J-Seed Ventures, Inc
Jeffrey Char is happiest when he is empowering young entrepreneurs to create start-ups. As president and representative director of J-Seed Ventures, Inc, Char has helped to create 15 companies in Japan since he founded J-Seed Ventures in 2000.
Most recently, J-Seed launched a new international business incubator in Tokyo, called Venture Generation, targeting early-stage Japanese ventures and foreign companies entering the Japanese market. Venture Generation is a co-working office environment, providing space at low monthly cost for companies that do not yet have significant cash flow or which are trying to minimize their start-up costs. The facility has dedicated, furnished workstations, meeting rooms, Wi-Fi, and office equipment.
Japan Today editor Chris Betros visits Char at the J-Seed Ventures offices in Yaesu to hear more.
What is your background?
I am from Hawaii and went to Sophia University where I majored in economics and business. I worked at an investment bank for awhile, then went back to law school in the U.S., where I practiced law for several years, mostly representing high-tech start-up companies. I started my first company in 1997. It was a network security software company and I have been starting companies ever since. I came back to Japan in 2000 and that’s when I started J-Seed Ventures. So far, we have done about 15 start-ups.
How are you different from a venture capital company?
Venture capital companies take investors’ money and put it into other people’s companies. We take our own money and put it into our own companies that we start here. Week nights and Saturday mornings, I meet with groups of people planning new ventures. The goal is to launch new companies.
How do you decide if a project is worth going ahead with?
It depends on if we believe that these people are serious. Working late nights and weekends requires a commitment. You don’t just come once and get the green light. Traction with the team is important. What it comes down to is: Do I like these people? Do they have what it takes? Do I trust them? Someone might be brilliant, but if I think he is flaky, then I won’t want to work with him.
What if you don’t think the project will work?
I’m pretty blunt, so if I decide no, I tell you no point blank and why it’s no. There have been cases where they come back later with “You said no because of this, but here’s what we did and now you should say yes.” There are some people who are very determined like that. Even when I say no, I usually tell them that the door is open. We’ve made mistakes and we lost money, but we learn from them. If you have a crazy idea today, who’s to say that next week, you might not come back with a better idea?
What is J-Seed’s stake in the start-ups?
Our stake depends on the level of involvement we have in the planning and to what extent we drive the process going forward. In some companies, we get diluted down early on. I typically give the lion’s share to the company’s management team. For the first year before it officially becomes a company, I am heavily involved. Year one, I am an executive director. I am on the board and am hands on day to day. Year two, I become an outside director and show up for board meetings only. By year three, hopefully I am just a shareholder. If I can’t do that, then I can’t focus on the next start-up. I am typically juggling 4-5 projects simultaneously.
How do these aspiring entrepreneurs come to you? Do you advertise?
For J-Seed Ventures, we never advertise. We’d get so many applicants that we would waste a lot of time in the screening process. Everything comes through a trusted introduction or connections. One thing we spend a lot of time on is meeting students. I spend a lot of time lecturing at several Japanese universities.
How about Venture Generation?
Venture Generation is an incubator but I view it is as more of a community. We advertised recently on GaijinPot, but we rely mainly on word of mouth. We provide an office environment – furniture, Internet access, shared printers, scanners, etc. We invite guest speakers. The idea is to have people who are relevant to helping you build your company come in here frequently. So we have experienced entrepreneurs, lawyers, accountants, tax advisers, marketing people, angel investors, CEOs of public companies and so on – more than 70. They are a valuable source of “intellectual and human capital.”
What does J-Seed Ventures get out of it?
We don’t make revenue from Venture Generation. We are doing it to foster more entrepreneurs. Japan doesn’t have critical mass, yet. We’re just shy of that. You need to have more young people thinking about and actually doing ventures in the future to get critical mass.
Are conditions in Japan more conducive to start-ups than when you started J-Seed?
I would say so. Ten years ago, the image of start-ups was not good, especially as many went bust after the dot.com bubble burst. That has improved and there are more young people thinking about ventures due to the fact that getting a job at a large company is looking less attractive. Nowadays, going to a good college and getting a job at a big established public company does not guarantee you happiness or employment.
What is the biggest obstacle to more young people doing start-ups?
Their mindset. A lot of people are interested in starting companies but I would say that 80-90% are just wannabe entrepreneurs. They are enamored by the idea of owning their own company but when push comes to shove, they are not going to quit their jobs and give up their salaries. It takes a lot of desire and passion to do it. Intellectual firepower is important, but it isn’t enough. Moreover, there is a big stigma attached to failing in Japan.
Societal views of entrepreneurship are another impediment. Entrepreneurship is not a well-contained orderly process and regulators don’t like messy processes. Entrepreneurship is all about throwing it against the wall and seeing what sticks; repeatedly, until you find a viable business model.
How are conditions for foreigners who want to launch start-ups?
I think conditions are always more conducive for foreigners to do start-ups in Japan. The cost-benefit analysis is very different. Foreigners have grown up in a different environment, so what is normal for them is not what is normal for Japanese. They come in with a fresh perspective on things. There is the honeymoon phase where everything is cool and different. Then there is the dark side where everything is wrong with Japan. The people who stay beyond that balance out and are able to identify things that are different as an opportunity.
Have you had some tough times?
I’ve had more than my fair share of failures. The emotional rollercoaster is extreme for entrepreneurs. Good days are awesome; you can walk on water. On bad days, you just want to disappear.
Where do you see yourself in 10 years’ time?
I’d like to see J-Seed Ventures continue doing what we are doing. For Venture Generation, I’d love to see this become the first prototype of a community and see other locations pop up.
What is the biggest satisfaction you get from your job?
When I see students who graduate and then go into start-ups. I love the enthusiasm of people who are trying to change the world by starting companies.