Digest of the 8th Annual Meeting] What is a Real Tech Fund?

Real Tech Fund Representative / Mr. Akihiko Nagata, Executive Vice President, Euglena Co.

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The Real Tech Fund creates an "ecosystem" that enriches the world with technology.

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The Real Tech Fund invests in R&D-based innovative technologies that contribute to solving problems facing the earth and humankind. However, Mr. Akihiko Nagata, the fund's representative, asserts, "We are not doing this because we want to invest. What is his true intention? ......
Here are excerpts from Nagata's speech at the 8th Annual Real Tech Venture of the Year 2019 held at this convention.

The 9th Annual Hyperdisciplinarity Conference will be held online on April 23, 2020.

We want to encourage a "revolution in workwear and lab coats."

My name is Nagata, President of the Real Tech Fund. Today, I would like to tell you what the Real Tech Fund is and what we are aiming for.

The Real Tech Fund was launched in 2015 by Euglena, Liverness, and SMBC Nikko Securities. As a fund, it naturally has the function of collecting money and investing it, but we do not essentially want to run a fund. To put it more simply, we are not running a fund because we like money and want to increase it.
We want to make the world a better place through real tech, we want to make the world a better place through technology, and we want to make the world a better place anyway, even if it is not through technology. We are managing this fund in order to create a mechanism to prevent such pure aspirations from being crushed.

The term "real tech" was coined by us. To us, real tech is "R&D-oriented technology for the betterment of mankind and the earth." Conversely, we do not consider technology that does not help people or the earth to be real.
In recent years, the term "deep tech" has become a trend, but those of us who have been supporting researchers feel uncomfortable about being told simply, "Apparently, there is a trend coming.
Because for a long time now, there have been people working on research for years and decades, and new research results are published every year. Great researchers don't just appear recently. They keep being born all the time.

But on the other hand, I also wonder why Tokyo Tech is not considered as cool as MIT. That is why I want to make sure that people, money, and goods gather here, so that the realm of real tech will change the world. We want to encourage a "revolution in work clothes and lab coats" by researchers. We believe that is the role of the Real Tech Fund.

Euglena's success story to the next real tech venture.

I am also the vice president of a bio-venture company called Euglena. Euglena was founded in 2005 as a University of Tokyo venture, and was the first company in the world to succeed in outdoor mass cultivation of microalgae called euglena (Japanese name: Midori Mushi). We have continued research into the use of this euglena in foods, cosmetics, and biofuels, and as of 2019, we have achieved annual sales of approximately 15 billion yen and a market capitalization of 100 billion yen (as of March 2019).

We also had an IPO in 2012, and in 2014 we became the first ever venture company from the University of Tokyo to be listed on the first section of the Tokyo Stock Exchange. I myself was 34 years old at the time and was the youngest CFO of a company listed on the first section.

But in the early days of our company, we were really poor, "the poor duckling. The first few years after the company was founded were a time of Livedoor and Lehman shock, and at our worst, we had only 15 employees and 200,000 yen in cash. We had to pay back money to whom and at what time today. It was such a situation that no one would even look at us. It was really a treadmill routine.

But even in the midst of all this, it was LIVERNESS that was on our side from the very beginning. While everyone made fun of Euglena, they ran alongside us through the most difficult times, helping us find a professor for joint research and a business company for joint development. And as a result, the combination of Euglena and RIVANES became one successful model as a combination of a real-tech venture and a company to support it.

Such successful models are few and far between, especially in the realm of R&D ventures. That is why I share a common understanding with Mr. Maru of Rivanes, who is also the co-chairman of the Real Tech Fund, that we should give all of our gains and successes to the next real tech venture that is going to change the world.

A partner who gives us "wisdom, people, and money" rather than "just money."

However, the Real Tech Fund is not made possible by Euglena Co. and LIVANES alone. This activity is made possible by partnerships with business companies that provide not only "money" but also "wisdom, people, and money.

