Dave McClure on Japan’s slow startup dawn: ‘What the fuck is the problem?’

(From l to r:) 500 Startups’ Dave McClure, James Riney, Pankaj Jain, and Vishal Harnal. Photo credit: Tech in Asia / Michael Holmes.

It was a 500 Startups extravaganza as no fewer than four people from the international venture capital firm took the stage at Tech in Asia Tokyo 2016.

The VC that started out in 2010 by Dave McClure and Christine Tsai with the ambition of helping build 500 businesses now has a global portfolio of 1,600 companies. “Maybe 500 VCs is a better name,” Dave joked.

When asked what makes the VC special, Dave pointed to 500’s near-global presence – of the 1,600 businesses it has invested in, about 500 are outside the US.

Another distinguishing element is the attention the VC pays to its portfolio companies’ growth by providing support in marketing, sales, customer acquisition, and more. The approach seems to be paying off – 500 Startups recently saw its first IPO with cloud communication software company Twilio going public in June.

Photo credit: Tech in Asia / Michael Holmes.

Growing in Southeast Asia and India

Besides Dave, the panel featured James Riney, head of Japan for 500 Startups, and partners Pankaj Jain and Vishal Harnal, responsible for India and Southeast Asia, respectively.

Pankaj mentioned that 500 Startups has made about 50 to 60 investments in India in the last couple of years, targeting both business-to-business and business-to-consumer companies. The VC will look toward video-related companies in the next 18 months as data prices drop in the country, which will result in a streaming boom.

It looks like it’s a good time to invest in India right now, according to Pankaj. Last year’s inflated valuations and abundance of cash resulted in some rude awakenings for founders and investors, but this has cleared the way for smarter investments.

It was quite a harrowing process.

“At the seed stage I think there was a huge frenzy last year, and some sanity has kind of returned to the market, which is good,” he said. “I still think that the opportunities at the seed stage are pretty significant over the next couple of years.”

In Southeast Asia, 500 has completed about 120 deals, including high-profile companies like Uber arch-rival Grab and mobile marketplaces Carousell and Bukalapak. “Most of those deals were done on a team of two people,” Vishal said. “It was quite a harrowing process, but we were fortunate to have people a lot better than ourselves to support us in getting deals done and scaling and growing across the region.”

Vishal’s impression of Southeast Asia was as optimistic as that of Pankaj’s for India. “There’s a lot of capital that’s filling up gaps that used to exist in the market in Southeast Asia, so venture capital funds that started at the seed stage, the series A stage, are now moving to the series A and series B respectively,” he said.

Turning Japanese

Slowdown

Shining a light into Japan’s black box

Escaping the comfort zone