2004年度（2004.4～2005.3）　ワークショップ講演

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Record of Workshop/Lecture

Date: April 22, 2004
Lecturer: Mr. Hirokazu Hasegawa, President of Global Venture Capital Inc. (GVC)
Theme: My experience in the venture capital business; how should we select candidate venture businesses and how should we support those we selected?
Recorded by: Iida and Aoe

1. Profile of the lecturer: from consultant to venture capitalist
Mr. Hasegawa received his CPA certification while a junior in university. In 1984, he entered Nomura Research Institute, Ltd. and became the most reputable analyst of the automotive industry. In 1993, he joined the Investment Research Department of JAFCO Co., Ltd. In 1996, he established Global Venture Capital Inc. (GVC).
GVC has four partners, with each partner responsible for investment in five companies. Thus, the company invests in about 20 companies in total. Each year, 200 candidate companies are selected out of the 870 companies that requested capital injection from GVC. GVC then conducts interviews with the presidents of the candidate companies, and decides whether to invest in each. Each interview takes only 20-30 minutes. GVC eventually selects two companies to invest in out of the 200.

2. Summary of the lecture
(1) How does GVC select companies in which to invest?
GVC focuses on people, not companies, when it makes investment decisions. Companies that qualify as GVC’s investment targets are companies that allow Mr. Hasegawa and other GVC partners to attend their board meetings as directors, that actively pursue IPOs, and that promote social contribution activities. Since GVC invests in venture business in their early stage, its service start with providing entrepreneurs with such advice as to how to leave their current companies, how to persuade their spouses and how to establish business plans. To provide such meticulous advice, GVC invests in companies located no farther from Tokyo than Nagoya, because Mr. Hasegawa believes that it is impossible to participate in management of companies too far from Tokyo. GVC not only evaluates the level of four risks (development, marketing, human resources and finance) for candidate venture businesses, but also attempts to give these businesses advice on managing these risks effectively. For instance, in case of human resources risk, Mr. Hasegawa never invests in venture businesses whose president ignores others’ advice, because Mr. Hasegawa will be unable to influence that company’s operation.

(2) Characteristics of GVC’s consulting service
Time portfolios are crucial for venture business in their early stages. The top priority for any company is to create high-quality products and sell them. For instance, when an entrepreneur tries to form an alliance with a large company, it requires a great deal of time to establish a key contact in the large company. If this contact is the president or executive vice president of the large company, it expedites the formation of an alliance; therefore, GVC’s good relationships with many major companies can come in very handy. When offering consultation, Mr. Hasegawa produces time portfolios for venture business.

(3) Pitfalls for venture business in the growth stage (Mr. Hasegawa’s experience with unsuccessful business)
Imagine the following case: A venture business achieved a large amount of initial capital investment based on its business plan, which predicts a growth rate of 25%. The business achieved only 23% growth. However, it is still making profit, and the achieved growth rate is well over the industry average of 20%. Many people would judge that the business is, in general, performing well. However, this may be a miscalculation; such a business may go bankrupt in a short period of time due to the burden of fixed costs. In cases like this, an entrepreneur must accurately analyze fixed costs.

(4) Timing for successful venture business
It is often said that exquisite wine is produced from the grapes collected in a very bad year. It is the same with venture business. Excellent companies are often created when the economy stagnates. Many of the companies currently making headlines with their IPOs were established around 2000, when the IT bubble burst. These will turn out to be excellent companies.

3. Comments by the reporter
Mr. Hasegawa said that the difference between success and failure of IPOs is very small. In other words, one cannot properly manage a business and its founder, and carry out a successful IPO, simply by relying on good luck. But by properly managing risks, one can achieve high returns. Mr. Hasegawa invests in businesses in which the founder does not easily give up a poorly performing business, but sincerely apologizes to the creditors when he/she cannot meet his/her financial obligations. If such an entrepreneur cannot make a living, Mr. Hasegawa may even employ him/her as advisor. I felt that Mr. Hasegawa truly puts the highest priority on his assessment of entrepreneurs’ personal qualities.
Unfortunately, there are not many venture capitalists of this kind in Japan. If we can find more “angels” to assist with the early stages of venture business, a larger number of Japanese entrepreneurs will aim for IPOs.

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