エンジェル投資家とは何か

Review

Perhaps many people have come to see startup-related words such as "pitch" and "accelerator program" in the media. The situation is changing due to the influence of the corona wreck, but in Japan, 20 to 30 It is in a boom called the "fourth venture boom" centered on millennial entrepreneurs.

This book is a book that depicts the reality of startups and the angel investors who support them for those who have not been involved in the world of startups. It is packed with raw information unearthed from careful interviews with many startups, including the names of celebrities such as Keisuke Honda and Atsushi Tamura. You can grasp the trends of the startup world that are difficult to understand from the outside, and as you turn the page, you can feel its existence closer.

"Japanese people have a low entrepreneurial mindset," and "Unicorn companies are not created compared to the United States and China." You will realize that the situation is steadily changing, and you will be able to think about the relationship between yourself and the startup.

After reading, check out the angel investors, entrepreneurs, and stock crowdfunding that interest you. Raising interest should be a small but important step leading to the revival of Japan.

The main points of this book

Point 1

Many angel investors come from successful entrepreneurs, leveraging their business connoisseurs to fund early-growth startups. Athletes and talents are also embarking on angel investment.

Point 2

Services have emerged that allow office workers to easily invest in start-up companies via the Internet. With the support of the angel tax system, angel investment is becoming more familiar.

Point 3

It was called a "bubble" in 2019, and its peak has already passed. In order to overcome the 2020 problem of chilling startup investment and revive Japan, it is necessary for startups to create industries.

Startup industry driven by angel investors

What is an angel investor?

An angel investor is an investor who personally funds a company that has just been founded. Many investors have long been active in the United States. However, it has recently begun to emerge rapidly in Japan as well, and has become a driving force behind the rise of the startup industry.

Many angel investors come from successful entrepreneurs. Utilizing the connoisseurship cultivated in business, we will provide our own funds to companies in the early stages of growth. Some investment candidates may be before the product or service is released, or they may only have presentation materials that summarize their business model. Angel investors take risks at their own discretion and invest in those companies on the premise of long-term holding.

Most of the investment amount is around several million yen to 10 million yen. Hopefully you can expect a home run-class return. For example, if you own 10% of a company with a market capitalization of 100 million yen, the value is 10 million yen. If the company grows into a unicorn company with a market capitalization of 100 billion yen, the stock value on hand will jump to 10 billion yen.

On the other hand, the success of startups is a tough world that is said to be "one thousand three." According to a survey by the Small and Medium Business Administration, about 20% of newly established companies will be closed within a year. Shareholders are subordinated to creditors, so if you go out of business, in most cases your stock will be just as good.

The face of startup company investment has changed

Until now, there have been many people in Japan who support young entrepreneurs in a friendly manner. However, few investors invested their own money in multiple start-ups. Speaking of investing in venture companies, venture capital (hereinafter referred to as VC) and banks were the main ones. VC refers to a group of professionals who specialize in investing in startups. They deal mainly with companies whose businesses are on track several years after their establishment. In Japan, there has been a long shortage of funds to support the early days of its founding.

So what was the reason why angel investment was not active so far? The reason is that the number of wealthy people with entrepreneurial experience was small, and the investment in private equity itself tended to be difficult for the public to understand.

In addition to angel investors, the willingness to invest in large companies has recently increased. Direct investment from operating companies to start-up companies is expanding rapidly, including corporate venture capital (CVC). Behind this is the sense of crisis of operating companies that they cannot settle down in their main business as the industrial structure changes due to technological innovation. Entrepreneurs are also becoming more willing to sell to large corporations as well as IPOs.

Points to be identified by angel investors

The encounter between angel investors and entrepreneurs has become more casual. Active entrepreneurs approach investors directly through SNS and other means. Investors conduct a primary interview on SNS chat if there is a project that interests them. If you are more interested, move on to a face-to-face interview called pitch.

Entrepreneurs approach prominent angel investors particularly enthusiastically. It's not just because it has financial benefits. I feel the merits of being able to expect accurate management advice, being able to get a foil from a well-known investor, making it easier to attract the attention of other investors, and being able to make investment decisions much faster. That's right.

On the other hand, investors see the humanity of entrepreneurs as a point of investment decision. Some investors say, "First is people, second is ideas, third is markets." However, start-up companies have many uncertainties, and it is never easy to calculate a proper market capitalization. The actual calculation reflects the intuition and experience of investors, and is said to be the "world of art." It is greatly influenced by business sentiment and fashion at that time. No matter how much investors like entrepreneurial talent and business ideas, negotiations can go awry if they can't finally agree on prices.

Changes in characters in the startup industry

From the non-business world to angel investors

The number of angel investors is increasing not only in the business world but also in the sports and entertainment worlds.

The cumulative number of investments by soccer player Keisuke Honda exceeds 50 companies. So far, he has been engaged in social activities such as opening soccer classes and building schools in developing countries. However, I realized that there was a limit to my donation, so I started investing in angels. If it is an investment, the returned money can be used for the next investment or donation. It is also attractive for angel investors to jump closer to a better world by supporting a large number of talented entrepreneurs.

Evolution of investment professionals and venture capital

In recent years, VCs launched by millennial angel investors have sprung up one after another. And the VC industry is becoming more diverse.