This is due to the characteristics of real tech ventures. For example, even if a venture has excellent basic technology, unlike in the IT or web world, the technology by itself cannot change the world. This is because it has to be manufactured and used by someone else. In other words, for a real tech venture to be successful, it needs to be a multiplication of various technologies.

Euglena also formed various partnerships with LIVANES from the time of its establishment until it went public. The key was to collaborate with a business company that has the same perspective as the venture company and is passionate about "changing the world together.

In light of this experience, we felt that it was essential for a fund that supports real-tech ventures to work with business companies that have the motivation to "change the world through the social implementation of technology. And very gratifyingly, we have been able to form partnerships with a total of 30 excellent companies in the five years since the fund was established. Thanks to the strong curiosity of the top management of our partner companies and people in the field who engage with us, we are now seamlessly accelerating our collaboration with real tech ventures.

The next Google may not be born, but the next Toyota will be.

The Real Tech Fund is accredited by both the Ministry of Economy, Trade and Industry (METI) and the New Energy and Industrial Technology Development Organization (NEDO). There are only two similar funds in Japan. In other words, we have received national support for our efforts to "bring Japan's basic technologies to the world.

I would like to ask you all, will the next Google or Amazon really come from Japan? To be honest, I can't imagine it. But I believe that the next Toyota, Fanuc, Komatsu, and Teijin will be born. I think that will give you a better idea of what I am talking about. I want to use Japanese technology to fight in a way that is uniquely Japanese.

To this end, the ecosystem that we have created with RIVERNESS includes, for example, a forum for gathering colleagues, such as this super interdisciplinary society, and initiatives to subsidize the research of young researchers, such as the RIVERNESS Research Fund. There is also TechPlanter, an acceleration program for research and development ventures, which provides support for real-tech ventures from the pre-commercialization stage.

When a company starts to sprout as a result of each of these efforts, that is where the Real Tech Fund comes in. We nurture these small budding companies by providing them with money, people, and wisdom as water and fertilizer. For a company, business, or technology to evolve, various elements are necessary. We believe that it is the function and role of the Real-Tech Fund to bridge these elements.

Real tech ventures need IP, HR and PR.

As of 2019, money is already a commodity. If you are surrounded by ventures that are lamenting that they are not attracting money, unfortunately, that is a sign that they are not very good at it.
But what is really needed for a venture is the essence of experience, relationships, collaborations and social implementation.

After investing in a startup, the Real Tech Fund will naturally provide financial support. We also provide support for business development and business collaboration. In addition, we work with dedicated patent attorneys to thoroughly implement IP strategies, and our human resources and team-building experts provide thorough HR support. For the 40 companies that we currently support, we are sending in a steady stream of excellent human resources, not only from Japan but from all over the world.

Another important aspect is creativity and PR. Generally speaking, many researchers believe that the reason why people do not understand the value of what they are doing is because society is bad. But I think this is actually the opposite. Researchers need to show society that they understand.
That is why the Real Tech Fund's first step after investing is to provide creative support. We make it visible and understandable. By promoting it, we will surprise the world and bring them to the point where they want to support the project.

Only by creating these "systems" will real tech ventures be able to move forward. They are young companies, they have the technology, and most importantly, they have the passion to change the world. But they have no idea how to move forward. There is no point in just throwing money at them.

We need to pull the weeds around them, till the land, and make sure it gets the proper amount of sun. We have to run with them. That's what the Real Tech Fund is doing.

In five years, we will silence those who laugh at the idea that "technology is impossible."

When I started Euglena Co., Ltd. in 2005, saying "We are going to save the world with Midori Mushi," I was laughed at by the whole of Japan. But when we went public, everyone turned their palms in awe.
Even when Maru and I decided in 2015 to do something about Japan with real tech, we were laughed at. He said, "You can't invest in technology," and "We know because we've done it many times already."

