Incumbent banks: startups are coming for you

July 7, 2017

In my previous post I wrote about the sparsity of financial services and products from incumbent banks for small businesses that act globally. This chasm has grown as the increasing proliferation of globally-minded startups face a retail banking sector that is stagnating for reasons of inflexible business models, obsolete systems, and corporate inertia.

Fortunately for SMEs, a handful of disruptive fintech startups have recently started honing in on this very problem. Given that fintech is one of our fund’s core investment areas, and I write occasionally on this blog about the various European or Japanese startups in fintech, I thought it might be interesting to recount my first-hand experiences as a customer of some of these fintech disruptors.

Of the wide array of fintech startups and alternative money transfer providers, I have direct experience with the following: CurrencyFair, Revolut, TransferWise, and OFX. The first three are pure technology players, whereas OFX, formerly called UK Forex or US Forex, is an Australian-based online international money transfer service.


I’ll start with CurrencyFair, which technically should be excluded from this list because CurrencyFair does not offer business accounts to U.S. legal entities. This is regrettable because CurrencyFair is unique in offering a currency conversion feature which I really appreciate: specifically, the ability to create an open exchange order with your own bid or ask price, even one that is out of the money. I enjoy using CurrencyFair as a consumer and look forward to the day they open up business accounts for U.S. entities.


UK-based Revolut has also just announced a business account, yet similarly does not yet accept U.S. entities. However, I understand that they will do so around the end of this year. Revolut conveniently offers a multi currency debit card, which is very handy when traveling abroad for use at ATMs or point-of-sale locations. Revolut charges a monthly fee ranging from £25.00 – £1,000 for its business account services.


The service I used most frequently over the past two years for international money transfers was OFX. OFX is technically not a fintech startup but a service that offers foreign currency exchange rates which are more transparent and competitive than those of incumbent banks. Unfortunately, OFX’s rules are difficult to navigate, and each transaction typically requires human intervention. Surprisingly, after 20 approved transactions, another OFX employee informed me that her colleague had violated the company’s compliance by approving my transactions based on a spuriously shifting definition of the term “third party transfer.” I no longer feel comfortable using OFX and cannot endorse their service at this time.


Which brings me to my final candidate: TransferWise. Only a few short months ago, TransferWise launched its Borderless Account product for small businesses. It’s still early days, so I will try to control my enthusiasm, but my initial experience with the Borderless Account is nothing short of euphoria! U.S. legal entities are eligible, and the product supports foreign currency transfers to over 60 countries. TransferWise offers its Borderless Account to businesses for free, and generates revenue in the form of a transparent fee upon currency exchange or money transfer. The company did not ask me to sing their praises; I’m merely a delighted customer acting on my own initiative. [For what it’s worth, here is my TransferWise referral link. I understand that using this link would grant you a free transfer up to £500.]

There may well exist other innovative financial services, for startups by startups, which have not yet come onto my radar. I welcome hearing about anything I’ve missed and will gladly try them.


Global startups hamstrung by local banks

June 30, 2017

In countries with developed financial systems, small and medium sized businesses have long been at a disadvantage for banking services relative to large firms and even relative to consumers.

In this piece and the one that follows I’ll review some of the basic business banking services on offer which I’ve experienced firsthand as both an investor and startup owner. But first, how did we get here?

How did we get here ?

The IT revolution facilitated incremental innovations for large companies, and these extended to include the modernization of their financial systems across borders.

Small businesses, however, did not reap the benefits of a globalized financial system. The problem became particularly acute once the internet revolution fostered the creation on a massive scale of startups who, despite their modest initial size, began targeting global markets early on.

This disparity was probably not more pronounced in developed countries than in the U.S. For this reason, I’m restricting my assessment to banks and financial services firms which will accept U.S. SMEs as clients. Not to let European or Japanese banks off the hook — I once wasted 3 months with a French bank to open a local account for my Belgian startup — but at least European and Japanese banks acknowledge that more than one currency exists in the world.

Of the incumbent banks with whom I’ve been working with most recently I will only pick on three of them: Bank of America, Chase Bank, Citibank. Although I would have a lot of positive things to say about incumbents like Lloyds TSB (UK), BNP (France), and Prestia (Japan), they are excluded from this assessment because they will not open business accounts for U.S. entities.

Business banking evaluation criteria

My evaluation criteria prioritize what I view to be the most important attributes for an SME which conducts business globally, specifically:

  • ability to handle multiple currencies
  • online interface for all essential banking services
  • ease of access from multiple countries and time zones
  • currency exchange functionality
  • transparency in fees

I have yet to find a U.S. retail bank that offers a multi-currency functionality to small businesses. Certainly the three largest of whom I am a customer do not do this. All incoming wire transfers in foreign currency are automatically converted into USD at a spot rate net of some opaque and price-gouging spread. Furthermore, the security and access requirements for these banks are so archaic and provincial that they should be forbidden from using the word global in any of their marketing materials.

