Our Investment Process of CrossTechnology Venture Partners

We believe that understanding our process is the best way to see why entrepreneurs and top tier venture capital firms rely upon us.

Selecting deals
CrossTechnology has identified a small number of firms and partners with whom it favors partnering.
Our interest is frequently expressed months or even over a year before we end up investing.

Our due diligence is in three steps:

  • Analysis of the portfolio company, by partners and technical advisors.
  • Analysis of the market growth of the portfolio company by the technical advisors in the U.S.
  • Analysis of the Japan market for the product/service.

Investment
The CrossTechnology investment is at the same terms dictated by the lead venture firm. As a result, we get a good deal, and we do not waste time and legal resources negotiating with the portfolio company. CrossTechnology typically has board observation rights, not a board seat.

Draft "Japan Strategy"
At the appropriate time, CrossTechnology drafts a "Japan Strategy." This short document outlines the product(s) or service(s) for Japan, what we seek to accomplish in the Japan market and the companies we are targeting. The "Japan Strategy" is circulated to CEO and Board of Directors for agreement.

Establish Virtual Japan office
The CrossTechnology office serves as the initial sales office for the portfolio company. Business cards can be printed using CrossTechnology contact information. The conference room at CrossTechnology is suitable for meetings. Our administrative assistant serves as an assistant to the portfolio company.

Draft Japan Marketing
CrossTechnology does a first draft of marketing materials in Japanese. This typically is limited to product/service descriptions, company description and executive biographies. This type of summary is not representative of the final marketing materials, rather it has a specific task: getting a meeting with the appropriate high-level contact at a company, and providing enough background that the meeting itself can be used to move the business forward.

Secure Key Meetings
CrossTechnology plans a trip for a senior executive, coordinating as many as 12 meetings over the course of a week. This planning process typically takes one month. CrossTechnology will share background information on the company and product to secure the meetings.

Note: It is typical in Japan to have a series of meetings to introduce a company or product. CrossTechnology shortens this process by having CrossTechnology personnel conduct introductory pre-meetings and/or conference calls prior to the arrival of the US based executives.

In Japan, there are four business groups, each of which is referred to as a Keiretsu. Actually, each one of these groups is formally called Zaibatsu. CrossTechnology has the advantage of not belonging to any Keiretsu. As a result, CrossTechnology is unrestricted, and has ready access to all companies in Japan. CrossTechnology provides much better access to Japanese companies because of its independence from each Keiretsu.

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Assess Results
At the end of each meeting and at the end of the trip, CrossTechnology provides an independent assessment of results. Privately, and after the meeting, CrossTechnology is frequently given a very frank appraisal of the company - something which is culturally not appropriate for most meetings. CrossTechnology feeds this information privately back to the portfolio company, allowing it to concentrate its efforts where they are most likely to pay off.

And for investors, CrossTechnology provides the Board of Directors an unbiased appraisal of prospects in Japan.

Monitor activities
CrossTechnology remains involved as the company grows. The CEO and the Board of Directors get an independent assessment of the activities and accomplishments of the local Japan office. CrossTechnology pushes contracts and sales in ways that are difficult for an operating company in Japan. Our continuing involvement accelerates marketing and sales in Japan, and provides feedback to minimize downside risk.

Establish Office in Japan
As real progress is established, CrossTechnology helps to recruit local managers and to secure a local office. Again, tasks which can be very challenging to an outsider are made easy by CrossTechnology.

Even after establishing representative offices/subsidiaries of the investee companies, CrossTechnology continues to support the investee companies' business activities in Japan. Upon the request by the investee companies, CrossTechnology tries to expand their sales channels and other business opportunities with Japanese companies.

Reputation Is the Key
CrossTechnology has established a strong reputation in Japan. Every deal brought by CrossTechnology is a good deal. Our contacts in Japan value not the deal flow, but the quality of each individual deal. We are very selective in choosing investments, because we will rely on their success and we do our best to ensure their success.