Promoting DE&I
to Develop Japan’s
Startup Ecosystem

JIC Group will be fully engaged in promoting diversity, equity and inclusion (DE&I). JIC CEO Keisuke Yokoo, Head of Fund Investment Yuka Hata and Head of Fund Management Yoshie Suzuki discuss their thoughts and perceptions of challenges around the promotion of DE&I.

Japan is an exceptional case

Yuka Hata, Head of Fund Investment You have been working on DE&I since before you became CEO of JIC?

Keisuke Yokoo, CEO I have been involved with DE&I for about 20 years, but when I became CEO of JIC in December 2019, I was reminded that the Japanese fund industry is a male-dominated society. Although diversity has other factors besides gender, I believe it is important to start with the most familiar issue, starting with women, who are the largest population, and to increase the gender ratio to 50/50 and increase the number of women in decision-making positions. DE&I is essential for developing Japan’s startup ecosystem, which is what JIC’s mission is.

Yoshie Suzuki, Head of Fund Management I understand that, in promoting DE&I, it takes time to change the mindset of top management. There probably are not many cases where management believes it is necessary and commits to it proactively, rather than being pressured to do it.

Yokoo My first posting abroad had a great impact on my thinking about DE&I. When I started working in New York, the first managing director of an investment bank I met was a woman. I still remember that moment. It was the first time I had seen a woman engage in a heated professional discussion. When I participated in international conferences as a staff member, I was shocked to find that 40% of presidents and chairpersons were women, which is normal outside of Japan. It made me realize that Japan was an exceptional case.

Hata I have been involved with LP investments in overseas funds for many years, and it is not unusual to find women in management positions overseas. Japan, on the other hand, is often dominated by men, with women rarely seen at conferences. How to increase the number of women is a significant challenge.

Bringing in diverse ideas by attracting foreign investors

Yokoo The lack of diversity in the Japanese startup ecosystem is clearly the reason for the low number of startups and unicorns (unlisted startups with an enterprise value of over $1 billion). STATION F, the world's largest startup cluster, located in France, is a place where diversity expands possibilities. One person started a successful telecommunications company after graduating from junior high school. When I visited STATION F the person in charge emphasized that changing the educational system was the secret behind France’s success in strengthening its startup ecosystem.

Suzuki In terms of diversifying education, there is a female capitalist in one of the funds we invest in who started her career after dropping out of high school, and she sees being a woman as a positive thing because the PE/VC industry is generally male-dominated and a woman's voice is more likely to make a larger impression. I believe that the PE/VC industry as a whole will change its mindset if such people become more active there.

Yokoo We encourage our portfolio companies to be aware of global standards, and we cannot compete without attaining global standards in terms of diversity. Diversity creates different ideas and invigorates countries and industries. The same is true for GAFA in the United States. I believe that ideas are fostered by a lively, diverse world where gender and educational background are irrelevant.

Hata Looking at the Japanese ecosystem through LP investment, I really feel that the ecosystem maintains a bias toward Japan's unique culture and business practices. In the U.S., the source of strength is its mix of people—not only in terms of gender, but also race. One of our investment strategy “Go Global” is based on the idea that diversity on a board of directors will be a source of strength for startups. While it is of course important to support the overseas expansion of Japanese startups, our main goal is to bring in diverse ideas by attracting foreign investors. I believe that having investors from various countries on the board of directors of startups alongside the Japanese will provide input and support based on different values, which will ultimately strengthen the startups.

I was wrong not to raise my hand for the job I wanted

Yokoo DE&I is about changing culture and values, so it takes time, but we have to start somewhere. I believe that JIC's promotion of DE&I as a public-private fund will help revitalize Japan. I will continue to pursue this professionally and personally as my life's work.

Hata In terms of promoting women’s participation and advancement in the workplace, I feel that the first step is to incorporate more women into the company. Japanese companies have a skewed gender ratio in their new graduate hiring, making it extremely difficult to find women who can become managers and executives from the small pool of candidates.

Suzuki I think there is also the reality that women tend to be reluctant about promotions. When we conducted a survey at an association for women in the PE industry, one of the responses to a question asking what is necessary for women to be active in the industry was “fair assignment of work.” Especially for women raising children, there is a tendency for supervisors to assign them to simple tasks "because it must be hard for them".

Yokoo That's an unconscious bias.

Suzuki I think women need to raise their hands and say, “I want to do this job.” When they think they are not being evaluated fairly, they need to ask their boss and colleagues what they need to do to get promoted, and if they can take the initiative like this, then they are more likely to get a fair evaluation. While I was raising my children I could not raise my hand to take on the task I wanted to do because I was afraid that it would burden my boss and colleagues, but today I believe that that was the wrong thing to do.

Hata Overseas, women who are as active as men in the investment world have a strong sense of professionalism; the “E” in DE&I stands for “equity,” and it doesn’t mean that women don’t have to work as hard as men do. I think it is important to provide women with a platform where they can engage in work as professionals.

Yokoo You are absolutely right. In Japan, there was no such platform. The environment was also inadequate, and this is about trying to improve it.

Finding new ideas through candid discussions

Yokoo From the new year, JIC Group will establish a structure and be fully committed to promote DE&I. We will establish a DE&I Promotion Committee consisting of the executive directors of each group company and a team of employees from within the group to promote specific initiatives. We will also position DE&I promotion as an important management strategy, incorporate it into our Code of Conduct, and implement training so that everyone will take a personal stake in promoting DE&I.

Suzuki We have already started engaging in dialogue with funds we invest in, and some of them—and the startups in which they invest—are also actively engaged in DE&I, so I hope that we can refer to their best practices to improve DE&I at JIC Group. Furthermore, as the person in charge of ESG promotion, I would like to be actively promote DE&I as a key element of ESG efforts, signing Principles for Responsible Investment (PRI).

Yokoo It is also important to encourage DE&I through support for VC firms, such as by asking those we invest in to report on the background of their venture capitalists and the status of their DE&I efforts, while referring to feedback from overseas institutional investors regarding their views of VC firms that promote DE&I. We would also like to discuss how to incorporate DE&I into investment decisions, and we will use JIC Group’s network to disseminate information and encourage the industry as a whole to do so. I am sure there are other views that I am not aware of, so I look forward to continuing to hear everyone’s frank opinions. New ideas should emerge as we continue candid discussions.

Hata As a government-backed LP investor, JIC’s role in promoting DE&I in the Japanese PE/VC industry is attracting a lot of attention overseas, and I believe that JIC taking the lead in this area will provide further momentum for promoting DE&I throughout the industry. As an LP investor, I would first like to continue dialogue with the GPs in which we invest, and while it is easy to demand that GPs set KPIs, I believe it can be difficult for them to achieve. I would like to work together with GPs as partner that helps them find the best way to meet their challenges.

Suzuki As an organization, I think it is important that DE&I will contribute to improving overall performance. I believe that the extremely homogeneous nature of Japanese organizations is one of the reasons why Japan’s growth has been stagnant for so long, and I believe that fostering a culture in which diverse opinions are constructively exchanged and each person is willing to contribute to improving productivity is needed through promoting DE&I. The present situation is a world apart from the days when I was working while raising children, but there are still many areas that need to be improved. Although "important but not urgent" things like DE&I tend to be put on the back burner, we need to make a steady effort since it takes time. There must be things that can be done only because JIC is a public-private fund, and I would like to enjoy the initiative as a way to grow in the future.