What can possibly go wrong with a venture fund generously financed by the tax payer topped up by token contributions from a selection of corporates?
Quite a lot it seems.
Japan and specifically modern Japanese culture like animé, media, fashion and food were cool. Why not brand and fund them to promote the growth of Japanese exports?
That was the thinking back in 2013.
Advertising giants like Dentsu and ADK jumped on the idea seeing a marketing opportunity and finance bureaucrats got to play venture capitalists.
So the Cool Japan fund was conceived. Today it has nearly 100 staff and has invested in over 56 ventures.
An important aside, the board is male only, as is its investment committee. (I couldn’t find the names of any female executives nor any overseas nationals – arguably important since all the investments are international).
Last week the Asahi Shimbum (a Japanese version of the Guardian, though there is no relationship between the two) reported the fund had over $220 million debts after the majority of its investments turned sour.
One of its biggest bets was the Anime consortium of Japan and WakuWaku a satellite broadcaster. Both of these businesses went up against deep pocketed Netflix and came out wanting.
The fund’s two most recent investments were a Japanese pizza brand in Vietnam which received $10 million and a plant meat start up. Whether Japan is renowned for pizza I am sceptical and as for plant meats, some of the big guys are finding the addressable market may not be anything like the scale forecast.
Japan has various Governmental entities promoting cultural exports including MAFF, METI and the Ministry of Foreign affairs. These conflicting departments may have hampered Cool Japan’s operations. They certainly won’t have speeded up decision making.
Another issue is that public sector funding can crowd out the private sector. Is that bad? Well maybe public funds aren’t as savvy at spotting winners, and maybe not as hands-on as full-time investors, with skin in the game, to ensure their bets pay off.
China has been an active proponent of governmental-cum private sector funding, but they have largely focused on strategic industries like technology; and the investments have been domestic, where the sphere of control is infinitely higher.
What are Japan’s strategic industries? Functional foods would get my vote, pizza would not.
By all accounts, and it’s even acknowledged on the fund’s website, the days of Cool Japan are numbered.