Balancing Efficiency and Play – Achieving Strategic Synergy and Financial Returns at Benesse CVC

Takagi Tsukito
Benesse Holdings, Inc.
Digital Innovation Fund General Operations

‍Joined Sapporo Breweries in 2010. Engaged mainly in finance, mid- to long-term business planning, and other management strategy operations. From 2016, served as Deputy Head of the Investor Relations (IR) Department, handling over 150 investor relations cases annually. Received three president’s awards during his ten years at the company.

From 2019, served as Manager of Management Control/Finance at GMO VenturePartners, overseeing monitoring and support for portfolio companies, as well as management planning, finance IR, and PR. Led a ¥13 billion fundraising effort in the Cayman Islands.

Since 2022, has been involved in the operation of the Digital Innovation Fund at Benesse Holdings, focusing on startup investments.

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Leveraging Knowledge in Education and Caregiving to Support Growth and Create Synergies for Solving Social Issues

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- Could you tell us about Benesse's Digital Innovation Fund (DIF)?

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The **Digital Innovation Fund (DIF)** invests in ventures within education, lifestyle, and caregiving sectors, as well as DX-related companies, with the goal of promoting **DX transformation of existing businesses** and fostering **co-creation of new businesses**. The DIF team consists of about 10 members, and while most of the team also serves roles in Benesse Digital Innovation Partners (DIP) or the finance departments of Benesse Holdings, I am the only one working exclusively on DIF operations and as a capital investor.

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DIP, established in the spring of 2021, is a cross-functional organization that integrates digital, IT, HR, and consulting departments to promote DX within the group. DIP plays a crucial role in creating DX strategies, allocating resources, and implementing initiatives across the company, breaking down barriers between departments and business units to accelerate DX adoption.

DIF started its operations in November 2021, about six months after the establishment of DIP.

Many members of DIP are former consultants who are focused on specific business areas like caregiving or education. They lead DX projects within those sectors and collaborate with startups to bring those projects to fruition. DIF also consists of members with diverse backgrounds, including data scientists, digital marketers, VC professionals, financial IR experts, and PR specialists. Recently, experts with knowledge in **DeepTech** have been added to the team to address emerging technical challenges.

As the sole venture capital (VC) expert on the team, I do not focus on a specific sector but rather take a cross-sectional approach to sourcing deals and managing the fund.

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- Can you tell us about the overview of the DIF fund?

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The fund operates through equity investments from Benesse Holdings (HD). While the possibility of forming a partnership structure is being discussed, the current conclusion is that as a **corporate venture capital (CVC)** fund, the primary goal should be strategic returns through collaboration, so a partnership model is not strictly necessary. However, we still believe that generating **financial returns** is essential, even though strategic returns are the primary focus.

The primary investment stages are **Series A** and **B**, as opposed to seed stage investments.

Depending on the nature of the investment, we may also collaborate with the M&A division. While we don’t always work closely with the M&A team, we do consult with them when appropriate. Benesse's caregiving business started as a latecomer but has grown to a scale of ¥120 billion. In the education sector, the company has historically expanded through M&A, and I believe the group has been quite adept at utilizing M&A as a growth tool.

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- What are the investment policies of DIF and why does Benesse invest in startups?

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The word "Benesse" means “living well.” Our business spans critical life domains such as **family (kids & families)**, **learning (schools, cram schools, online education, skills, qualifications)**, and **lifestyle (caregiving)**—all integral to people's lives. While we compete with many companies in these areas, we recognize that no single company can achieve social change or wellbeing alone. As a result, we aim to collaborate with other companies while also competing in the marketplace.

As technology has advanced and more young entrepreneurs have emerged, startups have become the ideal partners for collaboration, leading us to choose **corporate venture capital (CVC)** as our method for engaging with them.

