In this episode of India Game Changer, Nao Murakami, Founder and General Partner at Incubate Fund Asia, shared valuable insights into the world of early-stage venture capital investing.

Some of the topics that Murakami-san covered in detail:

  • Why Incubate Fund Asia’s approach to venture capital is deeply rooted in the principle of early-stage investing.
  • His belief that founders deeply committed to solving specific problems are more likely to persevere through challenges and create successful businesses.
  • The benefits of proactive deal sourcing and even engaging with founders prior to them raising capital.
  • How Incubate Fund’s global perspective enables them to identify trends and opportunities that may not be immediately apparent within a single market.

Read the best-effort transcript below (This technology is still not as good as they say it is…):

Michael Waitze 0:06
Hi, this is Michael Waitze. And welcome back to India game changer. Nao Murakami, the Founder and General Partner at Incubate Fund Asia and a Partner at SMBC Asia Rising Fund is with us today, Murakami-san, thank you so much for coming to the show. How are you doing today?

Nao Murakami 0:22
Thank you so much. Good, good, good. Very good. I’m doing very well. It’s good to thank you for Yeah, thank you for having me on the show.

Michael Waitze 0:29
It’s great to have you here. Before we jump into like, the really deep part of this conversation, can we give our listeners a little bit of your background for some context?

Nao Murakami 0:38
Sure, sure. Sure. Yeah. It’s might be a little long, but hopefully around me. Yeah, maybe a few minutes. So yeah, as you fairly mentioned, the I’m the founder and general partner of integral Asia. So we fund is the one of the largest seed focused Venture Capital One from Japan, we managing about like the slightly over $1 billion as aum. And it’s quite a big size as a seed focused venture capital fund. And we started in Japan, two years back. In just a few years of operation, we are investing only in Japan. But the obviously we noticed the opportunity outside of Japan as well. So we started operations in India in 2016. And now we have operation in the US and also in the Latin as well. And then how we operate is we separated operating the funds. So we share the brand, incubator fund, and then also basic principles of the investments. But the each regional funds are independently operated. So the older investor base, and then the investment decision making everything is independent. And I’m learning all the Indian investments. And then now we expanded the operation from India to Southeast Asia as well. So that’s why I actually really rebranded our form community, but that one India, to give up on Asia, actually, what I have been learning all over the India investments for us eight years, and then my personal story a little bit, so I got a higher education in the US. Then I joined the Nomura investment, investment banking division in Tokyo, and the US light after the financial crisis happened in 2008. Then the I just joined the investment bank, so I couldn’t get any deal for the past two years, actually, that be my assignment was the tech and internet startup Coverage team I was assigned. So as you Yeah, as you know, right. The in Japan, startup, I mean, the IPO market is very wide open to the world of startups, even sub 100 million dollar valuation companies can go public. So my lower was mainly finding the potential IPO candidates from the very early stage, like only a few employee type of the stage, if we feel this company can potentially go public after three, four years, we just a bit of validation steps, support them, from many aspects ready supporting them from the finance, for the introduction to the partners, potential clients, all of these things we have been doing almost off leash, and then maybe three, four years later, once they luckily leach into the IPO stage, we are going to get the top position, getting the underwriter position and then make money from there. So I have been doing that for six, seven years in Tokyo, and then few companies from my clients on successful IPO. And then the I was initially thinking after successful IPO of the company called the GDN, which is the internet media company in Japan. The company I got Sharif ticketed founded when they were very small scale, and then no Contura team, they’re only found a few employees that will scale. But I felt a very strong potential in the founders. So I I supported them from the scratch. And then they actually leads to the finding medium double operations and the successful IPO. So I was feeling like once after this successful IPO of the GN, I’m going to quit Nomura and then the maybe join startup as a CFO. Actually, I had some offers. So joining some startup for the CFO position or the be joining the COVID. Team in the listed startup are listed internet companies in Georgia. But somehow the maybe Nomura sense, my thinking somehow and it’s suddenly actually yeah, somehow, two or three days before the IPO the again the I just got a notice you are relocating to you will be relocated to New York classic in Nomura classic. Yeah. And then yeah, and then. Okay. But actually, that the the new assignment in the US under Nomura is kind of exciting. The like, as you know, like Nomura acquired the Lehman Brothers operation and in In New York, but they couldn’t get the the US population ready, I think the batteries acquired the US operations. So investment banking, in Nomura in the US was very weak at the time. So they’re trying to make it strong. And then the my assignment is going to the US, and then the joining the telecom Media Technology Coverage team, and then the make investment banking operation in the US to be getting stronger in Lumira. So this sounds interesting. And then okay, I’m just going to stop my idea of quitting Nomura. And then I’m just going to accept this offer, I’m going to go to New York, right, and then actually went to New York, they were the exciting moments. And then the I also enjoy the work. They also I was at a time newly married, so they think in my heart, obviously, it’s a good paying job. Working hard, playing hard protocol, God, I also enjoy. But at the same time, I just realized, the obviously like deal size, which we are doing in us compared to my smaller IPO deals in Japan, obviously, it’s much bigger, and therefore most of that maybe investment bankers, it’s more exciting job. But the I just gradually realizing I was enjoying my work in Japan more, even the deal size is smaller. Because the it’s because I just realize I’m pretty much a startup, right? Because the in Japan, as I mentioned, is pretty small company can go public. So I have a direct contact with the founders. It’s just so

