First came Sony, then sushi bars. Now, Ken Kawabe is out to give venture capital a Japanese flavor.
Last August, Kawabe opened a Los Angeles branch office for Yamaichi Uni Ven Co., one of Japan's largest venture capital firms, with a $50-million fund. But the 47-year-old Kawabe isn't just scouting for American companies. He is looking for transplanted Japanese enterprises -- small to medium-size businesses that show what Kawabe calls "the pioneer spirit."
A former executive with Yamaichi International America, Kawabe is something of a pioneer himself. It took two years of memos for him to convince Yamaichi of the irresistible opportunities in the States. At least 10 Japanese companies come to California each month in search of new products and partners, Kawabe pointed out, adding to the 900 privately owned transplants already on the West Coast. Many, he noted, are "excellent prospects" for eventual Japanese public offerings, the venture capitalist's pot of gold.
Kawabe's forecast came true even before he opened for business. While setting up his office one day in June, 23 different supplicants showed up on his doorstep, hats in hand. Even before the office was open, Yamaichi Uni Ven in Tokyo had invested a total of $2.5 mil lion in five Japanese companies in the United States.
The venture capitalist's game is much Kawabe says, but Japanese venture capitalists are less likely to back risky start-ups, preferring to invest in existing companies at later stages. "Perhaps in the near future, Japanese venture capitalists will get accustomed to failure," he says. "But, for now, they do not want to invest at stage one. They do not like bankruptcies."
Even so, other Japanese venture capitalists are following Kawabe to these shores, including Japan Associated Finance Co., an affiliate of Nomura Group, Yamaichi's main competitor at home.