The main goals of our CVC activities are as follows:

1. Enhancing Core Business Value
2. → Investments that contribute to improving the value of our core businesses like education, benefiting both the startup's growth and our business.
3. Co-creation in Untapped Areas
4. → Startups can utilize Benesse’s underused resources (business expertise, customer touchpoints), which helps them grow and allows us to access markets we might not otherwise be able to reach.
5. Advancing Benesse's DX Strategy
6. → Integrating startup services into our infrastructure and systems, enabling Benesse to reap the benefits of digital transformation, while startups gain revenue and use cases.

While partnerships can be established without investment, having a **capital relationship** strengthens the partnership and fosters deeper collaboration compared to a simple business alliance.

However, the **due diligence (DD)** process takes into account both **financial returns** and the potential for **business collaboration**. If collaboration seems unlikely, we may opt not to invest, or initially engage in a partnership without equity involvement.

On the other hand, even if an investment is financially appealing but lacks business synergy, we generally refrain from investing. In some cases, if future collaboration seems possible, we may consider a small equity investment, but this is not common.

Unlike traditional VCs, we do not focus on **diversifying investments across many sectors** purely for risk mitigation. Our strategy is more focused on **business synergy** and strategic growth.

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Could you tell us about the activities after investment?

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As a **CVC**, we conduct financial monitoring while the business departments handle direct collaboration cases. In the case of **in-house DX scenarios**, it is not only the relevant business unit but also members from **DIP** who work together with startups to cycle through PDCA (Plan-Do-Check-Act). Additionally, some of our members may be seconded to work closely with startups at a deep level, advancing projects from the startup's perspective.

Since our investments are aimed at creating synergies, the members committed to collaboration, not just within DIF but across the organization, are evaluated quantitatively to assess whether the expected synergies are being realized. For example, this includes increases in business sales or cost reductions within business units.

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- Do you have any specific goals for the fund? 

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As we have announced, the goal is to invest ¥5 billion over 5 years. However, we are not operating under a strict requirement to make a certain number of investments per year. Since DIF is directly overseen by the **CDXO** and **CFO**, if a truly attractive case comes up, we are flexible enough to collaborate with the **M&A team** even beyond the DIF framework. Additionally, as we are not a fund that involves external capital, our policies can be adjusted flexibly, allowing us to operate in a highly agile manner. This is why we are able to assess each case individually and make decisions based on its merits.

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- Are there any unique strengths or interesting aspects of Benesse's CVC?

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One major strength is that we have a strong base in **education and caregiving** businesses, and in these areas, we have top-level knowledge and human resources accumulated in-house in Japan. This enables us to support growth and create synergies in ways that other VCs or CVCs cannot. Moreover, when it comes to the **exit** of investments, we can consider a variety of strategies. For example, in the three investment scenarios mentioned earlier, if the goal is to enhance core business value, we don’t necessarily need to sell our shares even after the startup goes public, as long as the value created through collaboration is successful.

Since we are not a fund, we don’t have a fixed term for our investments, which means we can adapt our exit strategies and timing on a case-by-case basis while considering both business and financial perspectives.

Benesse’s business areas—such as learning and lifestyle—are directly tied to social issues. By building win-win relationships with startups and all stakeholders working toward solving these social problems, we believe we have the potential to improve Japan itself in a significant way. There is a sense of purpose in our work that goes beyond financial returns.

That being said, as a listed company and a public entity, we are always mindful of what kind of investments are appropriate for us. Unlike typical VCs, we cannot diversify investments in speculative areas for the sake of risk management, but I believe that the methodology is attractive, and we will need to continue refining our approach to creating a unique CVC portfolio.

As I reflect on this, I think that being a **CVC Capitalist** requires an ability to switch between multiple perspectives: that of an investor, a business person in a listed company, and an entrepreneur. It feels like a unique role that requires a kind of all-encompassing diplomacy.

In the future, I personally believe that CVCs, which currently focus on **balance sheet (BS) investments**, should also consider monetizing their investments as a fund model. While creating a fund has its advantages and disadvantages, I think it's meaningful to consider generating **financial returns** with external funding and having the capabilities to manage such a fund, even if that’s not our immediate goal. I aim to improve my skills to be prepared for that shift in the future.

