I expect that the market for regenerative medicine will significantly expand in the future, and that many venture companies in the field are currently being created. However, in reality, sufficient risk money is not available to stem cell and regenerative medicine venture companies both domestically and overseas. What we are looking to accomplish is to accelerate the growth of stem cell and regenerative medicine markets through the provision of the risk money that these companies so desperately need. Additionally, the growth of this market also represents a business opportunity for us.
The Shinsei Bank Group has invested in later-stage venture companies in many fields including IT, energy generation and environmental companies and products and services business since 2004. Considering the various investments in venture companies we have made over a period of 10 years, I think that greatest allure of biotech venture investment is the huge upside. I also think that the regenerative medicine market will grow significantly following the increase of the iPS cell R&D budget by the Japanese government and the revision of Pharmaceutical Affairs Act in 2013. Furthermore, we have been approached by many funds asking us to purchase their investments as many biotech venture funds were established around 2005 and are reaching maturity around 2015. On the other hand, evaluating biotech ventures on our own would have been extremely challenging and we had therefore been looking for a business partner with industry expertise.
Successful venture investment requires technological expertise, business experience, financial and investment expertise and experience. However, I think that it is rare for a single entity to have a high level of expertise in all of these areas. ReproCell, having expertise in operating ES/iPS cell businesses, has the capability to evaluate technological aspects of these kinds of businesses. Additionally, as I personally have managed biotech businesses for over 10 years, I too have a good understanding of these businesses.
Furthermore, the biotech industry is a community with close ties in which peoples’ reputations are well known and many rumors circulate, including those about myself. In particular, the cellular technology related business is a community with close ties on a global level, and I am able to gather information on these companies and their top executives, which are valuable pieces of information in investment decisions.
On the other hand, Shinsei Corporate Investment has rich experience of investment expertise and fund management. Cell Innovation Partners’ competitive edge should be to equip with all of necessary expertise and experience as an entity.
From my experience, I feel that Cell Innovation Partners’ competitive advantages are, compared to average financial investors, their deep understanding of the biotech industry, successful business development and management experience (which has resulted in successful IPOs) and ability to make good judgments both on technology and management.
Furthermore, once a deal comes in, Cell Innovation Partners is able to gather necessary information and appropriate references through Dr. Yokoyama’s global network in the stem cell and regenerative medicine fields as well as Mr. Yamakawa’s wide network in the Japanese biotech industry. Utilizing these two networks, Cell Innovation Partners is able to make smart investment decisions based upon deep understanding of deals as well as accurately evaluate their viability.
Ultimately, the investment needs to satisfy both financial and business/technological conditions.
The role of ReproCell is to assess business and technological aspects. A venture company with superior technology does not always prosper in business. I believe that what is most important is to successfully convert superior technology into a business model. Therefore, though a company may possess superior technologies and/or patents, we also assess their business plan and the reasonableness of assumed events in the plan.
We also consider the value that we can add to companies in the event we make investments in them. I think that we are responsible for supporting the growth of companies we invest in through the provision of our expertise and network.
As it is common criteria for all venture investment, we first assess the market potential in terms of scale and growth, because companies can’t grow without a certain degree of market opportunity.
Next, we assess their competitive advantages, because the more promising a market is, the more competitors are likely to come into the market. I understand that the biotech industry has high barriers to entry, yet we consider their competitive advantages compared to global competitors.
Finally, we assess CEOs. In starting up a venture company and teaming up members with different backgrounds, he/she should create a goal and stimulate the passion of their team members and lead them toward the goal. Furthermore, CEOs rarely lead their companies to success with their original business plans. Therefore, successful CEOs should have both passion and flexibility, which allows them to observe the market with dispassionately and convert their business models as necessary.
That’s the challenging issue in venture management. It is inevitable for the growth of venture companies to co-exist conflicts. The experience of management to establish challenging goals and guiding their teams toward it whilst balancing the realities of finance and investment timing is absolutely necessary. I feel that it would be difficult for CEOs that are engaged in the pursuit of ideal goals without considering the realities of running a business, or vice versa. Successful CEOs need to be able to do both.
Shinsei Corporate Investment has considered more than 2,000 investment opportunities through investment in venture companies over 10 years. From these experiences, we are able to provide companies advice on capital policy and management.
With a rich network of domestic VC contacts, Shinsei Corporate Investment is also able to support a venture company that looks to finance a large amount of money through the arrangement of syndication.
ReproCell can assist companies in developing their technologies and products through partnerships with our technical experts. We are also able to assist their business development through the introduction of customers and utilization of our sales channel in North America and Europe.
For overseas biotech venture companies, we are able to assist their business expansion into Japan through the introduction of business partner candidates in Japan and by providing advice on interacting with Japanese regulatory agencies.
Furthermore, we can provide our experience on general management. You can’t manage companies as textbooks say, and we are able to offer advice based upon our experiences when companies are faced with situations they do not know how to resolve, advice on do’s and don’t when faced with challenges, and offer insights on reaching compromises between theory and reality, which only experienced business managers can provide and not consultants.
As a business person in the same industry, let’s work together! I think that stem cell/ regenerative medicine industry is still small, so we should make it a large industry. There is no competition as the market is still small. We should expand the market. Let’s cooperate and help each other for growing a large market!
In the stem cell and regenerative medicine fields, especially iPS related business, Japan is a global leader. I feel it is a very challenging and socially significant undertaking to manage Cell Innovation Partners together with ReproCell. I would like to support the growth of stem cell and regenerative medicine venture companies and have an impact on society through our investments