Chase Bank is the worst offender. Almost any banking activity performed online from an IP address outside the U.S. seems to trigger a freezing of the account. The account can only be unlocked by visiting a physical branch with a photo ID. For a person working internationally, this is so ridiculously inconvenient that it’s laughable. When exactly such an incident forced me to incur a $500 penalty due to a missed deadline, I dramatically curtailed most of my business banking with Chase.

Bank of America is a bit better. They’ve never frozen me out of my account, and their telephone customer service always seems to be first-rate. The disadvantage of B of A’s online system is that their two step verification process requires a U.S. mobile number to which to send the SMS verification code. International mobile numbers will not work, and even U.S. cell phones will not reliably receive the SMS verification when abroad. The only way around this is to use a security token, a privilege for which Bank of America will make you pay $20. It’s a shame because of the three major U.S. Incumbent banks, I think B of A’s  customer service and online web interface is the best.

As a result, Citibank has become my first choice of incumbent financial institution for U.S. business banking. Citibank requires the same security token system like Bank of America but in contrast do not make you pay for it. I’ve been lucky enough to come to know the manager of a certain branch, who responds to my inquiries over email and has proven incredibly helpful. The only knock on Citibank, well two knocks actually is that: i) like their peers, they cannot handle multiple currencies (every incoming wire is automatically converted into USD upon arrival); ii) Citibank’s clunky online banking interface reminds me of the mainframe days of the 1980s.

Is it any surprise that most people, “would rather see their dentist than their banker?” (Goldman Sachs’ Harit Talwar at CB Insights’ Future of Fintech event).

The real killer app for fintech disruptors ?

The good news for globally-minded SMEs is that radical improvements are underway, and it’s thanks to the fintech revolution.

In the next piece I’ll review some of the fintech startups, of whom I’m also a customer, who are aiming to disrupt the aforementioned incumbents.


FB Messenger Instant Games Infographic

June 23, 2017

As I’ve said before, I believe that Facebook Messenger’s Instant Games platform has the potential to disrupt the App Store distribution model of mobile games, at least pertaining to casual games.

Playing a snackable, casual game inside a messenger chat feed is far more seamless, in my opinion, then going to the App Store, hunting for a title, downloading, installing, etc. Moreover, I suspect that the inherent social context of the platform should naturally foster casual games which are more interactive among friends.

Today, Facebook Messenger counts over 50 games from 30 game publishers. The game publishers who are currently on the Instant Games platform are the lucky ones. For now, this remains an exclusive club because Facebook has closed the gates to the party. Below is an infographic of the current games on the platform (note that some of these games may not be yet be available in all countries). Special thanks to my intern for helping me compile this matrix.

As investors in one of the publishers on this platform (CoolGames), we are monitoring closely the adoption and engagement metrics of the various games. For example, although it is still early days, we are already seeing viral adoption metrics which are orders of magnitude higher than conventional metrics prior to launch on Instant Games.

[click for full infographic]

5 hacks for jobseekers to catch a VC’s attention

June 16, 2017

Apparently my recent post, “So you want a job in Venture Capital?” proved popular (bumped me up a hosting bandwidth pricing tier, but hey it’s for a good cause).

Some people suggested that since I downplayed the value of drafting a sample investment memo, I should offer some constructive and concrete actions that ambitious jobseekers could consider in order to be noticed by a VC.

Point taken. So while I cannot speak for other VCs, here are five things which would catch my attention:

  1. Offer to write a “quick-look.” Rather than a draft investment memo, which is highly specific to the internal machinations of each VC firm, a one-pager quick-look analysis on a deal is far more versatile and efficient. For an example of a venture capital quick-look document, feel free to search the web or contact me.
  2. Offer to compile our portfolio companies’ historic budget and actual financials into a concise, easy-to-read Excel spreadsheet. As much as we try to standardize our internal reporting, every portfolio company is unique and possesses its unique format of shareholder reporting. Maintaining an accurate and updated synthesis document is an ongoing need at our fund. (Note: this is a bold one because if I enter into an NDA with you to share data, you’re taking a first step to a more formal working relationship).
  3. Offer to provide a market assessment of competitors of one of my portfolio companies. This is another example of an effort which is performed in detail at the time of the initial investment yet not always refreshed as the years go by and the market evolves. Portfolio company CEOs usually prioritize other activities with their limited bandwidth (and I often discourage them from obsessing too much over what their competitors are doing).
  4. Offer to do some groundwork research or other assistance for my blog. A student once offered to redesign some of the images on my blog posts and sent me a couple eye-catching samples. Three weeks later I hired him as an intern. I seem to be regularly facing some minor, nagging WordPress issue which needs attention, so this is an easy one.
  5. Offer to create a concise overview pitch deck encapsulating the core message of my portfolio companies onto one slide each. (Another sneaky hack because by building your knowledge of our portfolio, you start to make yourself indispensable).

