Gaming, media companies poised to grow 10x amid COVID-19: Yuki Kawamura, AET Fund
In a conversation with YourStory, Japanese investment firm AET Fund Partner and India Project Lead Yuki Kawamura speaks about the impact COVID-19 has had on the Indian startup ecosystem and the key things entrepreneurs need to keep in mind.
Yuki Kawamura, Partner and India Project lead from Japan’s Akatsuki Entertainment Technology (AET) Fund, in January told YourStory that the fund was “very bullish” on India and saw huge potential in entertainment.
Yuki, who holds a B.S. and M.S. in computer science from Keio University, Tokyo, Japan believes that the coronavirus pandemic will shape businesses for decades to come. He says a stream of new opportunities will open up post-pandemic and startup founders must wait for “the right time”.
“The most important goal right now is to survive until the economy restarts or seize new opportunities to grow the company,” Yuki says.
The second largest Japanese fund after Softbank, AET has been active in India since March 2019. The venture capital arm of Tokyo and Los Angeles-based entertainment company Akatsuki Inc. has so far partnered with venture capital (VC) firms such as Accel India Partners, Blume Ventures, Sequoia Capital India, Inventus Capital Partners, Chiratae Ventures, DSG Consumer Partners, 3one4 Capital, and InfoEdge Capital.
AET has invested in companies like The Wedding Brigade, Samosa Singh, Planet Superheroes, LBB, MechMocha, ShopKirana, Stay Abode, Purplle, and others.
After launching streaming giant Netflix in Japan in 2015, Yuki was responsible for content strategy and analysis. He also worked at Booz & Company and Monitor Group as a management consultant (Tokyo and Singapore offices).
Yuki joined AET Fund in 2018 and has been keenly looking at the Indian startup ecosystem. Despite the coronavirus pandemic, the Japanese fund remains bullish on Indian startups and is keenly looking to invest in digital and entertainment.
In a conversation with YourStory, Yuki speaks about the impact COVID-19 has had on the Indian startup ecosystem, how startups can thrive during this crisis, and the key things entrepreneurs need to keep in mind.
Edited excerpts from the interview:
YourStory YS: What is the impact that startups have seen because of COVID-19?
Yuki Kawamura (YK): Early-stage companies are obviously doing scenario mapping at this point of time and optimising their cash flow to ensure liquidity to survive this pandemic.
Many startups are witnessing an increase in consumer engagement and activity, and they should be inspired by the consumer interest to deliver groundbreaking innovation.
Gaming and media companies, for instance, are poised to grow 10x as more and more consumers are looking for ways to entertain themselves online when they can’t hang out offline.
The demand for ecommerce has risen sharply as well with many more consumers becoming comfortable with online shopping and payments. Most startups have stepped up their efforts to help employees deal with COVID-19 and that’s commendable. These are unprecedented circumstances and we are all in this together, trying to adapt and survive in the best way possible.
YS: What will it take for startups to revive?
YK: The coronavirus pandemic will eventually die down, hopefully sooner than later. Newer business models will evolve and a lot of new innovations will help society cope with the new normal.
Startups today need to evaluate, and double down on their role in helping consumers flourish in times to come.
A stream of new opportunities and trends will open up after the pandemic, and one has to wait for the right time. It is a difficult time, and startups need a strategic and well-planned approach to revive.
YS: What has been the impact on investment for early-stage startups? And how will that impact their growth?
YK: Startup funding may take more time than expected to fully revive as COVID-19 has hit investment activity. Early-stage startups hoping to get back in deal-making mode might have to wait for a longer period before things get back to how they were before the pandemic.
Investors’ priority would be to conserve cash for existing portfolio startups and help them tide over this crisis. Investment in sectors like healthcare, gaming, content creation, and streaming will boom amid COVID-19.
Investments will be rare for the next few months except for startups that provide products or services that fulfil the unique needs created by the coronavirus pandemic.
YS: How do you see startup business models evolving and growing?
YK: Until the pandemic is behind us, survival has to be the imperative focus for startups. This situation is very different from the 2008 financial crisis. Not all companies are losing out; the value of some companies has increased on the stock market and certain businesses are experiencing more demand than they were prepared for.
The businesses that invested in future trends of digitisation, streaming, remote learning, and more early on are now reaping the fruits of their foresight. This is the opportunity for startups to go back to the drawing board and assess if the products and services they were planning to launch will still be relevant in a post-pandemic world.
Companies that use this time to increase their penetration and ensure sustained usage even after the crisis will get more attention. Startups willing to align to the new changes will emerge winners.
YS: What do you think about the Indian startup ecosystem?
YK: Indian startups are trying to increase efficiency, in every way they can. They have started focusing on core strengths and building their way forward.
Every startup is addressing problems in its own unique way. Many companies have to be temporarily halted due to the pandemic, but they will be back in business after the lockdown. Once this is all over, online businesses will grow faster than ever before, due to a behavioural shift among people.
Now is the time for startups to look internally and see what can be improved, says Anisha Singh, Founding-Partner, She Capital
YS: Are there some shifts that startups will need to consider in their business models? What will those be?
YK: This global pandemic will shape businesses for decades to come. All businesses will have to adopt new-age digital measures as the coronavirus showed us that a bits-based business has higher odds of surviving a disaster than a traditional atom-based business.
Startups should look at this as an opportunity to figure out how they can diversify their offerings and build a more loyal community. There will be increased focus on building content properties as content has emerged as a primary source of entertainment, engagement, and information.
YS: What are the key things startups need to learn from this time?
Startups can redo their company’s strategy to face the current reality. They can take a hard look at all business assumptions about customers, market, products, revenue, and cost forecast.
Startups need a short-term strategic plan instead of a long-term one. Just make a plan that adapts to the new reality, review it daily, and update it weekly. That’s really the key. Start acting on new strategies immediately and decisively, whether that’s offering a new product or service, canceling a product line, or cutting costs. The most important goal right now is to survive until the economy restarts or seize new opportunities to grow the company.
Above all, it’s almost a Darwinian survival necessity to adapt to the growing digital consumption and buying behaviour of consumers. It’s important to evolve your business to cater to online/digital/virtual needs of consumers who have evolved in the wake of the pandemic.
YS: What is the advice you give startups at this time?
YK: Entrepreneurs should take this time to reboot and focus on business plans. And, most important, stay focused. The only way to move forward is to put our heads together and share what we see is working and not working in real time.
It’s time to think outside the box and come up with ideas, even if they don’t follow your existing business plan. Ongoing communication and engagement with your customer is key in the current climate.
(Edited by Teja Lele Desai)
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