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"Gears Need Play, Otherwise They Will Wear Out"

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- Could we talk about your childhood, Takagi-san?

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I was born and raised in Kunitachi, near Kokubunji, along the Chuo Line in Tokyo. I was considered a bit of an odd child. Even when the others were playing with balls after lunchtime, I would sit alone in the middle of the playground and eat my lunch (laughs). I didn’t like studying at school and often spent time on the rooftop. But I loved reading books, and I had several "hobbies"—at one point, I was into psychology, at another, I was fascinated by botany and quantum mechanics. During those periods, I would only read books on those subjects and get completely absorbed, thinking, "Wow, such a world exists!" during class.

I also enjoyed art and was interested in art history and world mythology.

My mother is a graduate of an art university and used to paint and sing at cafes, with a "I don't know much about the world" kind of personality. My father was an acoustics engineer who made parts for record players and hearing aids, and I remember him making plastic models while listening to jazz at home. In my family, there are many people involved in making things or creating, but I might be the only one who works as a business person in a corporation (laughs).

Because of this, I’ve been interested in objects and art from a young age. During university, I spent a lot of time taking apart and playing with watches.

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My father had an old-fashioned view that was somewhat adverse to money, which I thought was admirable in a way, but I also understood that the world operates on capitalism. His refusal to adapt to the common sense of the world sometimes felt like a disadvantage.

For university, I chose a school close to home that I could easily get into, which, in hindsight, was not a very strategic approach. But I chose the Faculty of Economics, and later worked in finance because I think, paradoxically, I didn’t like money. I wanted to understand money without being controlled by it.

In high school, I was a member of the basketball team, but I was the type to only show up when things were fun. I never really understood the obsession with "winning." I genuinely wondered, "Why does it have to be about winning?" I focused more on enjoying the good plays from myself and my teammates.

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- How did you decide on your first job after graduation?

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Having grown up with parents who were always involved in making things, I wanted to work in a hands-on field, so I applied to manufacturers. I was also attracted to businesses that dealt with products that excited people emotionally.

During my four years of university, I worked part-time at an izakaya and even took on a role as an assistant manager. I didn’t particularly enjoy drinking, but after seeing countless tables, I was fascinated by how alcohol could smooth over rigid atmospheres and bring people together. I was intrigued by the power of alcohol as a kind of "lubricant" for relationships.

Since I’ve always loved history and religion, especially ancient history, I find it fascinating that alcohol has been part of human culture for so long. One of my favorite poets is the Persian Umar Khayyam, who wrote poems solely about wine. His philosophy is that humans cannot live without being intoxicated in some way. (laughs)

I have conflicting ideas within myself. One is based on **Bejan’s Constructal Law**, which argues that all systems, living or non-living, are designed to flow more efficiently with less energy. This view aligns with my belief that the world is naturally accelerating, and we should support that flow. On the other hand, I also love the inefficient, human elements that make life interesting. My father's saying, "Gears need play, otherwise they will wear out," resonates with me, and I think it captures the essence of both my career path in the fast-paced world of CVC and my appreciation for the analog world of alcohol.

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- What did you do after joining Sapporo Breweries?

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From the beginning of my career at Sapporo Breweries, I consistently worked in finance and corporate strategy. I could have switched departments, but I enjoyed the fact that finance is a universal language that enables conversations with various departments, with clear indicators that make supporting decisions easier. I found it more comfortable to think about optimizing the whole system rather than being on the front lines.

While many of the talented individuals at the beer company were marketers, salespeople, and brewers, I noticed that few had a strong background in finance. This gave me a unique advantage, and I stayed in finance-related roles for the entire 10 years at the company.

Moreover, the company’s culture suited me perfectly. I’m not a fan of micromanagement and prefer to be involved in projects related to management change, marketing, human resources, and branding. My bosses probably didn’t always know what I was doing (laughs).

Together with my colleagues, I started an MBA study group, proposed a marketing approach that involved creating high-end products in small batches to generate revenue, and worked hard while having fun.

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- What prompted your career shift to the GMO Group?