These are just five ideas off the top of my head. The fallback option which practically never fails is to simply contact the VC and ask openly, “How can I save you time?”


Portfolio job openings

June 9, 2017

Many of our portfolio companies are seeking talented, adaptable individuals with a hunger to join a startup adventure. (For my views on why I believe everyone should consider working in a startup, read: Free your career).

Here are a few open positions among our current investments:


  • Ad sales manager (Japan)
  • Experienced Game Developer (Holland)
  • Front-End Developer (Holland)
  • Internships also available in graphic arts, social media, content management, game quality assurance, social media (Holland)

Lead Media Group

  • Business developer for Southeast Asia
  • Sales representative (India)
  • Sales representative (Canada)

At other portfolio companies (France):

  • VP Operations
  • VP Marketing
  • Data scientist
  • System administrator
  • Media salesperson
  • WordPress developer

And of course, internship opportunities abound, particularly in France, Holland, and Japan.

Any interested candidates are welcome to contact me directly by email.

Stability vs. Security [安定]

June 2, 2017
[image credit: Chris Riddell]

A conversation last night with my friend Shin Iwata from Atomico inspired me to reflect on the choices facing young people nowadays as they embark on their professional careers.

Shin penned a poignant post discussing the difference between stability and security in the professional context in Japan, concepts denoted by the same Japanese word of 安定 (“antei”). I cannot possibly do justice to Shin’s elegant piece, but one of his key arguments is that Japanese youth need to consciously choose which version of 安定 represents their ultimate goal, because stability and security can diverge.

Traditionally, the Japanese educational system conditioned young people to pursue professional security. Work hard in elementary school, participate in after-hours じゅく (cram school) in order to gain admission into a top university, and subsequently enter the pool of fresh graduates recruited by large corporations. Traditionally, the young graduate would join one of these large firms or conglomerates and work their butt off for several years with the implicit promise of a guaranteed job for life. I contend that this phenomenon was not limited to Japan.

The social pact of lifetime employment afforded workers full job security, and simultaneously a high degree of stability, so the two concepts became intertwined in people’s minds. Globalization ushered in the first wedge between the two by fostering conditions in which an employee might be expatriated to another geography for 2 to 5 years. I grew up as an expat child and derived nothing but benefit in bouncing around internationally in my youth. However, I also witnessed firsthand the dependency my father had on his firm. When the company asked us to relocate, my father was, at minimum, strongly discouraged from declining their request. In a Japanese corporation, such a refusal would be unthinkable.

I submit that stability and security have fallen even deeper into contradiction over the past decade, and that this trend is accelerating. The main driver is the second information technology revolution, i.e. the internet.

Stability(large companies) << Stability(innovative companies)

I’ve heard convincing arguments that the first IT revolution — the invention of the semiconductor and its ensuing proliferation of computing resources — represented sustainable innovation. In other words, the innovation of the silicon revolution was dramatic, but it was sustaining rather than disruptive. This innovation wave disproportionately benefited large companies by enabling them to leverage new efficiencies into their economies of scale.

In contrast, the subsequent wave of innovation, ushered in by the internet, is radically disruptive. The first ripple of this wave appeared in the technology sector (look what Slack means for Microsoft, or MongoDB means for Oracle, or AWS means for Cisco, etc.). Now technology startups conceived in the paradigm of the internet and unshackled by legacy baggage are going after large, non-tech industries, whether it be transportation (Lyft), consumer products (Dollar Shave Club), finance (TransferWise), agriculture (The Climate Corporation), etc. As I’ve mentioned in the past, the increasing connectivity to the physical world is enabling us to close the loop in industry, agriculture, and the environment.

Accordingly, large companies may still be able to offer workers a certain degree of security by force of their sheer size, inertia, and a protective labor regulatory context. However, stability in such firms is far from assured.

My message to newly-minted college graduates: Think about your ultimate goal as you embark on your career. The path that worked well for your parents is not necessarily an effective one anymore to achieve the same goal because times have changed. Finally, don’t feel you have to follow the same track as everyone else because conventional wisdom says so. There is more than one track.

