Rakuten Ventures’ Saemin Ahn: “No one should tell you what your vision is about.”

On May 20 at Singapore Polytechnic, Tech in Asia hosted its monthly Meetup event by bringing in Saemin Ahn (pictured above) for a fireside chat, which was moderated by our editor, Terence Lee. Ahn is a managing partner at Rakuten Ventures, and as such was able to share many interesting insights on the Japanese investment scene.

But first, the question: why did he choose to embark on a career in venture capital? “I knew that I had a strong proclivity to live, die, and be happy in the IT industry, and I wanted to challenge myself to try different things that I never tried before,” Ahn said. “So I changed jobs three to four times, even within Google, along the way accruing skill sets that I want for the future. And so I thought, since I’m still relatively young, why don’t I try this?”

Thankfully, it’s worked out well so far for him – Ahn has built good relationships with the founders of the companies that Rakuten Ventures has bought into. It might strike some as strange that Rakuten, an ecommerce giant, has an investment arm. It turns out that Rakuten has its fingers in many different pies, and Rakuten Ventures existed for a while even before Ahn joined the company.

“There came a time when my CEO, Hiroshi Mikitani, wanted a more constructive and rigid flow in terms of how they deal with investment opportunities. So I stepped in, and it’s been a year since,” recalled Ahn.

Moat-and-castle strategy

The reason why Rakuten is involved in so many areas is because of something that Ahn referenced to as the ‘moat-and-castle strategy’. Using Google as an example, their ‘castle’ would be search, while the ‘moats’ around it would be Android, YouTube, and so on. Rakuten has built essentially the same thing in Japan, with its castle as ecommerce, and plenty of moats such as credit cards. This way, Rakuten is able to capture users at several social, economic, and political touchpoints, extending their reach.

Lee then posed this question to Ahn: with so much talent within Japan’s borders, why is Rakuten looking across the region – what exactly is their geographical focus at the moment? Ahn revealed that their geographical focus has actually changed because the ‘pot’ has expanded a lot, though he declined to reveal any numbers. “Right now my focus is – apart from China and India – all of APAC, Israel, and also the US,” he explained.

So why are they doing looking outside of Japan? “We want to test the boundaries of our businesses in several service segments, and one of the businesses we want to test is: how good are we at investing in people and growing these companies? We want to identify synergistic opportunities, as well as financial benefits from long term exit-to-liquidity events.”

How to get funded by Rakuten Ventures?

Many ears perked up when the question everyone had been waiting for came: how many deals does Ahn take note of, and how many actually get invested in? Here are the numbers: 80 deals are received by Ahn weekly. This stack is then halved four times, with the remaining five being tracked and monitored closely by himself through three to four months.

“On a monthly basis, I will look at about 220 deals, but I may only interact with between 40 to 50 companies actively,” he added.

What actually goes through Ahn’s mind as he filters through the stack of companies on his table? What he does is to use an old trading roadmap that brokers use in public companies: coming up with themes on a quarterly basis, and subsequently matching what Rakuten wants to invest in with what is actually available in the market.

He used the firm’s investment in Singapore-based marketplace mobile app Carousell as an example of this. “When I first started out, I saw that there was a deficit in terms of how fast mobile was growing, and how commerce was actually being supported by the ecosystem. So I was furiously looking for anything that was related to C2C marketplaces, as well as companies who were able to relate well with their user-base and provide a good platform for transactions. And so I found Carousell,” he said. Right now, Ahn is currently interested in finding companies in the area of data masking and encryption.

The flipside: what does Rakuten Ventures bring in?

Is the money still coming into Southeast Asia from Japan?

Areas to attack

Q&A Session