NFTStudio24 Podcast Series presents an exclusive interview with Akio Tanaka, Partner & Co-Founder at Headline VC and IVC, conducted by NFTStudio24 CEO Hinza Asif. He shares his experience in the early Bitcoin days, investors’ mindset on investing in Web3 startups, and opportunities for foreigners in the Japan market.
Akio has been working in the investment field for the longest time. Before joining Web3, he was the former head of the venture investment program for Adobe in Asia. His journey as a founding member of many successful projects adds exceptional depth to his insights.
Akio’s Experience with Bitcoin in its Early Stages
Akio’s entry into the industry began before Web3 was even referred to as “Web3.” An era in which Bitcoin was just introduced and only a few tech-savvy people knew about this technology.
Over ten years ago, Headline VC was divided into four VCs spread around the US, Europe, Asia, and North America. Akio came across Bitcoin when one of his partners in Brazil talked about it.
“At that time, Bitcoin value in US dollars was just 3 digit,” Akio shared. His curiosity brought him to explore cryptocurrency. He along with Headline VC took time to research and learn about this newly emerging technology over the years.
They began investing in blockchain companies much later; almost after 5-6 years of its launch.
Akio’s Journey to Founding IVC for Web3 Investment
The first investment Akio ever made was in a Taiwan-based crypto exchange, which is soon going to be listed publicly. Akio shares that Headline VC kept up with the industry until the COVID hit brought a massive ICO boom with DeFi in 2020. This was the first cycle when VCs that had invested were receiving good results.
As an experienced investor and advisor to various tech projects, Akio saw a big potential in this industry. After DeFi, the GameFi market received global attention. Games like Axie Infinity saw massive investments coming from investors and players.
“During that time we decided now we’ve gone through one full cycle and we are starting to see real-world applications. And that’s when we decided to take the further plunge into this space by setting up a dedicated crypto fund called IVC,” Akio explained.
IVC aka Infinity Ventures Crypto has been headlining the media with its robust investments and support in the Web3 industry. Akio says this venture fund began with small experiments and now it’s becoming more mature than ever for long-term establishment.
Akio’s Remarks on Successful Startup Pitch for Investments
Akio has a background in Engineering and development, which contributes to his perspective when it comes to investing in different startups or projects in the Web3 space.
“When we talk about Web1 or the internet, each era has had a shift in its trend of Fundamental Technical Innovation, the same goes for blockchain,” he says. From an investment point of view, it’s not just about marketing lingo but also how relevant or innovative that startup or project is on the blockchain.
According to him, IVC and Headline VC pay special attention to cofounders’ technical skillset, especially in blockchain and Web3. He believes that like any technology it does require people with a technical mindset and skillset to implement new solutions.
Other than technical knowledge, IVC judges a team that can create services, not just for a specific market, but have a global impact.
According to Akio, the fund does have a portfolio of companies focused on specific markets such as Japan or India but those too must have an international interface by including international players or investors.
To summarize, the main points that Headline VC looks at:
- Startups that have Fundamental Technical Innovation potential
- Founders or teams with technical skill sets and an international background
- Teams that have the ability to develop solutions and services that have a global impact
- Utility of the projects’ tokens and products
Akio believes Youth Frontier is Essential in Web3
Since blockchain is quite a new industry, not many people have 10 years or 20 years of experience. NFTStudio24 raised the issue of lack of experience and its impact on the overall Web3 adoption.
Akio refers to the early internet days when there were many young CEOs who transformed from the traditional industry. He gives the instance of Mark Zuckerberg who created Social Network when he was just in University.
He believes that being young isn’t a bad thing but a good sign. “Young people are most likely to not be constrained by traditional mindsets,” he said.
However, he adds that people still need a skillset to implement solutions or make a project successful. Without those skills, there’s no guarantee among investors that a certain project or startup can succeed.
Akio on Headline VC’s Portfolio: From Zero to Unicorn
Headline VC has a big portfolio of projects which it invested in, in the initial stage, and are now developing into big companies.
Akio shares Free K.K. is one of the first fintech unicorns in Japan. Headline invested in them when they had zero revenue and the team was only 2-3 people.
This small project grabbed their attention because Free was the first cloud-based accounting service in Japan. Despite not having Paid plan, Akio noticed 4,000 active business users were using their services. They relied on it for their day-to-day business, which showed very strong traction.
