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Helping passionateEntrepreneursbuild

Successful global businesses

CreatingCreatingGlobal VenturesGlobal Ventures

The next challenge for

Japans evolving venture habitat

Allen Miner

Chairman & CEO

SunBridge Corp.

Helping passionate entrepreneursbuild successful global businesses

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AgendaAgenda

Introducing SunBridge

Japans Evolving Venture Habitat

Concentration of Creativity

Entrepreneurism

Venture Ecosystem Improvements

Venture Finance

Competing Globally

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IntroducingIntroducingSunBridgeSunBridge


SunBridgeSunBridge Founding Goals (2000)Founding Goals (2000)

Create a Dynamic Venture Habitat thatcombines the best features of Silicon Valleyand Japan

to influence and improve Japans VentureEcosystem, helping to create

World-class Global Ventures, and

World-class (top-quartile) investment returns

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SunBridgeSunBridge Venture HabitatVenture Habitat

AffiliatedAffiliated

VentureVenture

Sales &MarketingSolutions

TechnologyServices

IT VendorsIT Vendors

IntegratorsIntegrators

ISPsISPs

End UsersEnd Users

ConsultantsConsultants

PR FirmsPR Firms

DesignersDesigners

AgenciesAgencies

VCsVCsBanksBanks

AccountantsAccountants

LawyersLawyers

IncubatorsIncubators RecruitersRecruiters

UniversitiesUniversities

NPOsNPOs

Etc.Etc.

AffiliatedAffiliated

VentureVenture

UnrelatedUnrelated

VentureVenture

Established

Enterprise

Alliance

Information exchangeand collaboration

HumanResourceServices

AllianceAlliance

Established

EnterpriseVentureCapital

andStrategicSupport

Information exchangeand collaboration

150 Professionals$100M invested


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JapansJapansVenture HabitatVenture Habitat

Concentrated CreativityConcentrated Creativity

With strong creativity and power toinnovate, Japanese inventions havechanged the world, the way we work andthe way we live while creating newindustry sectors and employment.


Tokyo and Osaka: leaders of the Spiky WorldTokyo and Osaka: leaders of the Spiky World

#1 and #9: Worlds largestmetropolitan areas

Fortune 500 Headquarters#1 Tokyo: 51#8 Osaka: 7

Global patent leaders

Leading per capita GDP

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Japan is anInnovation SuperpowerJapan is anInnovation Superpower

2004 patentsJapan: 342,726vs. US: 167,183

Leads the world in Patents Issued


Patents in VCPatents in VC--favored Technologiesfavored Technologies

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Japan leads the world in R&D investmentJapan leads the world in R&D investment

(Source:Eurostat, OECD)

R&D Intensity (%)

R&D Intensity

AAGR (%)R&D Intensity (R&D expenditure as a % of GDP)

in 2004 and average annual growth rate (AAGR)

of R&D Intensity (99-04)

Japan R&DInvestment:3.3% andaccelerating

R&D share of GDP significantly leads US and Europe& growing faster


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Lifestyle IT leadersLifestyle IT leaders

Japanese introduced the world to most of its Lifestyle IT products

Lifestyle IT (non-computer computers)Game consoles, digital cameras, car

navigation, entertainment robots, mobileinternet, IPTV, Mobile DTV, etc.

Key enabling technologiesLCD, Flash Memory, CCDs, magnetic and

optical storage density and miniaturization,micromotors, IPv6 technologies, battery &fuel cell advances, mobile browsers, laser-scale hard disk servos, etc.

The result is an ever-richer technologyecosystem underpinning the success ofnumerous Japanese startupsAccess, Index, Faith, Cybird, Shicoh, g-

mode, Advanced Media, byD:sign, etc.These are the kinds of products(not enterprise-productivity tools)that are driving global IT innovationand growth today

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JapaneseJapaneseEntrepreneursEntrepreneurs

Contrary to popular myths, in Japan, aseverywhere else, innovation is driven byindividual heroes not by industry associationsor government. Increasingly, these heroes areinnovating in entrepreneurial settings rather thancorporate or government laboratories.