Michael Waitze 6:26
much more. So much more impactful, right? Like, yeah, the impact. That’s the point when a company like 500 people, or 1000 people goes public, it’s fun. And it feels important, because it’s a $4 billion deal or something. But it’s not as cool in a way as when a five person company goes public for 35 million bucks, and it changes everybody’s life kind of thing. Yeah, you’re right.

Nao Murakami 6:46
That’s that’s the same. That’s the same. And then also like the I could have been talking to founders almost every day, when I was in Japan, like 500 600 equity companies, or maybe Southern, every company like, it’s very rare to directly talk to the actual CEO, the founder of the company, mainly talking to CFO or the corporate people, right? So then I just feel Yes, I’m very much a startup guy. And then this should I stay in this investment banking world, or Nomura? For next 10 years or not? Because I was at the time, so two years old. And then the next thing is all of the life is very important for my career. My answer was no. So I just decided to quit Nomura. Then at the time, the minutiae, so process is just traveling around the world with my wife for maybe next six months to one year, and then see what’s going on in the world, and then decide whether what I’m going to do next. But the sub, almost same timing. When I resigning from Nomura, the one of my best friend from my college, his Japanese, but he was running small startup in Japan. And then he had a lot of grants all over Asia, including India. And he was building on region countries almost every month. And he just called me and actually technically shouting me. And he’s upset like, India will be the next big thing for sure. I visited most of the Asian countries, and then the India is very different. And then the something is going on there.

Michael Waitze 8:27
What year was what would you say? Do you remember what year that was?

Nao Murakami 8:34
Well, 2000 starting after Yeah, okay, great.

Michael Waitze 8:37
Yeah, that’s a long time ago now. But yeah, definitely something that’s gonna happen. Yeah, yeah, go ahead. Yeah.

Nao Murakami 8:42
And then he said, Actually something going on. So I cannot stay in Japan for anymore. I’m going to shut the shop in Japan, move to India start something new there. Oh, wow. So why don’t type all the discussion we had? Yeah, I mean, I just quit Nomura. And then the it might be more interesting. And more running than just traveling around the world. To stay in one country, starting something new. Whether it’s can be successful or not, doesn’t matter, right, I can learn something. So okay, I’m just going to join your journey. This is how I actually moved to India. So unlike other investors, who notice, okay, India is a good investment opportunities, and then growing economies, I’m going to start investing in there No, like this. I just, my friend just called me to go there. So I just feel good. So it’s very random. So to be honest, since I since I was very lucky, right? And he was correct. Like the after I moved to India, I just realized the potential of India and then even I amazed by the Indian people, Indian culture. So I just decided to stay for next few decades until my retirement, maybe I’m going to stay in India. So I just decided, yeah, so fasting is actually we run the company. It failed, unfortunately, but we learned a lot of things from there. And then the very last few months of the operations, I just went back to Japan for my friend’s wedding. Then incubate fun Japan team, they internally discussing to studying their phone just contacted me. Did

Michael Waitze 10:15
you know that? Did you know them before homeless? Oh, you didn’t know.

