X&KSK was established by Honda Keisuke to invest in Japanese startups. Going forward, the fund will invest primarily in companies with a vision to take flight globally, with the aim of creating a "decacorn" in Japan.
This time, we spoke to Yamamoto Kohei and Shimokawa Yuka, the central figures of the much-anticipated X&KSK, about the challenges facing Japanese startups that they understand because they have seen the world, the vision the fund is aiming for, and its prospects for the future.
Nagatomo Hiroki (hereinafter, Nagatomo): Please tell us about your background.
Kohei Yamamoto (hereinafter Yamamoto): I first joined General Electric and began my career as a financial analyst for about three years.
After that, I joined Rakuten and worked in the California office, which is Rakuten's US headquarters. At the time, the focus was on e-commerce, and I was thinking about data strategies with an eye toward Rakuten's global expansion, such as strategies to beat Amazon.
Next, I was in charge of startup investments, and then I worked closely with Rakuten founder Hiroshi Mikitani in a secretary-like role for about three years.
I had a connection with the fund started by Keisuke Honda, and that's how I ended up joining.
Yuka Shimokawa (hereinafter Shimokawa): After graduating from a university in Japan, I joined Bank of America (then Merrill Lynch) and was involved in M&A and fundraising.
After that, I studied intellectual property at a university in San Francisco, qualified as a New York attorney, and worked at the Milken Institute, a think tank headquartered in LA.
The founder, Michael Milken, is a person everyone who wants to work on Wall Street would look up to. Many top players in the financial industry gathered around him, and many of the people at the institute also had a background in the financial industry.
The institute's Asian office was in Singapore, where I worked for nearly four years.
I was in charge of four departments at the Milken Institute. In particular, I was in charge of non-profit business development, and was in charge of running Milken's international conference, known as the "Davos of Finance," and interacted with various companies.
I was in charge of all things related to Japan, as former Prime Minister Yoshihide Suga and Tokyo Governor Yuriko Koike were also attending, along with other company leaders.
Nagatomo: How did you end up teaming up with Honda?
Shimokawa: I met Honda around the end of 2020 through my previous job at the Milken Institute. When Honda moved to Singapore, he contacted me at a time when he was thinking about what business he would develop in the future.
At the time, we weren't thinking about working together, but I introduced him to institutional investors who I thought would be interested in his fund.
When I was trying to become independent and do something on my own, he told me, "I'm thinking of starting a fund like this," so the timing was perfect for me to join.
We shared the same concerns about the problems, and Honda was very interested in negotiation skills, which was related to the negotiation studies I studied in university, so we got along well.
Yamamoto: I had been living in the US for about five years, and when I was thinking about what to do next in my career, I realized I wanted to work in investment-related fields.
It was at that time that I saw the news that Honda was running a fund, and I became interested. At the time, the co-founder of the fund, Takeshi Nakanishi, was living in LA, and I had the opportunity to meet him through a mutual acquaintance.
After many discussions with him, we started talking about how it would be great if we could join forces.
That's how it all began, when I decided to go and meet Honda in Singapore.
Nagatomo: Please tell us about the interesting and difficult aspects of the job.
Yamamoto: I think it's different for each of us, but we each have our own specialty. For example, I find Japanese companies, and Shimokawa is in charge of Asian and Western companies.
Rather than controlling the organization, it feels like each person is free to act. In terms of what's interesting, it's fun to be able to act in that way, and we also have a sense of mission that we have to do something different from other funds.
But still there are a lot of difficult things as well (laughs). It's hard, but it's fulfilling.
Also, Keisuke Honda is an interesting person, isn't he? He has a completely different way of thinking, which is interesting.
At a normal company, you have a meeting on Monday morning and share your thoughts about what you're going to do for the week, but he says that's not necessary.
He says that you should use that time to think strategically about your investment destinations. He said that in the locker room at AC Milan, where he used to play, everyone talked about things like that.
He uses soccer as an analogy for everything, so I can't help but agree. Since all the references are soccer, it's innovative and interesting, so I never get bored.
Nagatomo: Mr. Honda has a track record of investing in numerous startups, but what was the background behind launching this fund?
Shimokawa: I think a big part of it was his strong desire not to miss the opportunity to invest in a Japanese company at this timing.
It wasn't just his personal desire, but also government action and the creation of an environment that led him to decide that now was the time to make a big impact in Japan.
