to Japan in 2016).
In 2016, established and headed a new venture investment department for restaurant tech at Gurunavi, then venture investment at Marui Group. In March 2020, just before the Corona epidemic, he traveled around the world by himself, reaffirming the importance of food and health and the potential of the Japanese food business. He is the author of the book, “Everything Important in Business Was Taught in Restaurants: How to Acquire Job Skills That Will Last a Lifetime (Daiwa Shobo)“. Born in Kanazawa City and currently resides in Kagurazaka, studied abroad and graduated from AFS in Silicon Valley Mountain View during high school, and at age 20, contracted fulminant hepatitis A on a trip to India, but survived. Hobbies include trail running (completing the Sahara Desert Marathon 250km in 2019 and UTMB 170km in 2023).

3. Studied abroad twice in high school(AFS)

Currently, I mainly live in Kagurazaka, Tokyo, but I spent time in Kanazawa City, Ishikawa Prefecture until I graduated from high school. I was studying only science and mathematics in a special science class at a public school in the countryside. When I was in high school, I went on two homestay study abroad trips. The first time was to Hobart in Tasmania, Australia for two months, and the second time was to Los Altos in Silicon Valley, USA for one year. After studying abroad twice, I realized that I want to do business on a global scale, and that to succeed in business, it is better to be familiar with the rules.The rules of business are laws. So, I decided to change my degree from university and go to the Faculty of Law.
After studying abroad twice, I learned that I don’t have any talent for languages, but that I have the characteristics (strengths and strengths) of being able to express my feelings directly to people all over the world, making friends, and not being afraid to fight. I was able to learn about my weaknesses at the age of 18.
My two homestay study abroad experiences helped me with negotiation, tenacity, logical thinking, and coexistence with different cultures when I later worked as a venture capitalist. The cultures of startups and large companies are very different (lol). When forming an investment/co-creation team, I think diversity in terms of age, gender, background, nationality, etc. is important. Also, when thinking about career development, I think it is important to know your own strengths and weaknesses.



4. Joined Jafco as a new graduate and learned VC standards

After graduating from university, I thought about starting a business, but since I had neither money nor a business idea, I decided to find a job. I thought that foreign consulting or venture capital would be useful for starting a business, and as a result, I joined Jafco, the largest venture capital (hereinafter referred to as VC) firm, as a new graduate. I was very lucky to be able to learn the standards of startup investment there and to join the Jafco network.
At that time, the startup investment environment was very different from today’s startup investment environment: most private companies raised funds through borrowing, and few startups (then called ventures or private companies) used VC financing (equity financing). I went around evangelizing equity financing. I was one of them, but at that time, VC firms were “going door-to-door” to private companies. It is unthinkable today (laughs). In those days, there were no preferred shares, investment agreements, or stock options, and it was very difficult to conduct investment due diligence (DD) and investment schemes. An eye for management, the concept of capital policy, and stock price negotiation are very important points in investment, and I was lucky to learn these at Jafco Standard. That was about 25 years ago.

5. Moved to a startup and then to a major general trading company CVC

Investing in startups at JAFCO was exciting every day and I thought it was my calling, but I started to want to experience “business” at a business company other than finance or consulting, and after a few years I started working with startups (internet x finance). I changed jobs to . I worked in the corporate planning department to raise funds for my company, and in the marketing department I conducted B2B sales (for major business companies and financial institutions).In the end, the start-up company reached a dead end, and I had to change jobs after less than a year. As the timing was perfect, I received an invitation from the corporate venture capital department (CVC) of a major general trading company.Although the CVC was well versed in business, it had issues with DD methods, stock price calculations for unlisted companies, and investor networks (investment project sourcing).By the way, In the first place, investment is not a core business, so if a number of failures occur, there are cases where investment activities are suspended or terminated.CVC temporarily suspended its activities for several months.I think there are various circumstances, but I don’t think corporate investment activities (CVC) should be stopped. If you stop, you will lose your reputation and trust in the startup and investor community, and you will struggle once you restart. Investment and co-creation cannot be done by one investor alone; we support startups in collaboration with multiple investors.