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( : Global Entrepreneurship Monitor, 2002: www.gemconsortium.org)(TEA=that percent of the labor force that is either actively involved in starting a newventure or the owner/manager of a business that is less than 42 months old)

World laggard in new business formationWorld laggard in new business formation

Consistently ranks near bottom of annual GEM Entrepreneurial Activity study

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Highly entrepreneurial at timesHighly entrepreneurial at times

In times of great change many new companies are formed

0

50

100

150

200

250

300

1880

1890

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

Founding year of apanese Public Companies

(compiled in 1998)

1/3 (599) were formed

in the 1948-53 GHQ

era of dramatic social

change and economic

recovery


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WorldWorld--class Japanese Entrepeneursclass Japanese Entrepeneurs

Winners of Nikkeis annual Entrepreneur Awards

PlusOffice Furniture andSupplies ManufacturerFounded: 1948.2006 Employees: 4,2642006 Turnover: private2007 Mkt. Cap: private

Yoshihisa Imaizumi 2001 Winner

Park 24Automated Parking LotMgt. 20,000+ stallsFounded: 1971 . Age 332006 Employees: 6382006 Turnover: 6532007 Mkt. Cap: 2,323

Kiyoshi Nishikawa 2000 Winner

H.I.S. GroupDiscount travel & tourism70 international branchesFounded: 1980. Age 292006 Employees: 4,3282006 Turnover: 3,2892007 Mkt. Cap: 1,267

Hideo Sawada - 1999 Winner

Culture Convenience ClubTsutayaMedia RentalChain, Online mediaFounded: 1982.2006 Employees: 3,0782006 Turnover: 2,2832007 Mkt. Cap: 1,219

Muneaki Masuda - 2003 Winner

NidecWorld leader in brushlessmicro-sized DC motorsFounded: 1973. Age 292007 Employees: 80,0262007 Turnover: 6,2962007 Mkt. Cap: 10,264

Shigenobu Nagamori -20 06 Winner

TempstaffJapans second largesttemporary staff agencyFounded: 1973.2006 Employees: 2,0162006 Turnover: 2,1292007 Mkt. Cap: 1,028

Yoshiko Shinohara - 2007 Winner

Fast RetailingInexpensive casual-wearmanufacturing and retailFounded: 19632006 Employees: 3,9902006 Turnover: 4,4882007 Mkt. Cap: 9,048

Tadashi Yanai - 2004 Winner

SoftBankSoftware Distribtution toInternet ZaibatsuFounded: 1980. Age 232006 Employees: 17,0752006 Turnover: 11,0862007 Mkt. Cap: 27,188

Masayoshi Son 2005 Winner

PiaTicket retailing and eventinformation publishingFounded: 1972. Age 222006 Employees: 3082006 Turnover: 9612007 Mkt. Cap: 182

Hiroshi Yanai - 2002 Winner

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Japanese VentureJapanese VentureEcosystemEcosystem

ImprovementsImprovements

How to create more world-class entrepreneurs?

From the mid-1990s MITI officials began to haveserious concerns about the lack of high-potentialtechnology startup activity in Japan andlaunched a 10-year initiative to study SiliconValley and replicate its features as much as

possible.


Dramatic changes in a short timeDramatic changes in a short time

From the perspective of entrepreneurs starting companies and the Venture firms backingthem, Japans regulatory environment, capital markets, labor mobility and social attitudeshave changed so dramatically in the past6or 7 years as to be nearly unrecognizable tosomeone whos knowledge of Japan is rooted in the common sense of the 1980s bubbleera or1990s lost decade.

2000-04 Dramatic structural change Commercial code and IPO rule changes Shift in domestic VC focus from very

late stage to very early stage University TLOs, spinouts encouraged Restructurings, Layoffs

-end of lifetimeemployment

2004-6 Recovery Economy, Stock Mkt. Emergence of

Serial Entrepreneurs 2008-09Collapse of IPO markets- J-Sox, Global FinancialCrisis

Over20,0001-yen companiesregistered in first two yearsafter regulation changesallowed them.

Quicker exitson new markets.Better IRRsfor VCs & LPs

New access toWorld-class R&D

Dramaticregulatorychanges

Top 5

Waseda 65Osaka 46Keio 43

Kyoto 37Tokyo 33

Entre-preneurialRenaissance?

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Where HighWhere High--Growth Companies Start TodayGrowth Companies Start Today

Because of the world-famous examples of such companies as Oracle, Cisco,Google, and Salesforce.com, it is widely believed that Silicon Valley createsmore high-growth companies than any other region in the world.

Number of publiccompanies formed after1997which had salesgreater than $50M in 2007and three consecutive

years of growth above50% from 2005-2007.

(source: SunBridge analysis of Bloombergdata)

ByCountry:

By Metro:

China 27US 22Japan 12India 10

Tokyo 10Silicon Valley 6Shanghai 4



VentureVenture FinanceFinancein Japanin Japan

A shortage of private capital and lowbarrier to public offering led to

exceptional VC returns while limiting thelong-term growth potential of Japanese

startups.

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Comparing VC Investments GloballyComparing VC Investments Globally

2.

23.

5

3.

7

4.

1 7.

9 11.

0

14.

6 20

.9

53.

6

104.

8

40.

8

21.

6

18.

9

21

.0

21.

