VCs are supporters, not main cast, says SEGNEL Ventures founder Hideki Fujita

Hideki Fujita, Founder, SEGNEL Ventures, is not one to dominate headlines.

“Sometimes, venture capitalists want to get the spotlight on themselves but it’s not good,” opined Fujita in a chat with DEALSTREETASIA.

“The venture capitalist is just a supporter,” he added. “Sometimes, like a staff.”

Support is clearly a favourite word with Fujita, and it forms the basis of the foundation of SEGNEL, which actually expands into Support Entrepreneurs for Growth to the Next Level.

The SEGNEL journey

Fujita started his career with JAFCO, a Japanese venture capital firm. After six years at JAFCO, he left for GREE, a local mobile and social gaming company, where he was in charge of business strategy and managed Japanese firm’s operations in the country and in China as well. He spent three years at GREE before he decided to get back to venture investing.

So, he joined hands with Shuhei Morofuji, the co-founder of SMS (a listed Japanese company that received funding from JAFCO) to start Coent Venture Partners in Singapore. In 2014, the fund started off with $10 million from Morofuji and Fujita, and targeted early stage companies.

Together, they placed some good bets. Coent Venture Partners invested in Hong Kong-based transport matching app company Gogovan and DNA testing company Prenetics, which have both gone on to raise subsequent rounds from strategic investors, and Chaldal, a Bangladesh-based e-grocery website which made it to Y-Combinator’s Top 10 list earlier this year.

Also Read: Prenetics secures $10m Series A led by Ping An Ventures

Three months into Coent Venture Partners, however, Morofuji had a change of mind, said Fujita.

That was when Morofuji set up Reapra Pte Ltd, a holding company in Singapore that would go on to manage various firms operating out of Southeast Asia, from hotels to agricultural companies, and listed Coent Venture Partners as one of its subsidiaries.

“Like a corporate venture capital,” he said. “Coent is very good, still good, still existing but their strategy is not focused. They invest in all industries, all services, all regions, all stages, so their portfolio is Hong Kong, Bangladesh, New Zealand, sometimes Japan, China.”

Coent Venture Partners’ diversified investment strategy was not in line with what Fujita had set out to do with venture capital. Additionally, Fujita had wanted to become an entrepreneur while being an investor. Starting his own venture capital firm, instead of sticking with Coent – which had become similar to a corporate venture capital firm, like JAFCO, according to him – would allow him to do just that.

The reason for wanting to be an entrepreneur is simple: Fujita believed that in order for him to fully support entrepreneurs as an investor, he would need to understand what it’s like to be an entrepreneur.

So, in 2015, he left Coent Venture Partners to start SEGNEL Ventures, based out of Singapore as well.

“I like the venture capital business. And I want to be a venture capitalist forever. Even when I am 80 years old, I want to do venture capital,” says the 35-year-old.

He further added that Morofuji is a shareholder of SEGNEL Ventures. “The strategy is independent from COENT,” he said.

Two-pronged strategy

With a focus on IT and mobile companies in Southeast and South Asia, especially Malaysia, Fujita has made 10 investments so far, and started two in-house projects in the last 11 months.

Out of the 10 companies invested by SEGNEL Ventures, seven are based out of Malaysia, while the rest in India, Denmark and Hong Kong respectively.

SEGNEL Ventures manages a $5 million fund, which like COENT Venture Partners, are invested by Fujita and Morofuji. While it can fund anywhere from $10,000 to $100,000, the fund writes an average cheque size of about $100,000. About $2 million has been invested into startups.

“It’s between angel investment and venture capital,” he said. Why not get money from limited partners to invest in more companies?

“If we have the fund, the merit is we have a huge investment amount… but it’s not flexible. The fund will have a time limitation. It may have a mandate to only invest in Singapore or Southeast Asia or Japan. But I don’t have the mandate. It’s very flexible. I can support all over the world.”

“Also, for a startup, it will take some time to grow, sometimes. So, I can wait,” he said. “But it’s very challenging.”

Its notable investments include KFIT, a health and fitness marketplace; Watch Over Me, a personal safety app; SPOT News, a multi-language news app; POKKT, a video advertising and app monetisation platform; and SALTYCUSTOMS, a custom T-shirt making company.

Portfolio companies
The two venture builds are Perro Box, a pet treats and toys subscription box service; and Ideastock, a marketplace for emerging video content like videos taken by Gopros and other new devices, that is still in the midst of being developed.

Because Fujita does not have any prior experience running a startup or investing in Southeast Asia, early days were tougher than expected. “Entering the ecosystem was very difficult for me,” he shared. “For example, Khailee from 500 Startups. He has businesses in Malaysia, right? … So, he’s very strong in Malaysia. He has the network. For me, it’s from zero, there was no community.”

Sourcing good startups to invest in became a challenge. “When I invested in KFit and CodersTrust, my strategy was to do two things: I want to invest in sexy companies. The best companies at that time.”

In Fujita’s mind, KFit had an experienced CEO (Joel Neoh, the CEO of KFit, had earlier founded Groupon Malaysia), targeted a huge market, and showed signs of great execution. “Everyone wanted to invest in the company,” he said.

“After talking to Joel over Skype, I went to KL the very next day. We met in person and discussed. Like sales. I went to their office and then they accepted my investment in the first round.”

According to Fujita, it took about one to two weeks for Neoh to accept his offer.

“It’s not cool,” he laughed, talking about how he had to really go after KFit in order to get the deal finalised. “Everyone imagines the venture capitalist is more cool, right?”

To him, SEGNEL Ventures’ investment in KFit was more than just a good deal. It created opportunities for him to speak to other investors — ones he could now co-invest with.

The second part of his strategy was to go after the blue ocean. Developed by W. Chan Kim and Renée Mauborgne, the blue ocean strategy was one that values previously unknown market spaces where “demand is created rather than fought over”, according to a paper.

The reason why he invests in Malaysia, other than his assumption that Malaysian entrepreneurs are simply hungrier for success than their Singaporean peers, is that there are fewer investors eyeing the country.

He explains: Malaysia is not that big a market, the entrepreneurs know that going overseas is a natural course of action.

But, he will be firmly guided by traditional metrics like whether the founder is capable, business model and the markets the startup will operate out of and not just follow the geography trend.

“I don’t want to follow just the trend. Many investors go to Indonesia. Many investors go to India. That’s a trend.”

The same went for industries. “Everyone says that agritech, blah blah tech, I don’t care,” he says. “I don’t like following just a trend.”

Also Read:

Malaysia’s FashionValet secures Series B funding from Japan’s Start Today

Garena raises $170m in Series D led by Malaysian state fund Khazanah

Ratan Tata’s ‘inbuilt frustration’ turned him into prolific investor post-retirement

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.