Incubation means different things to different people. Our interpretation is to provide all the resources needed to get a company past its first few critical months of operation, until it can fend for itself. Thereafter, we provide specific service sets as well as maintaining a presence at Board Level — as a director if we're an investor, or as an advisor if we are not. This allows us to contribute on an ongoing basis and help create a full-fledged, properly managed Japan operation. We are not a VC company and we are not a real estate firm, although both of these aspects may be introduced into the services mix.
Our incubation customers fall in two broad categories:
Larger overseas companies seeking to start an operation in Japan and looking for a beach head from which to launch their operation. The incubation approach provides Enterprises with an excellent balance between hiring in-house skills to gain core competence versus outsourcing non-core ones. By outsourcing to LINC Media, our Clients can focus on selling and technology development, enjoy a quick uptake of their back office functions while integrating them into the parent company, and practice risk management (by virtue of having a third-party to provide guidance, feedback, and checks and balances).
Our enterprise Client base tends to be broad, and since we are typically not involved in the selling or development of our Clients' products and services, our core contribution is the back office, IT, marketing and other support services. Because enterprise customers are generally disinterested in Japan-only equity investments, most of our work in this sector is fee-based.
Types of companies that we have done business with in the enterprise incubation category include:
- Leading U.S. CRM company (US$500MM+ market cap)
- Leading U.S. management and market-entry consulting company
- Large Hong Kong web and IT services company (US$1BN+ market cap)
- Major U.K. spam detection company (US$700MM market cap)
- Niche market leading U.S. medical instruments manufacturer (US$100MM market cap)
- Mid-size New Zealand telco application server software and services company (US$100MM market cap)
- Many others
Emerging Company Incubation
Smaller foreign and Japanese companies seeking to develop in the Japanese market but which are unable to fund the costs independently. In many cases, these companies not only require operational services but also assistance at senior management level in developing their export strategies and generally operating their businesses. For such firms we usually either become a significant cash-and-services investor (usually 34% or more of issued stock), OR, a minority services-only investor (usually 10%-15% of stock).
Types of companies that we have done business with in the emerging incubation category include:
- Australian English-language learning web company
- New Zealand high-speed network anomaly detection hardware company
- Australian SaaS HR self-service software and services company
- Hong Kong web software company in the online collaboration space
- Japanese vending media company with nationwide network
- Japanese CRM sales company working with major multinationals
- Many others
Incubation as a Form of Risk Management
One strong reason to incubate with LINC Media is Risk Management. This is particularly important for Enterprise Clients, since companies entering Japan will often hire a new CEO then proceed to hand to that basically unknown person the right to represent and bind the company into legal contracts and relationships. The problem is that usually the head office is not in a position to judge whether such commitments are appropriate. Therefore, the company may be subject to obligations that are not initially obvious, but the ramifications of which will emerge later in the business cycle, to its detriment.
Examples of where mistakes can be made include: marketing positioning, hiring choices, business agreements, employee agreements, lack of oversight on compliance, poor HQ/Japan communications, etc. Our incubation service provides for us to sit on the board of a company, or to act as an advisor, so that such risks can be alerted to the Head Office for further management/legal/professional consideration. We are not professionally qualified lawyers or accountants, but we can signal possible problems and also refer suitable professionals who work as close partners to LINC Media.
- Company establishment and integration of Japan business processes into Client's global operations
- Providing nominee directors, advisors
- Executive recruiting of full-time employees and/or interim CEOs and managers
- Fund-raising (for some larger IT Clients with established businesses in home country or elsewhere in the world)
- Premises search, or sublet from LINC Media
- Design and fit-out of premises
- Back office services (Accounting, HR, Compliance, Tax, Law) — tax and law services through partner firms
- Technology services (procurement, implementation, support, software development)
- Marketing services (online, ad space buying, special projects)
- Investment (occasionally for emerging firms with strong IP rights on their technology
- Management consulting and performance reviews
- Other services as required