Nao Murakami 10:20
I didn’t know. And actually, I called us and just call me when I would just back to Japan for my friend’s wedding. And it wasn’t just for me, I have 30 minutes in the familiar string. Gotanda. So can you come this day? This timing? I have only 30 minutes. Could you come and yeah, I have nothing to do. So when he didn’t explain me on tickets, he just call me can you come? Now just go there.

Michael Waitze 10:42
You didn’t even know who he was like, did you know what the incubate fund was or no?

Nao Murakami 10:46
He introdcued, roght. He’s a venture capitalist. Yeah. And then I knew So. So. Yeah. Okay. It might be interesting to see him. So I just go there. And then the after stepping is one glass of beer. He just said, I like you. And I trust you. I’m going to give you a few millions. Please go to India and invest. And it was literally very much the starting point to incubate one India. So that’s certainly a discussion changed my life actually completely. But yeah, this is how we started. Since then. I just moved down to Bandra and started thinking about funding. Yeah, yeah.

Michael Waitze 11:21
So I understand your perspective. On India, your friend called you and you said it’s going to change you put your job at Nomura moved there, tried to build something for a few years, I want to talk about what you learned. But first of all, I want to try to understand what was driving a chorus on the incubate fund and hold my son’s desire to start something in India as well. But for you, I understand you would live there, but they just been investing in Japan. So it was driving them to to India.

Nao Murakami 11:49
It’s a good point. I think the two points I think it obviously they have many venture capital friends. Japanese mentioned preference, but at the time, only a few who B C’s Japanese VCs in was investing in India. Yeah, they knew some of them, right? And then the these people just told them the is very different from Japan. Yeah, they’re also growing Ecosystm there, and then huge opportunities. So they just kind of like decided to capture more big opportunity. There is one thing. And then the another thing is the the simply because let’s say if we see the Oh, the global startup ecosystem, right? And then obviously us is largest, but it’s highly competitive as well. Right? And then the immune to there is very small font is almost no chance, I think to be successful there. Yeah. Also China, it’s kind of a closed market, and then setting up on there and then doing well there without the very local, trusted partner. It’s also so impossible, I think. And then the it’s a natural choice, the maybe solid largest startup ecosystem at the time also ending to becoming more bigger is India. So they just okay, it’s a natural choice. Expanding from, from Japan, next destination will be India. So this is how I think they decided to go to India. I think

Michael Waitze 13:19
that makes sense. I want to follow up on two things. Actually, if you don’t mind. You mentioned that all of the regional funds, including the fund in Japan operate separately, but all operate on the same basic principles. Yeah, right. And then you also said that India is very different than the Japanese market. So I’m super curious, what are those basic principles so that people can understand how incubate fund actually thinks about investing? And second, what are some of the really unique things about the Indian market that the rest of the world doesn’t know?

Nao Murakami 13:48
Okay, so that’s a interesting point. So first basic principles, organizational bonds of incubation, the sharing is the our name suggests right incubate form. So we want to invest at the first venture capital round. So we will never invest at the city’s ACDB as an angel check. So we always invest at the precede or sit down as a lead investor, so we always invest at the seed round as an angel investor, this is a base principle, the all of the original founders share in each other. So we tried. We are we have venture capital fund, obviously, but we also trying to be the Kendrick, co founder, or the CO creator with the founders of the committee, one of the founding team members, or at least for the first one to two years of the operation of the company. So that’s why we tried to get the as much stake as possible as well. And also we want to invest at the first VC dome. So this is a basic principle we have other than that the region to region Ecosystm is different. So we customize our operation and then the models are So it’s very different from Japan, US and India, actually. But this seed round lead position is the kind of mantra we have. I like it among God.

