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Startup
Two Leaders Discuss
JIC Group Investment Activities
Part2
In December 2019, under the leadership of new CEO Keisuke Yokoo, Japan Investment Corporation ("JIC") introduced a new structure.
In July 2020, JIC VGI was established under the JIC umbrella; JIC VGI mainly invests in the venture and growth areas,
and investment activities are being conducted under the leadership of CEO Hideki Yarimizu.
Keisuke Yokoo
President, Member of the Board Chief Executive Officer Japan Investment Corporation
In 1974, Yokoo joined the Industrial Bank of Japan (now Mizuho Bank). Following his posting to the U.S., he worked in capital markets and systems, and was instrumental in the establishment of Shinko Securities.In 2007, he became President and Director of the former Mizuho Securities Co. Following its merger with Shinko Securities, he became President and Director of the current Mizuho Securities in 2009 and Chairman of the Board in 2011.
Vice President and Executive Director, Keizai Doyukai (Japan Association of Corporate Executives), 2015; current position from 2019.
Hideki Yarimizu
Chief Executive Officer, JIC Venture Growth Investments Co., Ltd.
Yarimizu joined Mitsui Life Insurance Company (now Taiju Life Insurance Company) in 1991. After working for PricewaterhouseCoopers and Aozora Bank, he joined the Innovation Network Corporation of Japan (now JIC) in 2009, where he was involved in investment and development of startups in a wide range of stages and industries; current position from 2020.Investment in 30-Plus Domestic/International Startups in First 16 Months
－Which investment areas is JIC VGI focusing on?
Yarimizu We are focusing on Data Core Tech, Platform, Industry DX, FinTech, DtoC, Go Global (overseas growth model), LX (legacy industry regrowth model), and in Life Science and Deep Tech, where the supply of risk capital is scarce. We are also working with large companies, including carve-outs and JVs, to promote carbon neutrality and deepen the startup ecosystem. In the year and four months since VGF1 was established, we have received close to 1,000 inquiries, including those from large companies, and have invested in more than 30 domestic/international startups.
－Have you changed your investment strategy in response to the COVID-19 pandemic?
Yokoo I think that COVID-19 impacts every company in Japan. In some of these industries, demand will decrease, while in others, demand will increase. Regardless of the impact of COVID-19, JIC believes that the assessment criteria are still whether the investment aligns with policy objectives and, as an investment fund, whether we can create an "equity story" that increases the corporate value and competitiveness of the investee.
Yarimizu Startups face financial and resource constraints, so the impact of COVID-19 is significant—in both positive and negative terms. On the other hand, a certain amount of uncertainty in the potential behavioral change of industrial society is a business opportunity for startups. We will contribute to the further development of the startup ecosystem in Japan by steadily supporting both open innovation-type investments that can transform the industrial structure with a backcasting approach, and management teams that have a clear idea of what they want to achieve and can continue to grow by responding robustly to changes in the business environment.
Balancing Policy Goals And Returns
－As a public-private fund, what is important when conducting investment activities?
Yokoo As a policy implementing agency with a legal basis, JIC is supposed to set defined policy and return targets. Our objective is not just to pursue returns, but also to contribute to the competitiveness of the industry. However, since we are entrusted with public funds, we cannot afford to misuse them, and as a result, we believe it is important to achieve our return goals as well.
Yarimizu We have established and operate a unique investment decision-making mechanism to balance policy goals and returns. Specifically, we have unlimited time to discuss each individual case based on the assumption of returns equivalent to those of private funds, and after carefully examining the alignment with policy goals based on the hypothesized industry roadmap and mapping to ESG sustainability and SDGs from a bird's eye view of the specific industry, we discuss whether the investment actvity, including VGI value enhancement, can contribute to increasing the intrinsic value of the startup. While these goals are challenging, we believe it is possible to achieve both policy goals and returns.
Above All Else, Human Resources
－What do you emphasize in your approach to human resources?
Yokoo JIC, as a company, has a defined mission that in addition to investment activities places emphasis on the development of human resources. Nothing is more important than human resources. I believe it is critical not only to increasing the number of investment specialists, but also to increasing their competence, expertise, and diversity in terms of handling funds from institutional investors and other investors.
Yarimizu Our capitalists come from diverse backgrounds, including domestic/international operating companies, financial institutions, consultancies, think tanks, government agencies, lawyers, patent attorneys, and pharmacists. This is incidental, but 16 of the 21 members have science backgrounds, and five women capitalists are active in the company. In terms of human resource development, the basic policy is "mutual respect and mutual professionalism," which includes voluntary and interactive training programs, cross-organizational business development activities to support investee companies, and participation and information access for all members, including middle backs, to investment committee and other meetings. We are committed to pursuing maximum growth opportunities for our members through horizontal and open discussions. As a group of professionals who share the JIC Group's philosophy, the entire company is united in pursuing self-improvement so we can fulfill our fiduciary duties to perfection.
Looking Beyond JIC Group Investment Activities
－How do you intend to contribute to the transformation of Japanese industry and society through investments by JIC and JIC VGI?
Yarimizu We are living in a rare period in Japanese history where the population has been rapidly declining over the past 100 years. By playing a role in the development and investment of new industries and industrial finance through open innovation in cooperation with the private sector, we hope to maintain and improve the affluent Japanese society built by previous generations, and contribute to the realization of a technological society (Society 5.0) in which everyone can live happily with a sense of affluence, and where tomorrow is more exciting than today!
Yokoo In a nutshell, the society that I hope to realize is one that is peaceful, prosperous, and sustainable, and one where people feel fulfilled. To this end, we believe that the mission of the JIC Group, as a public-private fund, now more than ever, is to contribute to the transformation of industrial and social structures by supporting the creation of innovation and the growth of new businesses through investment activities, together with private investment.