Ag/Sum conference on Agtech

May 26, 2017

The Ag/Sum conference took place in Tokyo this week, assembling some of the most articulate thought leaders and compelling innovations in agricultural technology (agtech or agritech, depending on whom you ask) worldwide. The caliber of the speakers, especially the foreign ones, was truly outstanding. It was an honor to play a small role in this in leading a workshop about VC investing in the domain.

Here are my takeaways from this sector of innovation which I’m still discovering myself:

France and The Netherlands have a reputation as the most innovative countries in Europe when it comes to agtech startups. Worldwide, the list expands to include Brazil, India, Israel, and the U.S.

Surprisingly, in agricultural technology, India is ahead of Japan in many respects. Furthermore, India counts roughly as many farmers as the entire population of Japan.

While the need for innovation in agricultural in many dimensions is staggering, the case for venture capital is not always obvious. For example, large corporations may be better positioned to produce sustaining innovations, foodtech solutions with niche consumer markets make may better lifestyle businesses than VC-backed scale-ups, and other more massively disruptive innovations may be more suitable for alternative types of financing. Dedicated funds with a clear investment thesis have the best chance of success in my opinion. Funds like Agtech_VC, NewProtein, and Seed2Growth come to mind.

Japan’s institutional investor base declares a genuine appetite to invest in agricultural innovation globally. Anybody raising an agtech fund should seriously consider targeting Japan for LPs.

As a discerning consumer, the innovations in food on the horizon look appetizing: from seaweed pasta and bacon, to enhanced superfoods which could make my daily ice cream habit actually healthy.

MBA-types and Techies clamoring to enter the agricultural space have not yet proven as effective as the other way around, i.e. ag experts learning about tech. Perhaps it’s about attitude.

Deep bow to Nikkei and the organizers of Ag/Sum for a brilliant event.

Mobile messengers and the post-app world

May 17, 2017

It’s no secret that I’ve been a believer in the inevitability of a swing back toward centralized architectures in mobile. Although I probably mis-timed my call of the HTML5 inflection point, I remain convinced that it is approaching, and I believe Facebook is leading the way.

Facebook has now almost completed its initial worldwide rollout of its Instant Games platform on Messenger. Today, a closed club of about 30 publishers have released approximately 50 games on Messenger. Our portfolio company CoolGames is fortunate to be part of this closed curated platform, and with 4 games live, ranks neck-and-neck with Zynga (who has also engineered an admirable comeback of their own recently) as the number one games publisher on FB Instant Games.

When the post-app world arrives, I believe it will be thanks to the mobile messenger platforms leveraging their social graphs to deploy interactive ‘apps’ on the basis of a sufficiently mature HTML5 technology. I’ve long argued that messenger platforms like LINE and WeChat were miles ahead in innovation over the alternatives in the West. On this trend, however, they’re playing catch-up to FB Messenger. Make no mistake though, they will catch this wave too.

Nightmare scenario: Ransomware-as-a-Service

May 13, 2017

The paralysis of the UK’s National Health Service’s computer resources caused by the WannaCry ransomware this week is perhaps the scariest example of the malicious software at work. (I used to joke about ransomware by telling the anecdote of a friend who was ‘caught with his pants down’ by ransomware while surfing porn sites).

However, rumors that the vulnerability exploited by WannaCry had been previously identified by America’s National Security Agency has turned amusement into terror. It’s not far-fetched to see such malicious code factories take a cue from AWS or VPN services and offer Ransomware-as-a-Service.

Post-election wish list to help France’s startups

May 8, 2017

[screen shot from Japanese TV news where a picture of Macron “マクロン” pops out of the giant macaron “マカロン”]


Now that the French Presidential election is complete, it feels like we can all get on with our lives in thinking about Europe’s startup ecosystem. In proportion to the triumvirate of Liberté, Egalité, Fraternité, here are three regulatory reforms I’d like to see to support startups. Admittedly, the ability for France’s new Président, Emmanuel Macron, to effect substantial reform remains to be seen, so consider this a wish list to foster constructive discussion.

1. Make it easier to grant equity to startup employees and boardmembers

Readers of my blog know this as one of my pet peeves. As investors in French startups, we place a lot of value on equity compensation tools for reasons of improved alignment among company stakeholders, and the affordability of recruiting talented, driven people without an unwieldy up-front cash outlay. I’ve written in the past about how the French government rendered stock options ridiculously unappealing, how issuing fiscally acceptable warrants works but not to non-executive directors, and how one of the only functioning tools are free shares (rendered palatable by the aptly-named Loi Macron) though not immune to constraints and bureaucratic blundering. From a VC perspective, I generally favor ‘option-like’ instruments (e.g. options or warrants) rather than free shares. Here, the closest functioning instrument in France today is the BSPCE (founder warrants); however, outside directors or other non-execs are not eligible for BSPCE. With a nod to the government’s fear of abuse of such instruments, I acknowledge that the definition of an eligible startups will need to be properly scoped.

