An Insider's comments on Japan's high tech business world

* * * * * * * * TERRIE’S TAKE – BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.

General Edition Sunday, April 26, 2015, Issue No. 801

– What’s New — Who Was Kazunori Ozaki?
– News — Drone wars or laws?
– Upcoming Events
– Corrections/Feedback
– Travel Picks — Fruit Park in Yamanashi, Sushi in Nagano
– News Credits

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On April 7, 2015, Japan lost a one of its most influential small-cap
private equity and venture capital champions, Kazunori Ozaki, who until
recently was the Chairman and CEO of Ant Capital. Ozaki-san died of
pancreatic cancer at the age of 65 after a short and intense battle with
the disease. Ever the unassuming leader, only a close few were privy to
his illness, and he was still going to the Ant Capital office as
recently as January this year. Our thoughts and prayers go to his family
and friends.

Who was Kazunori Ozaki?

As with all human relationships, Ozaki was different things to different
people. We got to know him just as he was embarking on an intense
personal growth period, being the point at which he was leaving the
security of a top job at GE Capital to became CEO for one of Japan’s
first small-cap private equity firms. His subsequent contribution to
owners of small companies in Japan was profound, in that for the first
time his firm offered logical, reasonably-priced buy-outs that
previously were only available to mid- and large-sized firms. Although
M&A is the usual path for a small company owner to an exit, finding a
buyer in Japan who will pay a fair price was hard to do, and Ozaki was
helping to change that.

We first met Ozaki in 1999, when as the recruiting arm of we
were asked by the folks at Whitney, a Massachusetts VC fund, to help one
of their investors recruit a CEO for a new incubator business in Tokyo.
The search client was a UK-based firm called Ant Factory and in
1999-2000 they were at the peak of their popularity, with plans for
rapid expansion all around Asia. We visited with the founder of Ant
Factory, Harpal Randhawa, at his London office, and he clearly spelled
out that he wanted someone who was not only very bilingual but who was
also a strong leader, an excellent judge of character, and who had the
experience to structure deals.

We then conducted a lengthy search in Tokyo for Randhawa’s ideal
candidate, but kept running up against the problem that Ant Factory not
only had a weird name but that it was also still a start-up in the eyes
of most qualified Japanese candidates, despite having several hundred
million dollars in the bank. This is one of the recurring frustrations
for senior-level Tokyo recruiters: trying to bridge the credibility gap
between well-funded foreign start-ups and Japanese ideas on what a
“substantial” company should look like.

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Operators and agents wishing to apply, contact

[…Article continues]

As luck would have it, though, we were introduced to Ozaki, who at that
time was an SVP in GE Capital in charge of private equity investments.
Ozaki had only been in GE Capital for a year or so and was getting
restless after discovering that large companies anywhere take time to
decide on and execute deals. He’d previously been in an influential
position in VC firm JAFCO and was handling many fundings as part of
JAFCO’s general build up in the boom. He was particularly
interested in Ant Factory’s amazing ability to pull in hundreds of
millions of dollars, on the grand vision of setting up a “factory” for
company start-ups — essentially it was trying to be the boom’s
version of 500 Startups today.

In early 2001, Ozaki was on the verge of making the jump but wasn’t sure
if the Ant Factory incubator approach would really work. Then from
London, Randhawa introduced us to Hirofumi Hirano, who had just been
promoted to president of Nikko’s eventually ill-fated Nikko Principal
private equity business. At that time Hirano was still a rising star in
Nikko and he had enough exposure to the Ant Factory founders to know
that they had a good chance of pulling their audacious business plan
off. So Hirano spent time with Ozaki and finally convinced him that Ant
Factory was more than just a strange name. With that, Ant Factory got
the in-house entrepreneur/deal maker that it was looking for.

Unfortunately, not 9 months later, with the global implosion of the sector, events overtook Ant Factory and in December 2001 the
company was bought out, mostly for its US$120m cash pile, by London-based
investment bank Seymour Pierce. Randhawa and his team moved to Seymour
Pierce, and not a year later Randhawa moved on.

Luckily for Ozaki, as a condition of moving to the Tokyo Ant Factory
operation, he got prior agreement from Randhawa that he could focus on
private equity rather than incubation. Ozaki had just completed his
first M&A, of a company called Wit Capital, when the London parent
melted down. So with this first deal under his belt Ozaki was able to
scramble and find alternative funding for his new private equity
business, funding that never would have materialized if he’d been
following the original plan. In an additional and fortunate twist of
fate, his new funding came via Hirofumi Hirano, the person who’d
encouraged him to join Ant Factory in the first place. In May 2002,
Nikko Principal Investments Japan became Ant Factory’s largest
shareholder. About a year later the Ant Factory team was integrated with
a Nikko Principal company and the newly enlarged entity was renamed to
Nikko Antfactory. Ozaki remained the CEO.

In 2005, Nikko Antfactory’s share ownership changed from Nikko Principal
to Nikko Cordial. Those of us connected to Ant Factory were initially
surprised by the sudden change of ownership but later the reason became
clear when news of the Nikko Principal window-dressing scandal broke.
Readers may recall that Hirano was one of the senior managers to take
the fall for that event.