Michael Waitze 15:09
I like it. Can you talk a little bit now about how India is different?

Nao Murakami 15:13
Yeah. So let’s say India and Japan, how different we are starting in Japan. India is unique or Japan is unique. This is kind of a debating point, actually, Japan is also very unique and different from other ecosystems. But the how is they say, I can discuss about how it’s different from Japan market, like the Indian market is how it’s different from Japan market or Japan. Ecosystm is the one thing is, as I mentioned, that in Japan, the exits of the startups, I think still like 80% plus of the exit is through the IPO. This is also very unique, right? So because the the startup IPOs are widely accepted, and then the stock exchange is widely open for the startup, even small sub 100 million dollar valuation company can go public in Japan. And most

Michael Waitze 16:03
of those, most of those run mothers are what mothers the mothers exchange? Yeah, not on TSE one or TSE two. Yeah. Yeah. So

Nao Murakami 16:13
mostly to the Mongols. So yeah, so that Moses was opened, like the, I don’t know, like more than 10 years back, but this is a kind of a game changing moment for the startup in Japan by the on the other hand, the India obviously the IPO is for the very large startups on the now it’s gradually changing, but the still mostly like the fire on the medium level, the partition companies are both public usually. So the many exits or especially for early stage venture capital upon like us will be second the lead rate or the m&a. So this exit mechanism itself is very different. So we have to adjust our operational model to that equity Ecosystm itself. So one difference, and they also founders mindset, or the EB C’s mindset is kind of different between Japan in India. And then what I noticed is the in Indian founders are very good on lighting, very big pictures, and then the large growth stories, and then expanding the operations and the increasing the top line very quickly. And then taking a very bold bet. And then raising a huge amount, using all the money to produce and order these things is very good on that. But at the same time, like sometimes how to control the cost matrix, and then the making sure the marketing budget is under control. In the end, making the large profit pool is sometimes a little weak point of view. But it’s complete opposite in Japan, the older VCs even are thinking about the profitability of the company from day one, because 80% of exit is through the IPO. So they try to make the company to be profitable before the IPO happens. So if we build from day one, they putting the profitability mindset into the founders and the founder also accepting this. So this, but at the same time, growth mindset is sometimes we in japan, Japanese founders, so this is pros and cons, obviously, and they are customer adjusted to the ecosystem. So we cannot say which is better. But this is very much different. So it just doesn’t I can bring some Yeah, perspective of the profitability from our Japan perspective into the Indian ecosystem. So yeah. So

Michael Waitze 18:30
one of the things I wonder about about seed stage investors, right, because it’s the earliest stage you can invest. It’s also the most risky, but it also has the most upside potential, right, which is why you said earlier, you you want to get as much of a stake as you possibly can. I wonder if instead of waiting for companies to come to you, like incubate fund itself, whether it’s in Asia and Latin, or anywhere else that you operate, has its own thesis and says, I want to find a company like in the Evie sector or in the logistics sector in the FinTech sector. So you do some of your own research, go out to the ecosystem and look to try to find the best companies and then bring them in. Right. So you’re being proactive about this? Yes.

