[ STE Relay Column : Narratives 089]
H. Joon Paek「Reaching for the Stars – Thoughts from Venture Capital Formation (Fall Semester Intensive Course)」

H. Joon Paek, Ph.D. / Waseda Business School / Metcela Inc.

[Profile] Received a B.S. in chemistry from the College of William & Mary. After a brief stint at NASA Langley Research Center as a chemical engineer, completed the M.Eng. program in Polymer Science at Kyoto University. After receiving a Ph.D. in Biology at Brown University, worked for a biotech startup, Tissue Genesis Inc., in Honolulu, Hawaii, as the Director of Research & Development and led R&D efforts in medical devices and regenerative medicine products as well as collaborations with NASA and other academic institutions, for almost 14 years. Decided to move to Japan in the late 2018 and currently employed as the VP of corporate development at Metcela Inc. that is developing an innovative cell therapy for chronic heart failure. Currently pursuing MBA in the evening program (Japanese) at Waseda Business School, under the tutelage of Prof. Sato (Finance and Strategy). Avid traveler, reader, and badminton player.


“Before learning to create and manage projects to achieve your vision of the future, you have to come up with the purpose in your life” – Brad Blanton

Where to start…
I was quite surprised when I received a request to contribute to the STE Relay Column on Venture Capital Formation class, which is offered as a fall intensive course at Waseda Business School. I had read most of the previous STE columns and been quite impressed with the quality of writing and passion that was projected by each columnist. I certainly felt that pressure to keep up with such high standard and wondered for some time about what I should share with other students and readers of the STE Relay Column. Rather than simply sharing what the course was about and what we learned during each class, I decided to write about how this class helped me shape my thoughts towards venture capital and Japanese startup industry as a whole instead. This particular column certainly may not represent exactly what the class actually is about, so I would like to ask for the readers’ understanding for my incohesive thoughts and rambling narratives. Before I begin, I would like to express my sincere gratitude to Professors Kanetaka Maki (WBS) and Phil Wickham (Sozo Ventures) as well as Mr. Koichiro Nakamura and Mr. Hiroki Matsuda (Sozo Ventures) for the wonderful one-week experience in the world of venture capital.

My story first…
I have always had a keen interest in venture capital (VC) for its allure of cut-throat, fast-paced, go-for-the-kill kind of images in the past. Discovering and investing in rare and game-changing investment opportunities and gaining ridiculous financial returns at the end seemed really sexy and exhilarating. A part of such attraction may have stemmed from the adversity during my earlier life when my family suffered from tremendous financial difficulties. We had to really struggle day to day to survive for quite some time, and my parents finally decided to move to the United States to pursue that mirage of American Dreams when we finally had enough. American Dreams came in many different shapes and forms for our family. For my parents, those dreams were starting a brand-new life in their 40s and 50s and affording me and my sister an opportunity of American education. For myself, running away from the miserable life in Korea was a good enough reason although I lost most of my friends (this was way before LINE and Facebook after all…). I guess my parents’ gamble paid off pretty well: we at least had food on our table every day, and I ended up receiving a Ph.D. degree from an Ivy League school.

Where am I going with this…
So what is up with this long preamble? I believe that VC in the United States is so perfectly suited for that precise ideal of American Dreams. In the U.S., we believe that if we have passion and work hard for that passion, nothing is impossible. If you create immense wealth along the way, more power to you! Entrepreneurial spirit is still thriving in the U.S., and in many cases, what is feeding those entrepreneurial spirits is VC. In short, one may say that American Dreams are basically nurtured by venture capital.