Ozaki managed to steer around the scandal, which in any case didn’t
involve Ant Factory, and his involvement with Nikko finally came to an
end when the Lehman Shock hit Nikko’s new owner, Citibank. Ozaki and his
team were allowed to buy a meaningful portion of the company and finally
were able to control their own destinies, with the help of the
Norinchukin Bank and Mitsubishi as new shareholders. It was at this time
that the company changed its name to Ant Capital Partners.

If this sounds like a convoluted history, it certainly was, and
highlights one of Ozaki most outstanding points. He was a successful
player in the turbulent private equity game because of his ability to
stay cool and focused, because he was honest, and because of his
extraordinary personal network. Ozaki was always good at meeting people
and he was such a genuinely nice and self-deprecating guy that others
were always willing to help him out. A lesser person would have been
discouraged by the uncertainty and stress, but Ozaki just saw the
challenges as bigger tests of his commitment and skills.

No doubt what helped sustain him was his sincere belief that he could
help and champion smaller companies — a totally unloved sector in
Japan. As a sign of his commitment to this vision, he served as a
director of the Japan Venture Capital Association from 2004 until his
death, and was its Chairman until a few weeks ago. At the same time, he
was also a director of the Japan Private Equity Association, a position
held since 2005. Over that 10-year period he took the chance to meet
pretty much everyone who had anything to do with small-cap investment in
Japan. He was a busy guy and if you wanted an appointment with him, you
had to wait a minimum 30 days for an open slot in his schedule.

Ozaki’s Ant Capital investment team numbered at times up to about 80
staff. They were well disciplined under his leadership and were
extraordinarily focused on finding and making viable investments. They
would scout out hundreds of potential deals a year, seriously dig into
about 30 of them, and do roughly two actual transactions. As a result,
they completed 21 major investments and almost as many earn-outs between
2005 and 2014. Most of these were either acquisitions of struggling
companies, where Ant Capital fixed them and sold them later once they
were making money again, or they were buying out owners of successful
businesses where the owner couldn’t get a decent return for his/her life
work in the open market.

On a professional level, Ozaki taught us that despite the challenges and
uncertainty of the markets, with the appropriate application of capital,
good operations, a clear set of objectives, a strong internal moral
compass, and a personal network, any company can be made whole again and
can become an attractive buy-out target. This is not to say that all
their acquisitions went smoothly or grew the way they could have, but
despite having to learn pretty much each new sector they bought in to,
in the end they had a system that worked and were able to produce
returns for their investors.

On a personal level, Ozaki showed us that despite being under a huge
amount of financial conflict and stress, it is possible to be a genuine
human being and treat those around you with courtesy and respect. Yes,
he was a risk-taker, but one with a conscience, and he will be
remembered fondly for his principles and the genuine friendship he
offered to those around him.

Japan needs more business leaders like Kazunori Ozaki.

…The information janitors/


————- Bilingual Web Designer Vacancy ————–

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your work will be seen and used by millions of people a month.

Ideally the applicant will have a minimum 5 years experience in web and
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qualified individual, however, English and Japanese capability is
desirable. Modest salary to begin, then significant increases as the
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Interested applicants please send your resume to

+++ NEWS

– Drone wars or laws?
– Record Nikkei close in last 15 years
– First monthly trade surplus in 34 months
– South Korea bears brunt of cheap yen
– Pilot retirement age to rise to 67

=> Drone wars or laws?

We have to admit that we’ve been surprised over the last year of owning
a DJI drone, how little regulation there is governing the right to fly
one of these toys. It’s been a case of the Japanese bureaucracy being
slow to match the appearance of drones and thus a laissez faire approach
has been the response. But that will probably all change now that an
anti-nuclear activist has crashed a drone on the roof of the prime
minister’s residence. The aircraft he used was a DJI Phantom, similar to
the one we have. DJI has quickly come out and said that it will program
the PMs residence, the Imperial Palace, and other sensitive sites as
no-fly zones, and that upgrade software will contain the same
information. However, probably it’s too late for them to act now, and we
expect that the transport ministry will introduce some severe
curtailment of recreational drone operation in Japan. This is a shame,
because our travel site,, has been making
substantial use of drones for aerial tourism videos — in many cases we
have been taking the first-ever aerial coverage of given locations. We
know of many others doing the same. (Source: TT commentary from, Apr 24, 2015)

=> Record Nikkei close in last 15 years

For the first time in 15 years, the Nikkei index for the Japanese stock
market has closed above 20,000. This means that stocks have surged 140%
since June, 2012, reflecting the obvious effectiveness of the Abe
government’s tactics of saturating the stock markets with orders from
the various financial institutions it controls. ***Ed: while stock
analysts and bankers are lauding the effects of Abenomics, we note that
everything at the supermarket has gone up 20%-30% while wages have not.
We think Abenomics will go down in history as a blatant transfer of
wealth and well-being from the general population to an elite few, and
wonder how long the voting population will put up with it? Trickle-down
economics? We think not.** (Source: TT commentary from, Apr 22,

