Discussion: Exit strategies for Asian startups – M&A and IPO (LIVE BLOG)

What are some exit strategies that Asian entrepreneurs should take note of? We have invited guests from both sides of the table — entrepreneurs who have gone through multiple exits and experts who work in the stock exchange markets — to enlighten you with their invaluable insights.

On this panel, we have Yasuyuki Konuma, executive officer of Tokyo Stock Exchange, Gen Miyazawa, head of search at Yahoo! Japan, Yoichiro Hirano president, CEO and CPO of Infoteria Corporation, and Kay Mok Ku partner of Gobi ASEAN.

Moderating this panel is Anis Uzzaman, general partner, president and CEO of Fenox Venture Capital.

#15:27: Here come all the panelists on stage.

#15:30: Miyazawa introduces himself. Now he’s 31 years old withleast six years as an entrepreneur,and now he’s at Yahoo Japan, one of the leaders in Japan’s internet universe.

#15:30: Miyazawa: “As you may know SoftBank and Yahoo Inc. are the main shareholders in Yahoo Japan. Almost once a month now, we acquire smaller startups.” Miyazawa shows a picture of all the acquisitions that they have had, a very confidential list.

#15:31: Now it’s Hirano’s turn to introduce himself. Infoteria has two major projects, one of which involves information sharing. “We started fifteen years ago, we are going to be public in five years. But we ended up taking eight and a half years to go public.”

#15:34: “We raised $27 million to launch our project, Asteria. After that, we IPO’ed. But we had three difficulties. The first was venture capital, and the VC had over 50 percent of ownership of our company. Then we worked with a brokerage company which wanted 40 percent, this lead us to need to get strategic investors so that we could get more of our shares so that we could reduce the VC shares.”

#15:38: “The second was to get rid of individual contracting engineers. Our VC’s told us not to use individual contractors. Because the individual contractors are less credible and maybe there is a risk of scandal, and that is bad. Individual contractors are also a risk due to health. But the reason why we use them is because they are great engineers by name, and they ask us again and again, but we explained that we can use them.”

#15:39: “The third thing is the possibility of scandal, and that is something that you really have to protect.”

#15:41: Now onto Kay Mok Ku. He currently is a partner at Gobi ASEAN. He is currently preparing for an exit next year. He has had three exits already. He thinks that there is a new wave of VC cycles right now and that the new dotcom bubble that is happening right now will be quite different.

#15:42: “What kinds of roles did you play in the exits that you made?” Uzzaman asks. Mok Ku says, “First of all, I just want to say that China is very different from Southeast Asia and that it is much more similar to the USA. Southeast Asia is much more fragmented and exits happen faster because most exits tend to be cross-border M&A. Indonesia is hopefully going to be more like China and USA because it is more scalable so you could go all the way to an IPO.”

#15:46: Finally onto the last person, Komumura, from Tokyo Stock Exchange: “The IPO industry was very much in trouble seven or eight years ago. So the Tokyo Stock Exchange created a team that wanted to solve many of those problems. And now we’re much more aggressive about being a good friend to the Asian community. The Japanese market and regulation is very reasonable and we have to ask the companies to satisfy certain criteria and check more insights on the company, and more information on how the company operates. It used to be too strict. But now we’re trying to open up.”

#15:49: “There are many foreign companies that contact us, and now we are much more forthright about giving information about how to IPO on our stock exchange.”

#15:52: Uzzaman asks Mok Ku for advice on tips to IPO. Mok Ku: “In order to do an exit or acquisition, having a brand-name investor is important. Structure is also important. But focus on building your business and bring in guys that can help you with the structure.” Miyazawa continues: “The founder and CEO of SoftBank sometimes gave me advice ‘choosing which mountain to climb is 50 percent of your success and how you climb is the other 50 percent’. My understanding is that market is the mountain, and once you know which market you want to tackle, than you should focus on how you climb that mountain.”

#15:53: “Also, entrepreneurs should be more sales minded. M&A’s are interactions that involve buyers and sellers. So the entreperneur should imagine what are the buyers need and what are the buyers’ problem. So the entrepreneur can understand the strategy, and the direction. So the entrepreneur should prepare and provide the reason why you should buy their company.”

#15:56: Uzzaman asks what areas should people focus on: “The areas that should be hot for the future in tech are, e-commerce, especially in Indonesia, and the advertising technology market.”

#15:46: Hirano says “Does anybody lean startup? It is very popular in Japan now. Dream big. The problem is many companies just stay small. You should keep a big dream even though you start small and use lean startup. Also, Don’t live in “Like,” live in “Use.” Many people will give you likes on Facebook when you share your service, but they don’t actually use your service.”

#15:46: Mok Ku continues: “E-commerce, infrastructure, mobile internet, travel are also good spaces.”

#15:59: Uzzaman asks for final pieces of advice for startups on the path to IPO or M&A.

#15:59: Miyazawa: “Don’t go to PC. Please choose smartphone.”

#16:00: Hirano: “We are currently looking for very good technology partners to work with. We are currently working with three startups that graduated from Y Combinator.”

#16:01: Mok Ku: “Right now we’re seeing a new wave of entrepreneurs in Indonesia. So you need to find a lot of partners. I think we’re going to see a bright future for exits in Asia.”

#16:02: Komomura: “I think Mt. Fuji is a very straight mountain but the Tokyo Stock Exchange is much more complicated, with foreign investors and Japanese investors. Relatively, the small IPO’s have had a good track record and Japanese investors are very interested in technology especially lately.”

#16:04: And the audience is clapping and the panelists are off stage.