Back to Contents of Issue: July 2000

Venture Habitat's Move to Shibuya Makes Sense

by John Stern

Back in the prehistoric days before the Internet Bubble, when investors had limited funds and selected recipients with care, it was said that Silicon Valley venture capitalists would check to see how full a budding company's parking lot was late at night and on weekends: a full parking lot and a building with the lights on meant a feverish pace and high employee loyalty.

If a VC were to check out one of the companies housed in JETRO's startup incubator in the Akasaka Twin Tower, he would not, of course, see a full parking lot late at night. Tokyo's companies don't provide parking spaces, and few Tokyo employees drive to work.

But the VC wouldn't see the lights burning, either: JETRO's incubator for 24x7 companies closes at 5. Why? So the government retirees who run the project don't have to alter their long-standing work habits to suit the Net era.

The idea of an incubator for venture businesses is not new in Japan, and has often been promoted by quasi-government development authorities or real estate firms. Indeed, railroad and property manager Tokyu Corporation just announced that it will start building, in June 2000, a three-floor building in the Shibuya area exclusively for the use of venture businesses into which Tokyu will invest ¥10 million per firm. (Tokyu will also handle payroll, procurement, and other back-office functions.)

Sometimes a good location and facilities can attract enough Internet companies spontaneously to generate an incubator environment. To see an example, visit the espresso machine at the Regus executive suites facility in the Kamiyacho Mori Building. Regus has made it possible for foreign firms new to Tokyo to have immediate access to US-style executive suites, with large conference rooms, excellent air circulation, all the necessary office equipment, and a moderate rental deposit. The Regus facility has attracted a long list of pure Internet companies (or the Net branches of traditional firms), and they often swap shop talk around the espresso machine.

Then there are the facilities offered by ServCorp, which seem to attract the financial services companies offering money to the ventures in the Regus facilities.

One of the boldest incubator ideas in recent years involves a foreign-capital venture firm taking a big chunk of prime new real estate right in the heart of Bit Valley. I've talked myself blue in the face trying to get foreign financial and professional firms servicing the Japan Internet market to locate near those companies in Shibuya. No sale: the financial folks still flock to Otemachi, the lawyers to Toranomon.

Now comes SunBridge, a VC firm rooted in California that specializes in investments for the Japan market. SunBridge's "Venture Habitat" occupies an entire floor (20,000 square feet, or 2,125 square meters) in the recently opened Shibuya Mark City, the first modern hotel-office-mall complex in Shibuya. The facility also has the backing of JAFCO, NVCC, and the man who recently took Oracle Japan public, Chikara Sano. Sano's mark is evident: the Habitat plans to duplicate the bold color schemes, abundance of plants, and perhaps even the large, shaggy dog that made Oracle Japan a famously unconventional place to work.

SunBridge's facility was not called an incubator, according to principal Allen Miner, because the word incubator tends to be used for the weak: think of incubators for chicks, biological samples, or premature babies. Miner, a significant shareholder in Oracle Japan, and his executives Takaaki Nagayama, Shinichiro Ishibashi, Akira Kitamura, and Sandy Hirano, have collective executive experience at IBM Japan, Oracle, Netscape, and Adobe. They believe they know how to pick young but strong companies and then let them grow in an environment that fosters cross-pollination in addition to providing mentors, professional advisors, and access to capital. In fact, according to Miner, initial tenants represent not only the usual newly incorporated firms with two employees, but also a 60-person company scheduled to launch an IPO later this year.

Tycoon and philanthropist Andrew Carnegie once said, "Put all your eggs in one basket, then watch that basket." Perhaps Tokyo "habitats" will lead to another generation of Carnegies.

John Stern writes Log On exclusively for J@pan Inc.

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