=> First monthly trade surplus in 34 months

From the just-released trade data, it appears that Japan has had its
first monthly trade surplus (for March 2015) in almost 3 years. Falling
oil prices and the cheap yen have been fueling exports, however, the
surplus is not expected to persist, given that oil prices are now
starting to recover. Furthermore, exporters are fairly unanimous that
any further weakening of the yen, something which is widely expected,
might be counterproductive from now on since it will drive up the cost
of imports more than it will benefit exports. Trade exports in March
were JPY6.9trn (US$57.9bn) while imports were JPY6.7trn (US$55.6bn).
(Source: TT commentary from, Apr 21, 2015)

=> South Korea bears brunt of cheap yen

There is a good report in the website about how South Korea’s
export sector is under pressure from Japan now that the yen is 40%
cheaper than its peak 3 years ago. Economists are saying that right now
Japanese companies are still content to book profits rather than cut
their prices, but that if yen falls further then exporters may start
predatory pricing so as to take more global market share. South Korea
had Q1 growth of 2.4% annualized, versus 2.7% forecast, and the main
cause was weak exports. ***Ed: It’s obvious to us that South Korea will
have to start it’s own quantitative easing program, especially now that
they have had their knuckles rapped by the IMF for direct currency
intervention. Actually, why the IMF draws such a fine distinction for
Korea when Japan’s QE program is obviously currency manipulation is
beyond us, but it does point the way for South Korea if it wants to play
the game by the same rules. Once South Korea gets started on the QE
path, then Taiwan and other little dragons will have no option but to
follow suit, setting off a full-blown currency war in the Asia-Pacific
region.** (Source: TT commentary from, Apr 23, 2015)

=> Pilot retirement age to rise to 67

In recognition of the growing shortage of pilots (especially among LCCs)
and the improving health of the current generation of 60-year olds, the
transport ministry has decided that it will increase the retirement age
of commercial pilots from 65 to 67. The new rules will come with some
provisos, such as a reduced limit of 80 working hours versus 100 hours,
and the requirement that if a pilot is 65 or older then the co-pilot
must be 59 or younger. ***Ed: Given that 10% (about 500) of Japan’s
5,900 pilots are aged over 60, this change probably isn’t such a big
deal, but certainly we hope that the ministry pays attention to adequate
physical and psychological testing.** (Source: TT commentary from, Apr 24, 2015)

NOTE: Broken links
Some online news sources remove their articles after just a few days of
posting them, thus breaking our links — we apologize for the inconvenience.



—————— ICA Event – May 21st ——————-

Speaker: Rochelle Kopp – Managing Principal of Japan Intercultural
Title: “Managing Across Cultures”

Details: Complete event details at

Date: Thursday, May 21st, 2015
Time: 6:30 Doors open, Buffet Dinner included and Cash Bar
Cost: 4,000 yen (members), 6,000 yen (non-members) Open to all. No sign
ups at the door!!!!!!!
RSVP: By 5pm on Monday 18th May 2015. Venue is The Foreign
Correspondents’ Club of Japan.


=> No corrections this week.



=> Fuefukigawa Fruit Park in Yamanashi
Fruit trees, Fuji views and kid-friendly facilities

There are many reasons to visit this beautiful, spacious park in
Yamanashi City. It sprawls over a hillside overlooking the Yamanashi
countryside and includes a number of facilities that make it an
attractive destination throughout the year. It also has beautiful views
of Mount Fuji, and the night scenery of the Kofu Basin. I visited in
spring, and was so carried away by the blossom and Fuji views that I
forgot to photograph some of the other features!

Near the top of the park a 10 meter high dome encloses a huge space
sometimes used for concerts and events, and which also serves as a
pleasant rest space and play area for children regardless of the season
or the weather. The Fruit Museum is in the basement of this dome. A
second dome contains a tropical greenhouse which can be enjoyed from
several levels due to its elevated walkway and terrace. It contains many
varieties of tropical flowers and fruit trees.

=> Yuzawa Town in Niigata Prefecture
Sushi, sake and more: a great day in the snow country

In less than an hour from Niigata City, I went from a seaside, snowless
city to the mountainous countryside of the Yuki-guni (“snow country”).
The fresh air and the deep snow muffling sounds are things that you
appreciate instantly when you arrive from a big city. No wonder why many
Tokyoites choose to make the 75-minute bullet train ride to Yuzawa and
ski their worries away. All this snow becomes even more amazing when you
realize that it’s the source of the crystal clear water that helps
Niigata grow what is widely considered the best rice in Japan. This rice
in turn is what is used to make great sushi and world-famous sake.

After meeting with our guide, we headed to a nearby sushi restaurant.
There, the staff and the Taishou (the sushi master) gave us a warm
welcome. He starts by showing us how to make Chawanmushi. This is a
traditional dish that I have encountered many times in Japan, especially
at ryokan. It literally means “tea-cup-steam” and is an egg custard dish
with various ingredients. The chef prepares boiled shrimps, shiitake,
bamboo shoots, chicken, herbs and yellow beans for us to use in our
rendition. It is quite simple and fun to make.



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