JPYC & CEO Noritaka Okabe: A Pioneer of Japan’s Web3 Revolution
JPYC, a very famous stablecoin pegged against the Japanese Yen, is also part of Headline’s investments. Akio co-invested in JPYC with Circle, the issuer of USDC. “Circle invested in our fund and we tried to look for stablecoin-related investment opportunities in Asia,” he said.
Among many stablecoins, JPYC stood out the most due to its public chain being already available and having traction. Headline VC wanted to invest in a public chain because
“We wanted to invest in a stablecoin infrastructure that becomes a hub of all the other Web3 projects.”
Furthermore, JPYC CEO Noritaka Okabe is known for being one of the pioneers of Japan’s Web3 market. He’s been in this space for quite a long time. Before JPYC, five to seven years ago, he was creating his first blockchain project in Japan where you earn tokens by walking.
Akio shares that he was quite impressed by his project. “We thought the founder was actually a visionary. He was definitely one of the early innovators in Japan.”
Akio shares common mistakes that prevent growth potential
NFTStudio24 raised the issue that many startups fail to get investors. As an expert, Akio’s experience has led him to meet many teams that don’t have any growth potential.
Since Headline VC mainly focuses on Japanese projects that can grow internationally, he highlights a few mistakes that many startups make:
Not enough International DNA: He says a lot of teams don’t hire people who have international experience. For example, having an investor meeting where you don’t have anyone from the management team to be able to speak to the investor in English.
Akio believes that every core team should have an English skillset to give off a strong impression and convey their project’s true potential correctly.
Headline VC and IVC’s Minimum Check for Web3 Startups
Headline VC has multiple funds when it comes to investments. For token funds, there’s a Seed fund, which can range from $100k-$500k. But there can be exceptions if the project has good potential growth in the eyes of investors.
Akio’s Advice for Foreign Companies Joining Japan Web3 Space
CEO Hinza highlights that many foreign companies wish to enter the Japan Web3 space; however, find the market quite difficult. Akio expresses that it depends on what industry the company wishes to join.
For example, if you’re going to the heavy enterprise B2B, then it’s going to be hard. However, Web3 is much more open to welcoming foreign companies. In Akio’s experience, a lot of companies in Japan are willing to work with international ones.
He shares that one of their LPs: Sega Game Company is collaborating with startups who can actually develop compelling Web3 games or related services. They’re actively seeking out such opportunities, which is one of the reasons they’re investing in Akio’s fund as well.
“You might actually find that in your traditional businesses, it might be difficult to get into as an international player. But Web3, I think, might be much more open,” he said.
Akio opens up about opportunities for GameFi Platforms in Japan
Akio introduces YGG Japan, one of the big companies in the fund’s portfolio, that gives publishers aid to gaming companies.
If a foreign gaming project wishes to launch its game in Japan, YGG Japan could be a good gateway to enter the market.
YGG is basically the first gaming guild that started in the Philippines during the initial growth of GameFi in the industry. Its franchise is spread around various countries around the world, including Japan.
YGG Japan has the largest GameFi-focused media with a Japanese audience and gamers who are interested in this space. Furthermore, they have a game-focused KOL platform where, as a foreign company, you can hire Japanese influencers directly through their platform.
IVS Crypto Events: Exploring Japan Web3 Market as a Foreigner
IVS is one of the biggest Web3 conferences in Japan held every year. This year, IVS2023 took place in Kyoto and NFTStudio24 was also part of the attendees. It is the ultimate gathering of Web3 entrepreneurs, investors, developers, IP holders, and curious enthusiasts from all over the world and Japan.
Akio shares that 2,000 out of 10,000 participants were international guests. He believes that IVS could be a great opportunity for foreigners to actually explore the market and network with relevant people.
Akio’s Message: Uniting Local and International Talents in Japan’s Web3 Sphere
“Japan is really lacking in international talents. So if you’re an international player who’s already landed in Japan, we need you! There are a lot of local projects who probably need your input and presence, partnership, etc.
So I would definitely recommend trying to be more active, and not just staying inside the international community in Japan. Actually, we are trying to encourage the local Japanese community to interact more with the international community here. But I would also advise the same for the international community.
There’s actually a very active local Japanese Web3 scene whose value may increase more if some of the international elements can be mixed with it.”