Indeed, a generation ago, there was a bioventure boom, and a lot of money was attached to ventures mainly in the field of drug discovery. But from there, not even 10% of the companies went public and became truly profitable. That is why people say, "Technology is impossible" or "It takes time.

But we think, "That's backwards. It takes time, and that is why we, who are still young, should take the time to do it, whether it takes 50 or 100 years.

Real tech is now beginning to swirl around the country, including the deep tech trend. There is a clear increase in media exposure and a migration of people to real tech ventures. Money is pouring in. It means that many people are beginning to think, "This is the way to go after all.

As we have said repeatedly, we are not a fund that only aims for returns. However, in order to change society, we need to make people who laugh at the idea that "technology can't do it" understand what we are trying to do. That is why at the Real Tech Fund, we hope to have at least 12 companies go IPO by 2022. If we can achieve results in areas where everyone thinks "it won't make money," we expect that people will quietly imitate us.

When 100 people imitate us in that way, Maru-san and I will quit the fund. Five years have passed since the fund was established, and we are now hard at work pushing the heaviest part of the real-tech vortex. I am confident that in another five years, this vortex will be spinning round and round.

The Real Tech Fund will operate on a global basis.

We are entrepreneurs. We must constantly evolve. That is why this year the Real Tech Fund is expanding its investment support to include global companies. What we find particularly interesting is the Asian region. There are many new researchers and entrepreneurs in Asia who are very enthusiastic and believe in the future of real tech. We would like to share our experience with them.

In fact, real tech ventures in the Asian region have one common concern. That is that there are almost no large companies that have become stars in real tech in their countries. On the other hand, Japan is full of large companies that have made a huge impact by starting from scratch to develop technologies and implementing them in society. What the Japanese themselves are most unaware of is that Asian youth, young Asian researchers, and young Asian ventures are strongly seeking connections here.

On the other hand, Japanese academia is overflowing with technology, but there are too few entrepreneurs to implement it in society. That is why we are trying to bring in such human resources from overseas.

In other words, in our future activities of the Real Tech Fund, we hope to realize our goal of "changing the world," "changing humanity," and "making the planet more prosperous" by connecting technology, passion, and large corporations on a global scale.

The world changes with each and every action.

In closing, let me make just three requests of you.

First. We have really struggled to death at Euglena Co. Now, we genuinely want to give back to the next generation the experience we gained from going public and working together with Livanes. That is why I hope that startups that will grow and go public in the future will do the same, thinking of it as one of their duties to give back to the next generation.

Second. There are many large companies in Japan, but most of them have already lost their founders. In other words, I believe that the number of entrepreneurs in the real tech field, of which there used to be many in Japan, is now disappearing, and the number of people who can pass it on to the next generation is decreasing. The Real Tech Fund accepts secondment from large companies that have invested in us, creating an environment that allows those who wish to work as entrepreneurs to take on new challenges. In fact, there is a very cool guy who has been transferred from a large company and is very active.

And third. We see the fund as only one function. What we want to do is to create an ecosystem in which technologies born from passion and curiosity are implemented in society. If you feel even a little sympathy for this activity, we would like you to link it to one of our actions. It could be simply telling someone about the Real Tech Fund, supporting someone, or of course, investing in the fund. Or, you can just give a shoulder massage to a Liberace employee. It really doesn't matter what form it takes. I believe that each of these actions will add up to make a difference in the world, and I look forward to working with you.

With that, I would like to conclude my speech. Thank you very much.

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President, Real Tech Fund / Executive Vice President, Euglena Co.

Akihiko Nagata（Mr. Akihiko NAGATA
Originally from an independent private equity fund, he became a director of Euglena Co. in 2008. At Euglena, he oversees all aspects of the business, including business strategy planning, M&A, fundraising, capital alliances, public relations and investor relations, and administration. He is well versed in the areas of strategy and finance supporting technology. At the Real Tech Fund, he oversees all aspects of fund management as the representative.