The big difference from angel investors is that they handle external funds and the investment period is set around 10 years in advance. In many cases, they invest intensively in the first five years and aim for exits such as IPOs and M & A in the latter five years. Traditional VCs have been fairly cautious about investing in the early seed period. However, the number of independent VCs that young people have started to increase is increasing, and they are focusing on fostering companies in the seed period with a small investment. The strength of these young capitalists is their network of entrepreneurs of the same age.

In addition, the number of CVCs established by operating companies with their own funds increased to 63 in 2018, which is about three times that of five years ago, and VCs are entering the era of hundreds of flowers.

Reversal of position? Entrepreneurship competition

As of December 2019, investors and VCs are desperate to win promising deals due to the long boom in the industry. There are so many investors lined up at some of the hottest startups. One venture capitalist says he is in a position to help with everything from moving offices to romance counseling in order to earn the trust of entrepreneurs. With investment money spilling around the world against the backdrop of monetary easing competition, the positions of investors and entrepreneurs have reversed in Japan as well, and competition between investors is intensifying.

[Must read point] The forefront of angel investment by ordinary office workers

Angel investment on the net, entering the stock type one after another

One of the financing methods is stock-type crowdfunding (hereinafter referred to as stock-type CF). This is a new way for private companies to solicit funds from the general public on the Internet, which was lifted in 2015. Companies can solicit investment from a large number of investors online through specialized sites, and investors can acquire shares in return.

When an individual invests in a start-up company, there is a preferential system that reduces the tax burden, which is called the "angel tax system". Partly due to the subsequent push, the amount of funds raised in 2018 has more than doubled from the previous year. Even if you can't make an investment profit, the income tax will be cheaper, so it's easier to invest easily, and the number of salaried workers has increased.

Stock-type CF has other merits. Since the amount that one investor can invest is limited to 500,000 yen or less per year for the same company, the number of investors naturally increases. In this way, many people's due diligence effect can be expected. Individual investors who have started angel investment using CF tend to invest in consumer goods companies whose characteristics of products and businesses are easy to understand. Japan's personal financial assets are 1800 trillion yen, the second largest in the world after the United States, and the growth of stock-type CF is expected in the future.

Great Internet Financing

Financing via the Internet is attractive to startups aiming for rapid growth in a short period of time due to the speed of financing. If the concept of the business is clear, it is not impossible to reach the target amount within one minute. Unlike regular financing, you don't have to go around VCs and angel investors to repeat presentations, and you can focus on your core business. Besides that, you can enjoy many benefits such as market research and fan acquisition.

Internet funding is also beneficial for local startups who are not familiar with angel investors and VCs. Until now, local entrepreneurs have been said to have a lot of "rough diamonds", but they have not been able to raise funds.

By 2025, a cumulative total of 6.5 million jobs and about 22 trillion yen of GDP will be lost. Therefore, it is expected that the attention to local startups aiming to solve local problems will increase further, and stock-type CF will support it.

What is the 2020 problem and what should be the revival of Japan?

Silicon Valley in Asia

Tokyo has been attracting attention from the startup industry to the extent that it is called "Silicon Valley in Asia". This is because Japan has a small number of entrepreneurs compared to its economic scale, and the competition for survival of entrepreneurs is loose.

Differences in language and culture make it difficult for foreign companies to enter the market, office rents are low, and it is easy to attract excellent human resources. For this reason, the number of foreign entrepreneurs starting businesses in Japan is increasing year by year.

Increasing influx of human resources from various occupations

In the startup industry these days, there is a noticeable cross-border influx of people with glorious backgrounds such as lawyers, doctors, and career bureaucrats. As the size of the funds raised grows, investment banking alumni are becoming a stumbling block in the startup industry, which lacks talented people who are familiar with financial strategy.

In addition, work style reforms and the lifting of the ban on side businesses have made it easier to prepare for starting a business while still enrolled in the company. In this way, the hurdles for starting a business have been lowered, and various members are flowing into the startup industry.

The destination of the overheating boom

Challenges have begun to emerge regarding the overheating startup investment boom. Start-ups tend to prioritize growth and neglect compliance and governance.

For example, there have been cases of bankruptcy due to lack of funds due to huge upfront investment and more difficult development than expected. The case of the virtual currency exchange company Coincheck, which caused a huge fraudulent outflow incident due to the speed-oriented management stance that left safety behind, is new to memory.

In addition, CVC emphasizes synergistic effects with its own business, so it tends to invest at high prices even if it is not profitable. If some investors raise their market capitalization valuations, others will have to follow suit. As a result, it is said that the "Ese Unicorn Reserve Force", which was overestimated from the actual situation, is appearing one after another.

Investors are expected to play a role in checking management as well as providing funds. It is said that in 2020, startup investment will cool down at a stretch due to the distortion of rapid expansion, and it will enter a difficult phase. This is called the "2020 issue". Unless we adjust the number of small entrepreneurs and the amount of surplus investment money, the fundamental challenges of Japanese startups remain.

Compared to the United States and China, Japan has an overwhelmingly small number of unicorns. Returning to the starting point of prospering the country by actively promoting business from the private sector will be a step toward the revival of Japan. The development of startups is indispensable for raising the level of the Japanese economy.

Recommendation of reading

Despite being affected by social conditions, investment by large corporations and accelerator programs are about to overcome the boom. More people want to try new businesses, and even if they fail, they can try again and again. It is a book that you can feel that such soil is about to be created not only by angel investors but also by many stakeholders. Starting with a small amount of angel investment will be a step to support the challengers. As a guide in that case, this book can be said to be the best book.

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