Nao Murakami 19:09
Yep. Yeah, that’s true. And then this is kind of what activity are different from maybe like my PCs, typically just waiting for the flow to come. And let’s say 70 80% of our investments in India, and I think, almost 100% in Japan, are reproductively approaching to the founder from our side. So we always building the spaces internally, our investment services, it’s not like we are going to investing and think that no, like real estate in FinTech, we do lending but we don’t do payment, because of the reasons in lending. We will do the SME lending, but we are not going to do the consumer lending because of these reasons. In consumer lending. We want to do this specific business model we want to invest in this country. This type of discussion we internally have in India team also some Thanks. We have the global discussion together with the Japan team, USD and Latin team and then the what’s going on in the US was going in that time. And then we also share what’s going on in India. And then just we did we do the CSS together with the other regional team as well. And then the we just going out to the market to find the the good startup and funded startup ideally, for is doing the very similar things as ourselves is what trying to find the right founder, team, founding team, which we can implement the idea into the founding team, and then they start in the company together. Got it. So interesting, we are kind of incubating the company as well, right. So a couple of example, actually ready, for example, the prime insurance, which is the group insurance brokerage company in India, they got funding from Sequoia surgeon Tiger global. Actually, we committed investment before they incorporated the company. So I just reached out to the founders, and then had a coffee for one hour, two hours exchanging notes. And then I really liked the founders, and then what they’re trying to do is very much fit to what we’re thinking. So we just said, Whenever you incorporate the company just come back, we’re going to do like a check. So this type of approach is the best case scenario for us, because we can touch the company even before the other VCs reach out to them, right. So obviously, like engraved font in Japan haba name values are the brand. But in India, still we are very small. And then we even if I’m a founder, if we got the Thompson from XL Sequoia and incubate, I’m going to take the Sequoia. So to win against these other top tier funds for us, like a small unbranded fund in India, we nearly need to reach out to the founders before they are the other VCs. So in that sense, we are trying to be more productive reaching out to the ecosystem from our side.

Michael Waitze 21:58
I was gonna ask you that too. So Plum is interesting company as well. We had plum on our Asia InsurTech podcast show back in 2020. So I’ll be check Poldark on the show a long time ago. So yeah, we’ve known them for a while. But I do like this idea of like, it’s in the name. It’s called incubate fund, right? So you’re more than just an investment fund, right? You’re actually trying to be not co founders per se, because you don’t want to get in their way. But if you’ve invested in over 200 companies, you’ve seen a lot of stuff, right? So you can actually add value by saying, we’ve seen Company A do this, you may want to try the same thing or something similar. Can I ask you this, though, in a very specific way? I’ve done I don’t know, in the last six or seven years across my podcast network, right, the Asia tech podcast and short tech podcast InsurTech, amplified indie game changer. I’ve done 1000s of recordings. When I talk to a founder. I think maybe in the first like 15 minutes of a recording with them, I can feel like, okay, this guy, or this gal is serious, and is going to build something big, even if the company they’re building right now, doesn’t work. But you can tell you can tell that, like, they’re gonna build something big, even if this thing doesn’t work. Can you try to explain because I know it’s hard. But can you try to explain what you’re looking for in a founder, or in a founding team? Where you just like, You know what, I have to give these people some money, because they’re gonna build something big. Do you know what I mean?

Nao Murakami 23:17
What do you Yeah. That’s actually a good point. This is, even if you want to know.

Michael Waitze 23:28
You understand the point, right? Like, when I meet somebody, I can’t identify what that thing is. But I know it’s there. I mean,

Nao Murakami 23:35
yeah, I understand maybe even for us, most of the cases, the past 1520 minutes of the discussion, the, like, 50% of our district meetings are almost done. We do something in this founders or the actually, oh, this is maybe average on the so yeah. So this is a good point. But the one point we bat Tyvek keep it in important among our team as the it’s also I think, many other VCs also using the same term, but the how the passion and the sincere commitment of the founders into this specific business, or the issues which they are trying to solve, right. So anyone like the even very strong founders, and then the very nice business model already in the long run, they will face these challenges, right? And if they don’t have a super passionate about the actual issue they’re trying to solve, they easy to give up. Right? So this commitment level, and then the how much the passionate about the business they’re trying to build. Is the week trying to kind of like assess at the past meeting. And obviously other than that, the operating we need a founder. Sure, sure. The skill set their their previous running from the experience and the stuff we also highly value but the fundamentally the how strongly they are believing in what they’re trying to do is the most important things. And then this thing, even through the Zoom call, fast 1520 mins we can feel.

Michael Waitze 25:18
So here’s, here’s what I say to founders before I before I record with them. I think educated smart people can be good at anything they try. But to be great at something, you have to care about it. And I’m always trying to figure out, why do you care? And if I can figure that out in the first 15 minutes. I feel like I have to do this because this thing happened to my dad and I’m just I have to build this thing before I die. I’m like, okay, I can trust you remember, I got a son did this to you. He met with you for 30 minutes. Yeah. Right. Yeah. And so even.