6. Moved to another startup

Following the suspension of my investment activities, I decided to leave CVC, a large general trading company. As I had imagined, several successful cases (IPOs) were later created by that CVC. It turned out to be a great investment performance, far beyond my imagination.At the next startup, I was mainly in charge of business development (partner building), but there were only about 5 full-time executives and employees, so I worked on IR (shareholder communication), establishing an employee stock ownership plan, and creating a mobile site. I was also a manager.

As multiple shareholders included major business companies, including major telecommunications carriers, we were able to witness a good example of a startup’s capital policy. We look for major business companies that can bring not only funds, but also capital + business growth, make concrete proposals, and become co-creation partners. Both companies will expand existing businesses, create new businesses, and grow together.
If you are having difficulty raising funds with your startup’s current capital policy (planning who to finance, when, at what stock price, what type of stock, and how much in total), focus only on raising the necessary funds. However, if there are no difficulties, we will look for investors (mainly major business companies, CVC) who will provide funding and support business growth.

I think that CVCs are more welcomed by startups than VCs, as major business companies have the possibility of holding shares in startups even after IPO, and can support business growth and conduct business transactions (generating sales).

7. First entrepreneurial venture, into the world of food

After working for 4 companies in 5 years, at the age of 30 I started my 1st business. I had been in the finance and IT industries, but decided to start my own business in the food business and decided to operate a restaurant as my first venture. I loved food very much, and I also thought that there was a lot of room left for innovation in the restaurant business. I paid particular attention to innovation in the field, and for the first two years after opening the restaurant, I was on-site every day as the restaurant manager. When I brought common sense from the finance and IT industries to restaurant operations, small innovations occurred. That challenge was also published in a book.
In my first startup, I provided the most funding, but I also received investments from past business partners and close friends. Being able to experience for myself the expectations and anxieties of people investing in startups has been very helpful in my current investment business. I was able to experience firsthand what it is like to be on the receiving end of an investment. This company is still in existence today, but I am ashamed to say that it has yet to make any capital gains (CG) or pay dividends. So far, we have only given out shareholder gift certificates for our directly managed restaurants, but we have ideas for shareholder returns down the road.

8. Started a business for the second time @ Shanghai, launched CVC at a business company.

In 2012, I went to Shanghai to start my second business and tried my hand at a Japanese restaurant. I got to a good point, but at the end sales started to drop and the company ran out of money. People say that it is very difficult to exit China, but I was lucky enough to sell my company and return to Japan in 2016.
When I was thinking about what to do back in Japan, a friend invited me to join a major food x internet business company. 10+ years of restaurant management, starting and exiting a business in Shanghai, and startup investment and co-creation experience seemed to buy me. You never know when past challenges, including failures, will lead to what. I encourage all readers to actively take on various challenges without worrying about failure. Launching a new business, co-creating with a new partner company, changing jobs, starting a business, etc.
A major food x Internet company has decided to establish a new CVC division, and I am going to be the head of the division. I was in charge of designing the investment committee, structuring DD, forming investment and co-creation teams, designing rules for dealing with impairment, creating a multi-layered sourcing mechanism, formulating investment strategy, and all other aspects of the CVC establishment process. I believe that my experience (2 VC firms + 3 CVC firms) can be quite useful in supporting major business companies in establishing or strengthening CVC :).

9. Launch of a fund specializing in food tech

In March 2020, when the Corona lockdown began around the world, I went around the globe by myself to see, hear, talk and feel for myself. Tokyo → Silicon Valley → Toronto → New York → Barcelona → London → Tokyo. I was supposed to go to Estonia, Germany, and Norway after London before returning home, but the border was closed (only residents are allowed to enter) and I had to change my flight.
Two things stuck in my mind intensely at that time: first, Corona is going to last a long time and the interest of people all over the world will be “health and food”; second, Japanese food is high quality, super cheap, and internationally competitive; and third, the Japanese food industry is “DX behind” in the food industry. However, if we don’t solve the “DX lag and super human resource shortage” in the food industry, we will lose our chance.
A month and a half after returning to Japan, I established a venture capital company (kemuri ventures LLC) as my third start-up. Then, in October 2020, five months after the company was established, we formed a VC fund specializing in the food tech area (Food Future Fund No. 1). Our mission is to make the food business one of the key industries in Japan. We look forward to co-creation (open innovation) and co-investment with our readers.

To be continued

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