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A VC leverage AI to invest in startups all over the world: interview with Headline Asia founder Akio Tanaka
This May, Infinity Ventures in Asia and e.ventures in the US and Europe have rebranded together as Headline. The two venture capitalists have been collaborating for over ten years and have invested in startups all over the world. We ask the partner Akio Tanaka what’s the secret for them to source unicorns globally; he answered: by AI.
Pinkoi, funded by Sequoia capital in 2015 and now Asia's largest online marketplace for unique and original design goods, was established in 2011 by three young entrepreneurs. In the beginning, it was relatively unheard of to the globe, but Headline’s AI deal sourcing system, EVA, spotted that Pinkoi was growing rapidly. “By that time, Pinkoi did not enter most VCs’ radar, but we found it with our AI system EVA,” said Akio. Then everyone knows the following story, Sequoia Capital invested USD$ 9M in Pinkoi two years later, and Pinkoi has kept growing at a stellar record.
To invest in AI startups, VC firm Headline decide to become an AI company first
EVA is a deal sourcing AI system built by Headline in 2010. The system parses a variety of data from the internet including startup financial statistics and technology sectors. It can even calculate the Net Promoter Score(NPS) for every startup. “This July, EVA screened 1 million startups from the globe for us, then our team looked deeply among 10,000 startups,” said Akio, “That is how we leverage the AI to efficiently analyze the startups, making sure we won’t miss the next unicorn.”
After screening startups by leveraging EVA, Headline has another secret weapon, Athena, to analyze the financial data for each startup. “For our portfolio companies, they can also leverage Athena to compare the financial data with competitors, which enable them to know how to improve the operation,” said Akio. With these two AI systems, Headline can source startups from all over the world and make completely data-driven investment decisions.
Akio Tanaka, a man persuade Adobe to invest in KKBOX 15 years ago
Akio Tanaka, co-founder and partner at Headline Asia(Formerly known as Infinity Ventures) , forged an indissoluble bond with Taiwan in his early career at Adobe. He worked as a technology advisor to the CEO at that time. With the technology background and product building experience, Adobe soon appointed him to be in charge of the investment department in Asia.
In 2005, Akio spotted the potential of music streaming platform startup KKBOX. He foresaw the internet ecosystem KKBOX was capable to build; Akio persuaded Adobe to invest in it. “I was an engineer building products in my early career, which made me a product-driven investor. I like to take a deeper look at the potential of products.” said Akio, “I will also analyze if this startup is able to form its own ecosystem.” Right after Adobe invested in KKBOX, Akio bridged Japan’s giant telecom operator KDDI with KKBOX. They teamed up together and built a series of products around the music and streaming services to form an ecosystem. Furthermore, this collaboration made it a gateway for KKBOX to expand to the Japanese market. And now, KKBOX has become a top brand in Taiwan and Japan.
“We love to invest in internet startups that have strong traction and can keep growing their users and ecosystem, as well as have a clear business model. Alongside our strong collaboration with our Europe and the US partner e.ventures and rebrand as Headline, we can have the abundant resources needed to bring Asia startups to the global market,“ said Akio, “Thanks to the power of the internet to spread information all over the world, venture capitalists should keep an eye on the global market too.”
Headline's two milestones this year
This year, Headline has made two milestones. First, in May, Infinity Ventures and e.ventures rebranded as Headline, enabling the two VC firms to share the network and resources with zero barriers, and make it easier than ever to help their portfolio startups to expand to the globe.
"Our new rebrand as Headline cemented our decade-long partnership with our global fund teams in the US, Europe, and Latin America for a combined AUM of over USD $2 Billion," said Akio.
Second, on July 31, Headline Asia announced they closed the fourth fund at over USD$100 Million.
A number of previous institutional investors returned for Fund 4, including the National Development Fund of Taiwan, Abico Group, and Otto Group of Germany.
"With the new fund, we are joined by experienced, world class partners and advisors who led the first investment in Alibaba, managed a FinTech fund for Japan's largest corporate bank, or been behind most of the major tech IPOs in Japan," says Headline Asia Partner Joseph Huang. "With the expanded team capacity and our proprietary deal sourcing software, we are finding great investment opportunities at a breakneck speed."
Headline Asia invests globally across the internet technology sector at Seed and Series A stages with a focus on e-commerce, logistics, and FinTech. Combined with AI systems and all the networks as well as resources, Headline will keep searching for startups in the internet technology sectors that have the potential to shift the paradigm.
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