概要及び教育体系 主要講義科目 ワークショップ 課題研究・修了論文演習 課外活動

2003年度（2003.4～2004.3）　ワークショップ講演

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9th Workshop (June 5, 2003)
Entrepreneurship Study, Graduate School for Creative Cities, Osaka City University
Guest Speaker: Mr. Hiroyuki Ohnishi, President & CEO,
Technology Seed Incubation Co., Ltd. (TSI)

Key Words: Incubation, University-originated ventures, Venture capital, Company founding, Kyoto

1. Lecturer Profile
After graduating from university, Mr. Ohnishi joined a major Japanese venture capital group (VC) that invested in ventures in ASEAN countries, and was assigned to a domestic venture investment post that had just been created by the company. During his service as a venture capitalist in Osaka, Tokyo and Sendai, he visited many companies that caught his interest when he read the trade papers, fully prepared to be turned away. That experience has been useful in his current job. In 2002, he founded TSI, funded by venture capital and a group of professors, mainly from Kyoto University, and currently holds the position of representative director and CEO.

2. Lecture Summary: Project Incubation that Matches Seeds and Needs through Fieldwork
1) The Background to the Founding of the Company
In Japan, unlike in the USA, venture capital has been invested primarily in service industries, and the accumulation of knowledge at universities and research institutions has rarely been utilized to found new companies. This is partly because technologies are often difficult to understand and accounts by engineers-turned-managers are inadequate. When Mr. Ohnishi established an investment fund for university-originated ventures at his former workplace, he found that investment from venture capital was inadequate in many cases. Consequently, in April 2002 he set up a company in Kyoto that is directed toward supporting university-originated ventures.
Founding a company is in fact an exercise in starting from scratch, while ordinary employees are provided with all the infrastructure from the day they are hired. Renting an office, getting phone lines, finding personnel, arranging employee social insurance coverage, etc. - retaining a notary public to do all these jobs is rather expensive. Since these days it’s easy to find how-to books and CD-ROMs on starting a company, he recommends, at the very least, doing the initial registration of the company at the Regional Legal Affairs Bureau by oneself. Setting up a company with a capital of 40 million yen cost him approximately 500 thousand yen, even though he did all the formalities he could himself.
The first term closed at a deficit on sales of approximately 29 million yen, and he realized that venture capital investment is different from incubation. Seeking other means along various paths, he chose field-based marketing using the know-how he gained from interviews with companies that he had conducted as a venture capitalist. The company is currently capitalized at 115.53 million yen, with 45 stockholders.

2) Venture Investment in Today's Japan
Venture investment in Japan is ostensibly weighted in favor of early-stage or hands-on involvement, and oriented towards projects that involve technical firms or are university-originated. In reality, however, late stage funding where the venture will be making an IPO shortly to secure investor payback is preferred, and the hands-on approach is difficult because venture capitalists tend to lack management know-how. Nor can they evaluate technologies, even though they understand them. Further, not a few professors involved in university-originated ventures are incompetent in terms of commercialization and business models, and so are incapable of developing technologies into business opportunities.

3) Demands on the Founders of Venture Firms
Founding a company is accompanied by anxieties. Therefore, not a few people found a company with their spouse, brothers/sisters or coworkers, people whom they feel comfortable communicating with. When founding a company, sumptuous desires like becoming super rich or famous, are more likely to mitigate anxieties than are lofty ideals like contributing to society. The difficulties that the founders of ventures face at the beginning, such as unstable income, balancing sales with development, and financing - such difficulties often seem “convenient” - create demand for TSI.

4) Project Incubation
In the business model at TSI, a seed in an early stage of development is matched with a party interested in its commercialization and their coordination becomes TSI’s in-house development project. In other words, TSI helps set up a project early by providing the management resources that an entrepreneur lacks. Since in some cases university or TLO research results may be injected, TSI contacts the industry-academia cooperation offices at universities. TSI disperses risk by recruiting financial support, and so does not have to finance the projects itself. In short, TSI collects management resources, such as human resources (project and marketing leaders), the infrastructure (sites and facilities for R&D) and capital from TSI’s own funds, joint ventures and venture funds, to put together projects.
The company’s exit strategies include disposing of a project to a firm that has originally brought it in or to a third party and establishing a new company, all designed to help TSI recover its capital. Take, for example, a project currently in planning to develop a health control kit based on brain waves. Thirty million yen is needed for the first stage, and TSI has asked about 20 companies to finance the project together. Through these activities, TSI sometimes receives suggestions in return, such as less expensive approaches to product development. Such feedback is used for projects under development.

5) What Mr. Ohnishi Learned through Founding a Company
(1) One cannot accomplish anything alone.
Operating a business alone is likely to make one short-sighted, therefore, partners or supporters are indispensable. He learned the importance of having personal networks the hard way.
(2) Those who make tough comments are more important than others.
(3) Refrain from associating with those who tell you only what you want to hear.
Exposed to the critical eyes of outsiders, company presidents tend to delight tremendously in hearing favorable comments. They should be careful, however, not to make the mistake of letting the opinions of people on the outside influence their decisions.
Most importantly, management is something you don’t really know how to do until you’ve started to try it. Many of the people working at venture capital firms and financial institutions can criticize someone else's management, but know nothing about actually managing.

3. Q&A (Mr. Ohnishi’s answers to questions)
1) How to Deal with the Differences in Enthusiasm among Project Members
This is an extremely difficult problem, depending on the person who is appointed leader and how that leader coordinates things among all the other members. A project starts after the deadline and budget are set. Since delays in delivery are not acceptable, sometimes TSI has to take the blame.

2) Obstacles in University-Originated Ventures
Obstacles are omnipresent, because of the school rules at each university. In one case, even after a year of negotiations with the university authorities and the Ministry of Education, Culture, Sports, Science and Technology, a national university professor was not allowed to take the position of representative director of a company. The positions of project leader and second are better held by the candidates for president, but in reality, the spouses or brothers/sisters of Professors often become the presidents of university-originated ventures.

3) Key Points and People in Putting a Project Together
At TSI, a project is completed to satisfy the requirements of the particular exit strategy, although how it is put together depends on the stage of the seed. For example, the target that was set for a fingerprint recognition system was to make a prototype that linked the research at a university with the intended uses, such as security and card verification. The key people are different depending on the circumstances, and in some cases, department managers from the companies that brought the needs are the key people.

4. Discussion: Industry-Academia Cooperation and the Growth of Venture Firms
Graduate students praised the following points:
(1) The combination of human resources, infrastructure, capital and marketing
(2) The method of putting projects together
(3) The steady style of management
(4) The target-oriented approach
Teachers valued marketing through fieldwork and the project incubation business model.
RCT (NPO) in the US and The Steinbeis Foundation in Germany were referred to as examples of advanced groups overseas

 

 

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