Nobuaki Kitagawa, Director of Overseas Investment at CyberAgent Ventures, talks about his investment philosophies and how it helps him make the right decisions.
CyberAgent Ventures is one of the many Japanese venture capital firms exploring investment opportunities in Southeast Asia. With offices in Jakarta, Ho Chi Minh City and Hanoi, the management team looks for the next big thing in consumer Internet.
Sitting down for a chat with CyberAgent Ventures’ Director of Overseas Investment, Nobuaki Kitagawa, I hoped to find out more about his investment philosophies and how he is driving the Japanese firm’s search for Asia’s top technology startups. Nobuaki is based in Beijing as the CEO of CyberAgent Ventures China, but oversees all investment activities in Asia-Pacific, excluding Japan.
When looking at investment opportunities, Nobuaki highlights that the firm looks at startups that can leverage on the expertise of CyberAgent. This includes consumer Internet and online advertising products as they are part of CyberAgent’s business.
Getting to know more about how he evaluates investments, Nobuaki mentioned that he and his team looks at two aspects. Is the local market big enough? Can the startup win in that local market?
Why local and not global? According to Nobuaki, the firm’s experience through CyberAgent’s operations taught them that cross-border business expansion is something that is really, really hard. He said that even though Southeast Asia may seem like one big market of 600 million people, it is not easy for startups in the region to expand out of their country. Nobuaki and his team sees each country as a completely individual markets. That said, Nobuaki and his team are not against the idea of going global but understanding the challenges of it helps frame their focus and expectations rationally.
Understanding this, it is clear why CyberAgent Ventures is operating in countries like China, Taiwan, Vietnam and Indonesia. The firm is also showing interest in the Thai market. Countries like Singapore is not their focus yet as the market size does meet the criteria.
When looking at investments, the team first look to identify the verticals that present strong opportunities in the country. Once they have identified the space that they want to invest in, they will then search for companies that fit the bill. This investment plan is a more tedious process as the team has to understand the country environment first. But, as Nobuaki mentioned, they view all their investments in the region as long-term investments which justifies their stringent evaluation methods. Another reason why CyberAgent Ventures’ investments in Southeast Asia is for the long run is because of the current state of infrastructure available in the region. While the lack of information technology infrastructure is one of the main challenges that startups in Southeast Asia face, Nobuaki views this as still the right time to enter the market. He believes that these problems will be solved as time goes by and getting in early in the game puts them in a prime position to capitalise from these opportunities.
Comparing China to Indonesia, Nobuaki commented that although the market in Indonesia is not as big as China, the competitive environment is better in Indonesia for startups. In China, there’s fierce competition going on among the local startup for market share and other resources.
Image Credits: CyberAgent Ventures
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