The wind is also turning, with overseas investors showing increasing enthusiasm for investing in Japanese companies. With the number of angel investors in Japan on the rise, Honda has a strong passion for Japanese startups and a sense of mission that he must do it now. That was the background to launching the fund.
Nagatomo: Please tell us about the investment targets that X&KSK focuses on and the criteria for selecting startups.
Yamamoto: The goal of the fund is to create as many decacorns as possible in Japan. I think that one decacorn will have a greater impact on the industry than multiple unicorns.
For that to happen, the company needs to expand globally. When considering how to select such a company, it is difficult if you narrow down the industry.
It is also difficult to achieve this with domestic capital alone. When considering how to get overseas investors to invest in Japanese companies, I think it will be easier to do so if the company is one in which we are investing.
For example, IP that is unique to Japan is strong. We will think about how to attract overseas capital and search for the best 30 companies in Japan over a period of four years.
After we invest, we will attract overseas capital and, in some cases, consider listing in the United States, etc.
Nagatomo: What do you think about the Web 3.0 field?
Yamamoto: We have investment experience in the Web 3.0 field in the past. Alchemy and others have achieved great results. Although we are a general fund, we are interested in the Web 3.0 field and would like to continue to monitor it in the future.
I think that entrepreneurs who create products with a clear plot are important in this day and age. We are paying attention to entrepreneurs who create solid products even in a bear market.
There are blockchains that are suitable for Japan locally, blockchains that span multiple chains, and finance such as DeFi, so I think there are investment opportunities in a variety of fields.
Nagatomo: What are the challenges and obstacles facing startups in Japan? What initiatives does your fund have in place to overcome them?
Shimokawa: The most obvious thing, as Honda often says, is whether the founders have the right mindset.
I have looked at the community of next-generation leaders, and many of them are trying to control the Southeast Asian market and go overseas.
Many founders are thinking about how big they can grow by controlling the economy of the country.
Although Japan's GDP has fallen to fourth place, I think the market itself is still large. The idea that you can scale if you control the Japanese market can sometimes work against you.
That means you can't think about overseas strategies. Honda often uses the analogy that "if you aim for the national soccer tournament in soccer, you won't go to the World Cup."
"You can get close to it because you aim for the World Cup." There are no rules about this perspective, but I would like to develop their human resources as they aim for global expansion.
Nagatomo: Please tell us about X&KSK's future vision and goals.
Yamamoto: We would like to make a splash in the industry through our fund, which has never been available in Japan before.
There are some great people out there who don't know what to do to advance overseas, so we would like to help them.
I would like to accomplish a variety of things with this team over the next four years.
◉ Kohei Yamamoto
X&KSK Managing Partner
He leads investment due diligence, business development in support of investees, fundraising, investor relations, etc. Prior to joining X& Group, he was in the CEO's Office at Rakuten, where he was involved in Rakuten Capital's global investments, the launch of RakuNest, an open innovation community with over 100 large companies, company-wide strategies such as building a global data platform for utilizing AI/big data, and the company's Tokyo and Silicon Valley offices. Prior to Rakuten, he participated in a leadership program in the finance field at GE (General Electric) in the United States, where he was involved in management and accounting work in the energy, finance, and healthcare businesses. He graduated from the Faculty of Economics at Hitotsubashi University.
◉ Yuka Shimokawa
X&KSK Head of Business Development
Specializes in investor relations, fundraising, and event program development. Prior to joining X&KSK, he was the first Japanese to work at the Milken Institute, where he was instrumental in expanding the institute's network in Japan, strengthening relationships with institutional investors, philanthropists, family offices, and young entrepreneurs, primarily in Asia, and building strategic partnerships to advance the institute's goals. Prior to the Milken Institute, he worked in the technology sector at Bank of America Securities' Institutional Investment Division. He is a New York attorney and a graduate of the University of California, Berkeley Law School.
◉ Hiroki Nagatomo
Columnist
Born in 1988. Started a business while studying at Yokohama City University. Developed a staffing agency with major telecommunications carriers as its main clients. Traveled to over 30 countries and met wealthy people from overseas, which led him to come into contact with crypto. In 2022, he participated in the launch of BitLending, an asset formation platform for the Web 3.0 era. Leveraging his unique network, he follows the current state of crypto. His hobby is photography. As a triathlete, he challenges IRONMAN RACEs around the world.
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