Nao Murakami 25:53
Yeah, even like he after, like two years or so he just told me that he actually he he left after 30 minutes saying that. Okay, I decided I’m going to give you for investing in a few million. So please stop investing in India. Take it or not, it’s up to you. And he just left, right. And if he said, If I didn’t really pride him in one day, he will not be he will not be impressed. Because you will get this. Yeah, this is on I mean, if I just negotiate on the terms, or the if I’m just saying something I want to invest with you. But the this is a time when he does. Okay, nevermind, I’m not going to. But the message is I just reply right away. Okay, it’s good. I want to do it with you. And then he just so this is the kind of things right, the So even our Japan form, and also as actually the same when we investing in the seed stage companies, we sometimes request the founder or founding team Saturday, right? We said this is the until CDC happens we want you to get only this much of your salaries. Right, right. And if someone negotiate back with us on the founders salary, in obviously, everybody negotiate back, obviously, it’s fine. But if if we kind of dispute about the founders salary, it’s a very much a yellow flag for us. It’s a great way to test. Your uric acid this founder will not be successful, because they don’t have an entrepreneurship mindset might be in the long run, they will get the much more return from their capital gains. Exactly. I’m getting a bit business right be why you need to care about makes money on Saturday,

Michael Waitze 27:25
but also how much? How much do you believe in your idea and your ability to execute? Because if you believe you’ll just like, I’ll take half of that I’ll eat noodles for the rest of it for the rest of this year.

Nao Murakami 27:34
I use that money to pay on more people. Yeah, yeah, that’s what we so I run

Michael Waitze 27:38
my own business too. And I pay myself as very small amount of money because I want to use the other money to hire people to do the other stuff that I can’t do.

Nao Murakami 27:46
We have like 10s of such small small check points, to assess the founders quality and the stuff. And then we still, it’s also keep updating, starting also learning from the FWC since these top tier funds in India, Japan everywhere else, they are assessing the founders and we keep updating all of these checklists. But we have this is kind of one example. But we have the 10s of such things.

Michael Waitze 28:11
Do you have other sectors specifically that are interesting to you? You meant we didn’t talk a little bit about fintech. But like How about things that people talk about everyday like electric vehicles or artificial intelligence? Or look, I once had a I once had a guy on on India Game Changer who said to me that every Indian family is like one health accident away from poverty. Right because if something bad happens to them, it’s just so expensive to fix, but they just don’t have the resources or the technology’s not there to do it. You think about the health sector maybe we can talk about that a little bit as well.

Nao Murakami 28:44
Yeah, yeah. So, the from what you mentioned like the Evie is one not the sector we also could also be looking at actually we have a one portfolio called the Euro bike, which is now the largest EB two era sharing platform in India nice is appropriate. We also wrote the first check together with other Indian VCs like broom and Sullivan for the but also like the many other things should be improved and the Abb Ecosystm In India right. So also some battery or battery Medina systems and the battery itself. Also we are proceed looking at so it is one of the thing we are also focusing on. And then FinTech obviously, we’re running the SMBC founders, well, they’re almost entire money is going to the fintech. So we’ve exhausted looking at the thing with them now. And the also the supply chain, especially for import export. From India to India, is the one of the purposes here we have somehow 50 to 60% of our existing portfolio, some supply chain data. Some successful ones also like the captain fresh which is now becoming Unicom as the global seafood supply chain company, or shop Kirana, which was our first investment in India, although these companies are actually supply chain related and we feel, especially for export from India, given this China plus one, China, US tensions are happening, the supply chain from China to somewhere is happening, and then the how to coordinate these things, I think this space for the startup to play around. So this cross border import export supply chain play, we have a very strong interest. And the healthcare also, as you said, it’s one of the largest issues in India. And the path for the healthcare we have kind of CES is allowing the not only internal service type of the healthcare companies, but maybe we want to invest some physical presence, like maybe reinvesting in the new age, can you exchange type of the company’s been a mistake when everything changes? Because the it’s made so much larger issues, I think, and the direct impact to the society so yeah, maybe he’ll scare also. And then also the direct to consumer is also still we feel the the some brands that consumer brands in India also we feel the potentials. So basically, all these things and plus entertainment, since we are from Japan, we can add some value into the entertainment community, we technically know almost all the gaming companies I people does in Japan directory, so we can support the contents company from that perspective as well. So yeah, these are Lafley our current focus areas, can

Michael Waitze 31:43
I ask you this? Do you think there’s been a shift in the Indian startup ecosystem from just building in India for India? And now building in India for the rest of the world?

