Evolution of a Venture Capital Firm and Challenges in the Japanese Market

Japan has far fewer unicorns than one expects - or than venture capitalists desire. That fact, however, hides a fascinating story. Today James Riney, founding partner of Coral Capital explains the danger of unicorn counting. We dive deep into which startup sectors Japan is likely to lead in globally in the coming decade, how to identify unique startup value in Japan. We also talk about how Japan has become more like Silicon Valley in the past ten years and why they are about to become very different. It's a great conversation, and I think you'll enjoy it. Show Notes Coral Capital’s portfolio strategy How to find Japanese startups that can make a global impact Three categories of Japanese startups with unique opportunities for growth Sectors where Japan has a global advantage in startups Why “niche” startups in Japan can become hugely profitable What’s in Store for Carpal Capital Fund 4 Proof Japanese investors are long-term patent long-term investors The importance of VC portfolio services is growing in Japan How to get a job at a startup Starting a VC fund as a foreigner in Japan Japan’s “Just who does he think he is?! “ problem The error in the government's plan to attract foreign investors Why foreign VC struggle in Japan This biggest misconceptions foreign VCs have about the Japanese market Japan’s hidden unicorns Links from our Guest Everything you ever wanted to know about Coral Capital Get in touch as a startup Get in touch as normal person  (lol) Coral Capital on YouTube The Coral Capital podcast Follow James on Twitter @james_riney Connect with him on LinkedIn Japan's Hidden Unicorns James' Article on Japan's 41 Hidden Unicorns My panel discussion on the same topic : Live from Stanford: Where are Japan’s Unicorns? Coral Capital Fund IV announcement Get a job at Coral Capital Transcript Welcome to Disrupting Japan, Straight Talk from Japan's most innovative startups and VCs. I'm Tim Romero, and thanks for joining me. Venture capital in Japan is changing, but not in the way that most people think it is. Today, we sit down and talk with longtime friend of the show and founding partner of Coral Capital, James Riney. Now, James first came on the show about eight years ago, back when he was at 500 startups and before he even started Coral Capital. Over those eight years, James and Coral has probably done more than anyone to bring Silicon Valley style VC investment and VC founder support to Japan. And we're going to talk about some of those successes and failures. James also shares exactly what he and the team at Coral Capital are looking for in the startups they invest in and how they identify unique startup value in Japan. We also dive into the recent push to attract more foreign VC investment into Japan, what foreigners misunderstand about investing in Japanese startups, the challenges of establishing a VC fund here in Japan, and what Japanese and Silicon Valley VCs still need to learn from each other. But you know, James tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, I'm sitting here with longtime friend of the show. James Rainey, who's CEO, founder of Coral Capital. So, thanks for sitting down with us again. James: Thank you. I guess it's my third time. Tim: Third time in almost 10 years. James: It's crazy. Time flies. Tim: It does. Man, so much has changed. It's just incredible. But we will go down memory lane some other time. And today let's talk  Coral. So, tell me about your fund. Who are you investing in and why? James: Yeah, so we are basically looking for what we call Power Law companies in Japan. So, as you know, venture capital is very much driven by Power Law, which means that there's only a handful of companies in the industry or at a firm level that are really going to drive most of the returns.