When we talk about our own dreams, they are not typically measured in dollars (or yen or yuan or whichever currency you use). More often than not, dreams are your ideals, purposes, and goals in life. Fairly recently, I realized that if my previously-mentioned logic of American Dreams and venture capital holds, what VC is trying to accomplish may not be just simple financial returns for their investments. I have always been on the receiving end of VC investments in the past, working for startup companies, so it was difficult to put myself in the shoes of VC. Venture Capital Formation class provided that opportunity for me and glimpse of new perspectives on VC. Of course, financial success is a must for any VC firm. However, the definition of success reaches way beyond that for VCs. Creating job opportunities, building a sustainable business, achieving social engagements, and providing convenience and benefits that can fundamentally change the fabric of our lives; the list goes on and on. More specifically, urgent patients can find a ride to the hospital on Uber; loved ones can reach each other through instant message services in the event of natural disaster; innovative medical therapies can cure diseases that were previously untreatable. More currently during the pandemic of COVID-19, business can still go on as usual through web meetings on Zoom. Technologies that were supported by VCs are not only changing our life but saving our lives at the same time.

Such purposes and goals are demonstrated by how VCs behave in the Silicon Valley. Other than the usual capital that they provide to startups, they provide tremendous level of business support and network to ensure the perpetual success of startups they invested in. Therefore, VCs’ roles expanded much larger than what it used to be in the past. Most VCs in the U.S. understand that initial public offering (IPO) is not the ultimate goal or exit but rather a starting point for those startups’ sustainable success. It is a stark contrast even for the Japanese unicorn startups (e.g. Mercari, Sansan) that continuously lost their values post IPO. Absence of a lock-up period for the investors of startups post IPO is certainly one of the major contributing factors, but from the beginning businesses must be built from the ground up in a more sustainable way for the future investors post IPO as well.

Where are all the dreams…
No one would deny Japan is one of the powerhouses of the world economy, and the level of science and advance technologies developed in Japan are truly wonderous. However, for some odd reasons, the startup industry in Japan is not as vibrant as in other countries that are not as advanced in economy and technologies, such as Israel and India. Although Prof. Wickham expects that the time will come for Japan to stand out in the startup industry, why can’t we make that happen sooner and how can we make sure that actually happens?

The current young generation of Japan, mostly born in between late 1980s to early 2000s, is called “yutori” generation. This generation is a byproduct of “yutori” education, in which the standard curriculum shifted from emphasizing knowledge and memorization to facilitating independent thinking and creativity basically. Fierce competition suddenly was portrayed as something undesired, and the economic downturn they happened to experience at the same time during their youth drove them to seek for something stable and not so lofty. A lot of people from this generation ended up seeking for a stable job, like public services, mostly for job security and not wishing to risk too much for ambitious dreams. There is a general sense of lack of “ambition dreams” in this generation, but instead people tend to pursue a series of small “attainable dreams”. Such behaviors of the society may be the reason why Japanese VCs behave as they typically do: low risk and low-but-sure return. Prof. Wickham also pointed out that the size of the Japanese market is the Achilles’ heel of Japanese startups. The Japanese market in many cases is just large enough to sustain startups’ businesses, so they end up feeling content and not desiring to expand their businesses internationally or globally.

I would like the younger generation of Japan to understand that Japan is still looked up to by many nations, and Japan still serves as a destination for that illusive “Japanese Dreams” for countless people from many developing countries in Asia as well. Young Japanese must restore that pride in themselves and try not to shy away from playing that role of economic and global leaders. Do not be afraid of taking that risk and reach for the star, and then VCs will be the first ones who will recognize that change and nurture those ambitious dreams.

Before I go…
One last interesting perspective that Prof. Wickham shared with us was how he judges the character of the CEO of a startup that he is considering investing in. Prof. Wickham always invites the CEO and his or her spouse or significant other to a dinner before he signs an investment contract. The reason he does that is not simply to entertain them but to watch how that CEO interacts and treats waiters and waitresses as a measure of how he or she treats the employees and other relevant players. Additionally, Prof. Wickham also wants to see if the CEO gets appropriate support and understanding from his or her spouse or significant other. Being an entrepreneur of a startup company is actually a lonely and laborious job. Being unable to receive proper emotional support from home can also affect the performance of that entrepreneur at work as well. My mother was extremely strict with me in her teaching of how to treat people in a respectful manner no matter who they are, especially who support or follow you. Looking back at how she raised me in such challenging time, I felt that my mother may have foreseen what my future path would be and the value of building respectful human interactions and providing psychological safety to others. I am truly grateful that she is still taking me to school in a way even these days.