Delight Ventures, a Japan-headquartered venture capital fund wholly funded by internet company DeNA, does not yet intend to adjust its investment plans in the face of the Covid-19 virus, US-based managing partner Dai Watanabe told Global Corporate Venturing.
“Given the uncertain market conditions and the fact that our fund does not focus on a particular sector or stage, Delight Ventures is not planning to pivot its investment strategy in the short term,” Watanabe said.
However, although the coronavirus crisis may serve as a catalyst to accelerate innovation in the startup ecosystem, Watanabe noted the pandemic will likely result in startup downsizing or bankruptcies on a scale never before experienced by the venture industry in the country.
Launched in July 2019 with $92.7m in capital, Delight Ventures made half a dozen investments by year end and in 2020 has backed online job interview service Zenkigen, virtual networking platform developer YouTrust and Agree, the operator of telemedicine platform Leber.
“Delight Ventures has started remote working and we are also interviewing startups virtually with video conferencing service Zoom,” said Watanabe, who is based in Silicon Valley, and whose team in Japan was therefore already familiar with online meeting tools.
“I think the remote working approach will go fairly smoothly for the time being, but I cannot yet foresee the impact on our business over the long term.”
Some industries will get a helpful tailwind from the situation while others will inevitably be harmed by a headwind, but Watanabe considers assessing investment opportunities accurately and providing timely support for existing portfolio companies to be more important than ever before.
The affects of Covid-19, along with the government restrictions that come with it, is set however to represent the first large-scale financial crisis since Japan’s annual startup investment rose back above the ¥100bn ($927m) mark in 2014.
“In the current climate, large corporations – which have been considered stable in Japan – are also facing difficulties, and the existing Japanese model of recruiting new university graduates for lifetime employment may be disrupted,” Watanabe said.
“Since the situation is dire on both company and personal level, it is still unclear how much time will pass before the companies will transition to a recovery trend. That said, I believe it will ultimately be a positive force for the growth of the Japanese startup industry.”
Watanabe is confident Delight Ventures’ innovation tactics will succeed in the long run despite social distancing and other challenges surrounding the pandemic. In addition to funding external startups, it has also begun a number of intrapreneurial projects through its Venture Builder scheme, which helps DeNA employees leverage the company’s in-house capabilities and resources.
“In the Venture Builder program, those who want to start new businesses are able to utilise DeNA’s data and know-how and develop their ideas,” Watanabe said. “DeNA has pledged continued commitment to these efforts because Tomoko Namba, DeNA’s founder and chief executive, is also a managing partner for Delight Ventures.”
Watanabe concluded: “At the heart of Delight Ventures lies the desire to launch and support startups and spinouts by making the most of DeNA’s talent and assets.”
Photo of Dai Watanabe courtesy of Delight Ventures.
