We’ve written a lot about Japanese mobile social gaming company GREE (TYO:3632) quite recently, and it has been especially busy of late with with its $173.8 million purchase of Japanese game publisher Pokelabo. But GREE, in addition to its primary meal ticket of mobile social games, is also on the lookout for other exciting developments in the internet business.
It is doing so via its investment arm, GREE Ventures, which is particularly interested in Southeast Asia these days. I had a chance to speak with the director of GREE Ventures’ investment office, Tatsuo Tsutsumi, recently in Tokyo, to find out a little bit more about the group, as well as its plans for the future .
This year has already seen GREE Ventures invest in Indonesian startups Price Area and Bukalapak. Tsutsumi tells me that their main focus moving forward will be the Southeast Asia region, with continued emphasis on Indonesian startups:
Our fund size is US$25 million, and about 60 percent of that will be for the Southeast Asian market. As a subsidiary of GREE, we invest not just in gaming but all internet businesses including e-commerce, advertising, and other digital media services. Indonesia’s e-commerce market is rapidly growing so we are essentially making a value chain. We plan to invest in e-commerces site within this year too. It’s a hot market there.
He explains that while there are many seed accelerators and angel investors in Indonesia, there are few venture capital firms there. But even though GREE Ventures has arrived early, the learning process is still a slow one as local regulations and processes can be complicated, but with time things are getting easier.
They are currently focused on series A rounds with a typical investment amount of about half a million to a million dollars. For this current ‘GV1’ fund, they hope to build a portfolio of about 15 to 20 companies within one year. It’s interesting to see Tsutsumi and company exploring new regions for new opportunities that differ from the parent company’s primary business.
GREE Ventures is very different from GREE in that it is looking at e-commerce, digital media, and non-gaming social applications. The gaming industry is GREE’s territory, and GREE Venture’s mission is, along with financial return on investments, seeking out the next big thing on the internet.
I was a little surprised to hear that Tsutsumi lists content and communication startups as an area of interest, especially given the difficulty of monetizing digital media these days. But he points to the examples of Twitter and Facebook, noting that investing in those companies when they just started out would have certainly been a good idea. In addition to media and e-commerce, he cites online transaction and booking services as other areas of interest.
Of course, GREE Ventures will continue to be active closer to home as well, since about 40 percent of its GV1 fund will be reserved for Japan and Korea. Its portfolio already includes e-commerce search site Aucfan, catering/bento startup Star Festival, and ad platform Geniee.
Also under the wing of GREE Ventures is social restaurant finder Retty, who recently raised $1.2 million from a group of investors including GV. The startup plans to use the funding to begin expansion outside of Japan, starting with the US and Singapore.
Regarding the creativity of Japanese startups and entrepreneurs, I couldn’t help but ask Tsutsumi a little bit about all the recent headlines proclaiming that Japan is suffering from an innovation/entrepreneurial crisis. He explains that in some ways, the circumstances we see today remind him of when he was younger:
Right now, I think entrepreneurs under 25 years of age have a strong entrepreneurial spirit. 20 years ago I was a student, when banks and securities companies were bankrupt – so my generation didn’t believe so much in big companies. Right now the young generation are in the same situation, as mega electronics companies are going down. Of course many students prefer big companies, but more aggressive young people prefer to try their own companies. Some people like that do their own thing.
He qualifies that while it would be hard to compare what’s happening in Japan to Silicon Valley, the small ecosystem in Tokyo gives him cause for optimism.
Certainly, the growth and expansion of Japanese internet companies abroad is cause for much optimism as well. Many of the recent problems experienced by the old guard in Japanese technology can be largely attributed to an inability to find opportunities in global markets that Japan borders. And while GREE Venture’s GV1 fund is still very modest, we can expect that the lessons learned from its adventures in Southeast Asia should pay off in experience and value that its parent company can benefit from in the future.