VENTURE WATCH

Back to Contents of Issue: March 2000


Big Blue Showers Help on Startup

by Noriko Takezaki

As Japan's venture boom unfolds, the relationship between corporate adults and technology ventures is undergoing real change, as established players are finally starting to lend a hand to the new kids on the block. IBM Japan is one of the leaders, and last year it launched a venture company support project offering Big Blue products and technologies free to selected Net startups. Info Shower Japan was the first to catch IBM's attention.

Info Shower's key business concept has been dubbed e-docum@tion, a term the company uses to refer to rationalizing the document management process, including storage, search, distribution, and printing, by electronically managing documents via the Internet. Info Shower provides two main services: digital archiving and document capture.

Digital archiving provides storage and management of customers' electronic documents and multimedia data on servers located in Tokyo and San Jose, which employ storage area network technology. Target users of this service are central and regional governments, and large corporations. Document capture, meanwhile, converts existing paper documents into digital versions to permit electronic handling. For this service, Info Shower plans to start a nationwide franchise system this year, which the company hopes will boost its business and brand recognition. Info Shower also intends to offer content delivery and print-on-demand services via the Net.

Sensing an opportunity, IBM Japan has come onboard by providing 300 million worth of hardware and other assistance free of charge for the first three years. The industry giant has also been providing 24/7 remote management of the San Jose servers.

"Thanks to IBM's help, I was able to launch quickly," says Info Shower president Hiroshi Kubori. "This business requires significant infrastructure investment to start, and it would have taken too long to raise sufficient funding on my own. For knowledge management services like ours, I see a growing demand from a wider range of customers, so I couldn't afford to miss the chance. We're forecasting a digital document handling demand equivalent to more than 800 billion documents, and we've set 2.8 billion documents as our first target."

In his early 50s, Kubori had already started several businesses by the time IBM found him at the helm of Info Shower. The most recent was his involvement in the establishment of Direct Internet, a venture company offering a satellite-based Internet service. He played a key role in developing the business plan for the company, particularly the Net-based data distribution component. In 1998, he left the company to establish Info Shower and focus on data management services. Soon after the launch of the company last year, his business plan caught the attention of IBM Japan's venture company support task force, and since then, IBM has been helping Info Shower not only through the provision of hardware and software, but also by providing business development consulting and review of the business plan.

"'Win and win with speed' is our mission," says Noboru Itoh, a member of the IBM task force. "In return for providing our products and technologies to venture companies, we can gain valuable e-business knowledge from them. Since venture companies are quite active and flexible, generally taking a speedy e-business deployment approach, there are lots of things we learn from them."

Although Info Shower now enjoys IBM's support, the most pressing tasks facing it are acquiring the know-how to operate the data servers and raising funds to continue the firm's growth. IBM's support will run out in a little less than 36 months, after which Info Shower will have to go it alone. For fund raising, Kubori has been looking for direct financing rather than bank loans, with an eye to a future IPO. "If we have a large bank loan liability, our stock valuation won't be so high," says Kubori.

But for now, there's no question that IBM has helped smooth Info Shower's launch. The real challenge will come in attracting investors to the scheme before the three-year deadline, after which the company must be fully funded and self-supporting. To date, Kubori has convinced nine investors, including a trading company, a bank, a Taiwanese software vendor, an ISP, and "some" angels. This year, he's aiming for an increase in working capital, to 1 billion, and he's making sure that people clearly understand Big Blue's involvement in his venture. For future fund raising, this issue will be key.

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