Funding International Startups from Japan – Crowdcredit –

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As CEO Tomoyuki Sugiyama was on a business trip at the time of this interview, CIO Sungjae Kim, kindly spoke to us about Crowdcredit and their mission.

– Please tell us about your service.

Crowdcredit is an investment linked global crowdfunding service, where we gather funds in Japan to be used for investment in global businesses.  Since we are the investment side, we rely on local partners to provide the loan directly to the users.  We are in charge of selecting local partners as well as determining future schemes.  Our platform focuses on the funding side.

– What countries do you have partners in?  What was the reason for entering those markets?

Currently, we have partners in Peru, Estonia, Finland, Russia, Cyprus, Lithuania, Georgia and Cameroon.  And they are expanding business in Spain, Poland, Czech, Slovakia.

The original concept arises from the fact that Japan has historically had a deposit gap, with no place to loan out their money.  With competition among banks give out loans, interest rates became lower and lower, creating a low yield market.  Due to degree of maturity Japan has reached compared to the rest of the world, low funding requirements lead to an abundance of funds.  On the other hand, following Lehman Shock, banks in other developed countries didn’t have money to lend out; this was especially the case in England.  Our Founder, Sugiyama, was working at Lloyds Bank in Japan at the time and saw an opportunity to the fill the gap.  After an unsuccessful attempt to create a new fund scheme through Lloyds, Sugiyama decided to create Crowdcredit to work on the business opportunity he discovered.

Upon starting up and searching for countries to sell his fund, Sugiyama spoke with experts on Latin America and found that Peru, although developing, is a country with an abundance of natural resources with strong finance—they have a single A credit rating, which is very good compared to Japan.  He decided to start with Peru and added more countries based on business potential he saw in those markets.

Looking at crowdfunding in Japan, which are mostly real estate based invested, our fund scheme is based on short term, 6-12 months loans with high interest rates.  Taking Cameroon as an example, we entered trade finance with a local partner and were able create a short term, 7 month, collateral backed fund, that can yield returns of 10-13%.

– When did you decide to start?

We came into operation in 2013, so considering preparation, I believe it was around 2011-2012 when Sugiyama decided to start.

As for myself, I actually joined the company in June of this year.  I had been in contact with Sugiyama from the beginning of 2015 and had an interest in his business idea.  We discussed ideas and eventually starting volunteering time on the weekends to help out.  It wasn’t until March 2016 that Sugiyama invited me to join.  Before joining, I was working at Morgan Stanley in interest rate trading.

– Who is your target and where are you looking to expand?  Are you looking to approach borrowers directly?  

At this moment, we are not looking to supply loans direct.  There are challenges even working with local partners to understand the market, as business rules and regulations vary from country to country.  So, we are continuing our efforts to find local partners, namely loan provider, with whom we can establish mutual, beneficial business relationships.  Though it may be possibility in the future to acquire local partners if we achieve a certain stage of growth globally, at this stage we not considering taking over the loan side anytime soon.

Though we have child companies in Peru, Estonia, and Mexico, we don’t want expand without reason considering the operational burden of running these companies.  Of course, future expansion is not out of the question, as this will depend on market conditions we consider and local partners we can find in those markets.  Though we have no plans at the moment in expanding into the US since the crowd funding market is already mature, we may consider otherwise depending on options we may want to provide to our investors in the future.

– What sets Crowdcredit apart from similar crowdfunding platforms? 

I believe we are the only company to focus solely on cross border projects outside of Japan, not to mention the portfolio of countries we can offer.  Our key concept is all about correctly supplying money to consumers or companies that are in need of funding with the aim of improving their respective local economy.

– Though you do not lend money directly to businesses, have you heard of any examples of companies who have benefitted from your fund?

We hear through our local partners.  As an example, we heard of an import company that has been able to multiply their operations due to increased profits in Cameroon.

– What types of investors or companies would you like to partner up with in the future?

While institutional investors would be nice to partner with, we are all still at a stage where such investors would see buying our fund as a risk.  Wealthy individual investors or Small-Mid size business with some extra funds to spare would be our main target of investors.   Also, someone that could help connect to new local partners would be great; it would be interesting to partner with individuals or companies that are well connected in their respective market.

– What is your daily schedule like?

I am usually in the office from 9:00 am.  I am mainly in charge of managing our fund, which includes cash management and updating all the individual platforms we are running for each country.  Recently have been working on our user page renewal project.

– What app due to you use the most?

I tend to use Slack for internal communication, as well as Box and Facebook Messenger.

– Do you have favorite hangout spots or restaurants you can recommend to our readers?

I recommend three places: Sora – a ramen shop in Kojimachi, Rengetsu – a gyoza restaurant in Nogizaka, and Nonno – an Italian restaurant near Yoyogi Koen station.

– Who are your biggest influences?

I would say my father and American football coach in college.  My father taught me not to “chase money or women” (Kim laughs) – “if you work hard, both will follow”.

My football coach taught me a lot, but the most profound lesson I learned was that if you realize how much of a nothing you really are as person, failure at anything is justifiable; however, if you succeed at something, despite being a nothing, that is a spectacular thing.  In other words, putting yourself on a high horse only creates a false sense of who you really are.  Throwing your pride, though difficult, can lead to something wonderful.

Although not a charity, Crowdcredit’s motives are altruistic with the end goal of improving and revitalizing global economy through funding aspiring startups and businesses are looking to improve their local situation.  We look forward to hearing more about the people and businesses Crowdcredit has reached through their funding activities.

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