7

7.

28.

8 12.

6 18.

8

32.

7

45.

5

31.

6

27.

2

2.

6

1.

8

0.

8

1.

5

1.

6

2.

4

2.

0

1.

2

2.

3

2.

8

1.

1

1.

7

1.

5

2.

0

1991

1992

1993

1994

1995

1996

9997

1998

1999

2000

2001

2002

2003

2004

2005

US ($1B)

EU (1B)

P (Y100B)

VCas%of2004 GDP__US 0.17%EU 0.10%JP 0.04%

Japans VC industry may be significantly underfunded


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( : Global Entrepreneurship Monitor, 2001: www.gemconsortium.org)

Japanese VC industry spreads riskJapanese VC industry spreads risk

Many small investments across large portfolios

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Japanese VC Investments byJapanese VC Investments by Company AgeCompany Age

)LJXUHVDUHWRWDODmount invested LQ?100Munits) 1996-2001are percentages

2 3 19 13 10 13

27 32

5954 659 467 596 261

1521 14

1614 194 141 199 125

20

2117

11

7 111 69 101 3639

29 35

1123 285 185 244 113

21 1

25

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1996 1997 1998 2000 2001 2002 2003 2004 2005

0 15Age (in yea

s) of company at time of in

estment

Shift from pre-IPO to earlier stage investing.

Over50% of investments now in companies under5years old

Source: VECAnnual Surveys


IPO leadIPO lead--time truncated after 2000time truncated after 2000

Quicker exitson new markets.Better IRRsfor VCs & LPs

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How are we doing? (201

0)How are we doing? (201

0)

A Dynamic Venture Habitat that borrows bestpractices from both Silicon Valley and Japan

to influence and improve Japans VentureEcosystem, helping to create

World-class Global Ventures, andWorld-class (top-quartile) investment returns



Competing GloballyCompeting Globally

Japan continues to create many world-class entrepreneurs and multi-hundred-million dollar high-growth companies.

Why dont they expand internationallylike they used to?

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The Middle is MissingThe Middle is Missing

2004 get-acquainted meeting with METIs newestshinkisangyoutantokachou

Dont japanese startups have a hard time raising seed capital?

Japan does not lack seed capital or exit opportunities. But private $10M+C round (and D round?) to enable aggressive sales and productexpansion is missing

Instead the entire Venture Ecosystem pushes Japanese entrepreneurs togo public as quickly as possible

They raise cash that they cant use for aggressive organic growth and oftenunderperform expectations after theirIPO.

Japan needs a chottomatte IPO fund or two.

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The domestic opportunity is big enough?The domestic opportunity is big enough?

Alexa WW

CompanySite RankRevenueInternational

Rakuten #73 $2.98B fr2010 w/ Baidu

CyberAgent #77 $938M fr2008. neglig.

Index Holdings mob. $724M 13%

DeNA mob. $376M fr2008. neglig.

Mixi #96 $120M 3%

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Globalization of Some Leading Japanese InternetGlobalization of Some Leading Japanese Internet CoCoss..

MyMy most disappointing globalization warmost disappointing globalization war--storystory

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China/Shanghai vs. US/Silicon ValleyChina/Shanghai vs. US/Silicon Valley

Emerging Economicpower = rapidly growingmarket opportunity

Biggest internet andmobile markets

Current WW Focus ofattention & capital

Cultural cousins

Not a stepping stone forglobal expansion

Established Economicpower = big establishedmarket opportunity

Big internet and biggestsmartphone markets

Gathering place of globalTech talent & capital

Cultural opposites?

Highly connectedworldwide (incl. China)

Repeatedly creates thenext big thing

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What Can I do about it?What Can I do about it?

Since 2009: Shifted my emphasis from

Bringing Silicon Valley to Japan to

Bringing Japanese to Silicon Valley

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Launched July 2010 at Plug & PlayLaunched July 2010 at Plug & Play

The most active, dynamic hubfor startup activity and relatedindustry interaction in SiliconValley.

Continuous flow of local VCsand international visitors thatprovides high-valuenetworking opportunities

Launch with 5 high-potential

Japanese startups and anetwork of supporters

Attract US VC expansioncapital and world-caliberexecutive talent


Globalizing Japanese EntrepreneurshipGlobalizing Japanese Entrepreneurship

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2 of3finalists at Plug-and-PlayInternational Business Plancontest (PACT) 2010

eio University collaborationwith SunBridge Japan pavilion

Fukuoka Univ.affiliated biotechstartup chose to create businessin Silicon Valley instead ofJapan

Profitable Japanese cloudcomputing company postponesIPO to invest in globalization.

100+ visitors to our Lucky sofa

More excitementto Come!

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