GB Interview: A Former Researcher’s Passion to Support Startups That Have the Technology

Kenta Kitsuka, a venture capitalist and a researcher by background, was newly assigned as a General Partner (GP) last year. I asked Kitsuka-san how he leverages his past experience for his current role and how he wants to contribute to GB going forward.

What I can do as a former researcher

──What brought you to GB after working at Sanyo Electric and Nihon L'Oréal?

I was a researcher for quite a long time and often felt frustrated when it took a long time to give back to society the results of my research or when good outcomes were not turned into products. The work I was doing was of course important, but I wanted to do something different to give back my experience to society, without sticking to one company. This feeling became gradually stronger.

It was at that time in 2014 I came across the opportunity to join Global Brain. Back then, I had no idea what a “venture capital” firm was about, and nothing came up on the web, or at least nothing in Japanese. It was a very big career change for me, but for some reason I had this hunch that the greater the risk, the bigger the return, and I jumped right in.

──Does your background as a researcher give you a leg up with your venture capitalist work?

Very much. I feel that my “intuition” with technological development is working out quite positively. For example, in my discussions with tech startups, I often hear them say “we’re successful with lab scale but have challenges with pilot scale.” In such cases, I can have a shared sense of what is going on, thinking, “maybe this kind of gap caused this to happen.” Although I specialized in cosmetics and materials, I can have deep discussions with the startups about other products and technology out of my expertise, because I can roughly understand what challenges they are facing by listening to what they say. I guess this is because I was a researcher myself.

Also, because I have done the work myself, I can understand the technological risks a startup has based on our discussions, as long as the technology relates to my area of expertise. In startup investing, “having faith” is ultimately the most important thing. And because I can fully understand the risks, I can have complete faith in the success of a startup. In that sense, I think my background brings depth to my investing activities as far as R&D startups are concerned.

In my view, investing has three aspects: “Can they build it?” “Will it sell?” and “Can they control it?” With R&D startups, it's extremely important whether they can “build” something that will possibly sell. I would say it is my strength that I can assess this aspect very closely. Also, I’m not the only venture capitalist with domain expertise at GB. We have many other venture capitalists who are subject matter experts, all contributing to building our in-depth investing structure.

Working with each stakeholder

──What are you mindful of in leveraging your strength and working with stakeholders like the startups and Limited Partners (LPs; fund investors)?

With the LPs, I‘m attentive to ”information disclosure” and “consistency.” Information disclosure is key to a trust relationship. You can never win people’s trust if you are always saying different things, which is why it’s important to be consistent.

When I first started this job, I wasn’t sharing enough information with the LPs because I had no experience and didn’t understand everything fully. Because of this, I lost my confidence in communicating with them.

However, from one point in time I started to gain a certain level of confidence as a venture capitalist. From then onwards, I changed my attitude toward information disclosure, trying to be open more than ever. I remember how that gradually led to gaining trust from others. Making good investment decisions or any decisions are of course important, but I think all of that bears fruit when you have a trust relationship at the basis.

──How about when you work with startups?

Information disclosure and consistency are both vital here as well. In addition, I think we as investment professionals need to provide “objective and long-term perspectives.”

The best management team of one startup company can get their hands on only so much information and it's natural for them to prioritize the other tasks laid out right in front of them. If we could share essential information by referring to other companies' cases and examples, startups can make better management decisions and avoid risks.

For example, let’s say one startup we’re supporting is having challenges hiring a CFO. Because we see a lot of CFOs in the media with experience working at investment banks and the like, the startup will likely think that that is the kind of talent they must find. But when you look across GB’s portfolio companies, many CFOs are internal accounting staff by background. This is a good example showing you don’t necessarily have to have high financial skills or come from a professional firm to succeed, as long as you fit in with the culture of the company and can acquire required skills afterward.

Of course, there is no one-fits-all golden rule, but I hope startups can make better decisions by understanding the importance of culture fit and by knowing the risk of turning down a candidate just by looking at his/her experience.

GB supports startups through various means ranging from an accelerator program for seed-stage startups to growth funds, and has achieved more than 100 exits. Our strength is that we have a good grasp of many startups’ situations and know various success cases. From this standpoint, we are excited to continue offering long-term support with an objective perspective.

The advantage of having a big “backstage crew”

──Let’s talk about the company. In short, what is the culture of GB?

That is a difficult question, but I would say the “backstage crew” represents our culture. We have many talented people, and no one is overly assertive. No one shouts “Look at me!” but the members are rather quiet and hard-working. I guess we have this common mindset that the startups and the LPs are the main players. Also, whatever we do, we do as a team, so inexperienced members can look to others to learn, and all the teams hold internal discussions to deep-dive into different topics. This is a culture that remains the same since I joined the company.

There are a lot of things you cannot come up with on your own. Because we discuss as a team and think about what we can do for a startup together, we are able to move forward with our sourcing activities, investment process, business support, and exit support saying, “Let’s do that. Hey, we can do this too.”

At GB, the company assigns “mentors” and “buddies” to new-joiners, which I think is very effective. This creates a culture where no one works alone but instead we muster everyone’s power to overcome challenges. In investment, you have no one correct answer, which is why we need to put our heads together and search for a better answer.

──Any experience where GB’s culture brought positive outcomes?

Yes. I’ve been investing in food tech startups given my background as a researcher in the consumer goods sector. In the final out of the four investments we made in BASE FOOD, which has already gone public, I received humongous support from the Fund Management Team and the Due Diligence Team.

I initially faced some hurdles with this investment, but as I consulted the two teams and carefully analyzed the startup’s financial status, I realized that the business could further grow if we invested based on a specific KPI. This gave the thumbs-up to make a follow-on investment.

Of course, we were able to make the follow-on investment largely because BASE FOOD had achieved business growth by leveraging the past investments. However, I think this example also shows how discussions with GB’s professionals can lead to new findings, analysis, and quantitative understanding of risks, to move a deal forward.

Taking Japanese tech startups to the global stage

──I imagine you will be involved in GB’s organizational structure as a GP. How do you see that?

Being a researcher, I struggled to catch up on skills required as a venture capitalist. Which is why I host study sessions on a regular basis or document my own investing guidelines. By compiling my past experience, I want to create a structure where others can learn in one year what took me five years to learn.?

GB has more than 120 employees with many people working remotely. It hides from view members who have struggles. I would like to build a structure to solve such unseen problems and foster communication.

──How would you like to contribute to the startups and the LPs as a venture capitalist?

Because I was a researcher myself, I am eager to support R&D startups to vitalize the Japanese ecosystem. ?This is in line with the government’s “Startup Development Five-year Plan” and is also needed for the Japanese economy.

Japan does not have many R&D startups and not enough money is going into the sector. However, GB works with many LPs including Kirin, Epson, JGC Group, Mitsubishi Electric, Mitsui Chemicals, Shimadzu Corporation, and others who can all evaluate the technologies and take risks. I hope we can work together to get the R&D startups booming.

Good technology crosses borders. I’m excited to support startups with the power to expand abroad and contribute to Japanese society. Going forward, I actually want to create R&D startups myself. I would be more than happy if I could not only support the existing startups but also help found R&D startups.