2. Reduce the cost and complexity for startups to restructure their workforces

Whereas incumbent organizations may excel at incremental innovation, startups are often better positioned to uncover the disruptive innovations which can usher in exponential progress. The thing about such innovation is that it usually requires agility and risk-taking. However, when startups are hamstrung by rigid labor laws — structures whose original intent in protecting workers’ rights was laudable — they are required to hedge their experimentation efforts because the cost of employee restructuring forces excessive prudence in hiring. Let’s give the French workforce some credit: I submit that there is a segment of the working population who would willingly accept the perceived lower stability in a French startup in exchange for the higher potential rewards. The rewards are both monetary and non-monetary, whereas the former could be greatly enhanced with measures in item 1 above. As in the first item, properly defining an eligible startup will be key.

3. Re-label social charges as “taxes”

I’m not even lobbying for a tax cut nor a reduction in social charges, both of which are always welcome of course. I’m merely requesting that we call a spade a spade. Social charges represent real out-of-pocket costs to companies and employees. For example, on a hypothetical 100k€ gross salary, the actual cost to the employer is 145k€, while the net salary to the employee is a mere 78k€, and that’s net before income tax. This 67k€ in lost surplus captured by the government should be called a tax (22k€ of which was paid by the employee, 45k€ paid by the employer). Labeling this a tax under international fiscal treaties could allow foreign nationals who are taxed on their worldwide income (e.g. Americans) to apply for a rebate on foreign taxes paid. As it stands now, any American citizen working in France is subject to a double taxation on their income, since the IRS does not consider most social charges as “foreign tax.”

I wish the fresh Président all the best in his new adventure.


April 26, 2017
Image credit: peshkova / 123RF

先日、私が賞賛していて、時々連絡をとるテック CEO が、実に心に響く発言をした。彼は素晴らしい起業家で、私が知る中でも最も素晴らしい起業家の一人で、その業界では優れた先見の明の持ち主だ。成長の速いテクノロジー企業の多くの CEO と同様、彼はしばしば旅に出かけてはビジネスの話を決め、世界中に会社のことを知らしめている。






職場でのモチベーションがいつも最適な状態ではなかったり、キャリアがぐらついていると感じたりする場合は、根本的な問題について考えてほしい。職場環境を見渡してほしい。自己裁量は与えられているだろうか? 奮起させてくれるリーダーのために仕事しているだろうか? 熱意あふれる同僚に囲まれているだろうか? 毎日のように、成功や失敗を繰り返せる機会があるだろうか? 自分が、大きなビジョンの重要な要素であると感じられているだろうか?


Panel discussion on hardware investing

April 20, 2017

The other day Yohei Sawayama (500 Startups) and I gave a panel discussion on hardware investing at the DMM.Make hardware incubator in Tokyo. Some people requested a recap of our points, so here are some of the key takeaways. I’ll post the video when I get it.

Thoughts for hardware entrepreneurs

  1. IoT is not the future. It’s the present.
  2. IoT is not a trend. It is a technological shift.
  3. The opportunity in enterprise is monumental compared to consumer.
  4. Hardware is hard. People that suggest otherwise are doing a disservice to entrepreneurs.
  5. Large firms have an advantage in hardware innovation. It’s no coincidence that few genuine VCs invest in hardware startups. VCs prefer hardware-enabled software, which is different.
  6. It’s cheaper than ever to start a hardware business, but:
    – contract manufacturer selection, quality control
    – distribution costs
    – slotting fees
    – channel management
    – inventory holding fees
    – working capital challenges
    – maintenance / support costs
    –> this is why large companies are generally better at bringing hardware products to market
  7. Consider crowdfunding as a tool for marketing campaigns more than as a sole funding source.
  8. Explain how your business could scale (subscriptions, product extensions, etc.).
  9. Find the right positioning and partner with a deep-pocketed VC to have staying power.
  10. Every hardware entrepreneur should visit SXSW at least once.

General closing advice

  • don’t be afraid to try. to experiment. to be wrong.
  • don’t be afraid to engage with people outside your comfort zone. there’s value in diverse perspectives.
  • don’t be afraid to ask for help. assemble a diverse collection of advisors and solicit their advice.

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