Nao Murakami 31:56
Yeah, I think so. Specifically, the software industry right the have been building India to global was the kind of thesis right the most of the SAS companies who is becoming very big like unicorn company from India is have a certain percentage of the revenue coming from the US. And then because the price point is much higher than India so building great product in India and selling in the US or global, as always, for the software athletes for even last five years are the kinds of interfaces everybody’s chasing. But not only the this software, SaaS companies I feel now building India Go Global type of approach is start working, I feel one example is our portfolio Captain fresh right? When we invested in the company, they’re very much domestic seafood supply chain companies, but much tech to enable from end to end from the fisherman to the retailers recreating the entire tech stack to make more efficiencies into the supply chain. And then somehow founder travel around the world visit 200 over the wet market with single market globally DLs the actually what he’s doing in India is more advanced than the even in the US or Europe the and then the he just realized okay, this business model can be exported to the other regions, and then connecting all of this the digital supply chain into the global problem may be building a very large brand. So, this in the sense that somehow in India, very difficult market, some service models or product, which tested in India can work, even in the other ones market like US or Europe, I think so in this type of the success stories, I feel coming out from India more and more from now on, then it’s it’s very, very exciting stories ready, we can build the very large service companies or supply chain company from India to global This is very exciting stories. And we will see most of the stories in next days, I think, I

Michael Waitze 34:02
think so too in particularly in the supply chain area where just the logistics, for lack of a better term are just so much more difficult in India, and it’s such a large country. And also, the language and culture is different from like this 100 kilometers to the next 300 kilometers away. So just solving all of those little problems are so hard where you get to a place like the United States and you’re tech enabled, you’re like, I’ll just go down 95 Get off the exit and go to this thing. It’s just much easier, right? Even in Japan, it’s easier,

Nao Murakami 34:31
right? That’s true. And also one more quick point is some industries, let’s say like some like BPOS IPOs that outsourcing from the USA, us or any other countries into India was having a very big business in India, but actually this industry have not been disrupted for us 20 years, right still doing the exact same thing as 20 years. Even call center operations or business outsourcing all of these things, right. I feel like this should be disrupted by AI. So the kind of same BPO 2.0 type of approach should coming out from India, the still some human labor will be there. But the more tech enabled AI enabled approach to the BPO using the cost arbitration, also from the India or maybe other countries like Philippines or Southeast Asia countries may come out. And then this is also another big theme we are chasing in India and also in Southeast Asia as well. So,

Michael Waitze 35:28
I’m curious about your opinion on this. Sam Altman. I think in the last week or two was in India, maybe it was in the last month. Okay. And somebody in the audience asked him and Indian gentleman in the audience asked him, What kind of companies in the AI space that are using large language models and other models that we can build? Do you think we’ll be able to compete on the global scale? And Sam Walton said, on ironically, he said, I think it’s useless for you guys to try to build anything you’re so far behind us, and there’s no way you’re ever going to catch us. And I think I think he’s right, that he’s ahead. But I think arrogance and hubris at that level, leaves a massive market open for it just shows a real lack of understanding of what the technical prowess is in India, particularly through the IoT isn’t the other higher learning higher learning institutions that those guys can build some pretty amazing stuff? Right. I think he’s leaving that open for them. And I don’t even think he knows it.

Nao Murakami 36:24
Yeah, I think this tech talent in India is incomparable. Right. It’s very high dialect. And then they also also the number of the distances must save them the Yeah. So the only point is how we can the work with distance, and then liquidating the products, which actually fit to India and India to grow whatever the context is. So yeah, so I think still, there’s a chance for the Indian companies doing Grovo. From from that perspective,

Michael Waitze 36:57
I think so too. I want to ask you one more thing, maybe then I’ll let you go. You mentioned earlier that if you’re an outsider, right, as a Japanese kind of fund in India, getting into the deal, flow is just going to take probably an entire generation, right, it could take a while. Yeah, I have this philosophy that no one succeeds alone. So are there partnerships that you’ve formed that you think adds value to you to your portfolio companies, that helps you on the deal flow perspective, but also helps you on? Because one of the things that incubator was really good about in Japan was investing in early stage companies, and then kind of feeding them to the larger venture capitalist and going this one’s really good. Right? So if you built those partnerships in India as well?

Nao Murakami 37:38
Yeah, I think so. It’s also took a long time. Because we started in India, like, few years back, technically, I was alone. At the time, and even the font size, only one digit medium, right. So it was very, very small font, and then the but the point, the we have keep it in mind, it’s very difficult. I mean, many let’s say Japanese VCs or any foreign bases start investing in India, say initial strategy. Usually, I don’t want to compete with Indian local VCs, right? To take the leap option, because it’s very rare chance to win against the local VC. So I’m just going to co invest with local VCs, right, giving up the bridge, but we didn’t do this. So at the seed stage, we always trying to lead the round. So always competing against the other Indian VCs, and we lost many deals, actually, but we keep doing this. So most of the portfolio companies, we are leading the round. This actually, in the long run, it worked well, because the revote I don’t want to say this from my voice, but the because of that, we we supported the first round of the lead investor and then connecting to the other top tier VCs like axial matrix Tiger, Grover, all of these parts. So, somehow we got kind of respect from them as well I feel so this actually the now working very well. So because we have a relationship with the Mazel Tov to plants in India, it’s seed funder cities A while later funds also. So, this actually works well to support our portfolio companies for sure. Yeah, so, this partnership with the other VCs are very much beneficial and then we want to be closely working with the other VCs in India for sure. And also the one more important point for us to now getting stronger in India as the I successfully hired my Indian partner, Raji Blanca, we hire him like, when we started the second one in India in 2019. He joined in 2020 Actually, but this hiring was very much or important changing point for us, he brought a lot of network, then the he brought up IoT connections. He is IIT Bombay, and then also he know many people in this industry as well. So the it was very lucky for me to Who to get in touch with him? And then the the deputy requalify action? So these two things actually working very well now,

Michael Waitze 40:07
did you do you hire him the same way Akaura-san hired you 30 minutes,

Nao Murakami 40:12
I spent a couple of years to hire him. Actually, I was sitting on the board of the shop Kirana. And the he was a co investor of Ghana, it was my first investment in India and he was also sitting on the so we share the board and then the then we gradually becoming a friend. And then even after I decided to hire him, I spent almost six months to convince him to join us. Alright. And they also found that projects are a little different from other typical VCs. So I just don’t want to have a mismatch between me and him. So I spent six months for him to understand us as well. And then the so that’s why I feel we don’t have as much as of now. I hope so. He can stay longer to us. Yeah,

Michael Waitze 40:53
I mean, I’ll leave you with this thought. It’s funny you say that, but like my co founder, and I kind of danced for like two years before we decided to actually form a company just to make sure that everything was okay. Right, right. Same thing, like we knew each other. We talked to each other. We sat around and chatted about our ideas and stuff. Yeah. And then two years later, we’re just like, Okay, I think we need to do something.

Nao Murakami 41:11
Yeah, yeah, we’re still doing it.

Michael Waitze 41:16
It definitely works for me. Okay. Nao Murakami Founder and General Partner Incubate Fund Asia and a Partner at SMBC Asia Rising Fund. Thank you so much for doing this today. I really appreciate it. I would love to have you. Or maybe Rajeev, back on the show. I’d actually love to have a couple of your portfolio companies on the show as well. cents for it if that’s okay with you. Thank you again for doing.

Nao Murakami 41:38
Yep, thank you so much. Thank you so much.