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The alcohol industry changes on a 10-year cycle. Wine booms, sake booms, and so on—there is a roughly 10-year cycle at play. While I loved both the company and the work, after 10 years and having been involved in various projects, I began to feel a sense of déjà vu.

Around the time I was handling IR for about three years, during exchanges with foreign institutional investors and analysts, I strongly felt a discounting of Japan as a country.

Realizing that Japan was seen in such a negative light, I wondered what I could do to increase Japan’s value. In my own research, I came to the conclusion that the weakness of Japan’s startup ecosystem was a major issue. Compared to overseas markets, the amount of funding was vastly lower, and the environment for generating new “cells” to revitalize industries was far too weak. I was shocked by this realization.

To create new cells, I thought that investment in these areas was necessary, but there was no investment expertise or function within my company.

Although I briefly considered areas like private equity and corporate restructuring to learn about corporate investment, my desire to be involved in creating new “cells” was stronger. I decided that a CVC would be the right place for me, where I could leverage my experience at a business company.

Since I lacked direct experience, I thought it would be difficult to land a traditional capitalist role. So when I came across an opening for a position somewhere between a capitalist and the back office at GMO, I decided to apply.

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- What was your feeling when you switched industries and moved to a completely different field from your previous career?

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When I joined, everything was fresh. The terminology, the people I met, and the perspectives were all different. In terms of work, I was involved in monitoring investments and providing indirect support, as well as fund-raising, CVC management, and all aspects of fund management such as finance, public relations, HR, and legal matters.

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This world is fuzzy, so diversity is necessary

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- What made you transition to Benesse after working at GMO in such a wide range of roles?

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I had initially seen my time at GMO as training to learn about investment and fund management. To be honest, I didn’t think I would stay there for very long, and I had started job hunting.

While reflecting on what area I wanted to focus on, I remembered an experience from when I was around 27. It was during my time at Sapporo Breweries, and through an introduction from my boss, I helped out with a Rotary Club-affiliated volunteer project in Nepal. I spent about four years in various roles, including as chairperson and international service chairperson, working on activities like donations, infrastructure development, food aid, and organizing art competitions.

Nepal still has a very strong caste system, and many children do not have guaranteed human rights or access to education. The image of those children being moved by the work we did has left a lasting impression on me, and I felt deeply fulfilled by the experience.

While reflecting on that formative experience, I continued my job search, and then one day, I received a call from Benesse. They were offering a position in CVC at a company that supports education and people’s lives.

I thought to myself, “This is exactly what I was looking for,” and I made the transition to Benesse in October of last year.

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- How do you view your career as a capitalist at DIF in Benesse? What kind of work do you envision doing?

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There is a technique called "sfumato," which was perfected by Da Vinci, where the outlines of objects are blurred. I tend to dislike rigidity, so I prefer working in a way that is more like sfumato—where things aren’t so clearly defined. Even after I joined Benesse, I continue to assist with paid and unpaid work at Sapporo Breweries and GMO, and I also serve as an advisor for multiple startups. I feel that Benesse is a company that allows me the freedom to take the actions I believe are necessary.

Sfumato (Italian for "smoked") is a painting technique that creates depth, volume, and the perception of form by layering transparent layers of color. It refers to the subtle blending of colors to the point where the transitions are almost imperceptible. It is a technique that was pioneered by 16th-century artists like Leonardo da Vinci.

In that sense, I’m not the type of person who can devote intense, almost ego-driven passion to a single thing like an entrepreneur, but I think I can contribute by supporting others. If I’m going to work, I’d like to support people who are doing things I can’t do myself. I also want to challenge myself to help create new businesses or industries.

From the perspective of Benesse, which focuses on “learning,” I think it would be fascinating if we could find ways to teach children about the rules of the capitalist game earlier in life—before they even enter the workforce. I’ve always believed that simply pursuing economic rationality is boring, having seen my father’s approach. That’s why I think it’s important to provide opportunities for young people to develop a sense of how to approach economics in a more balanced way, enabling them to pursue what they want to do in life and ultimately leading to greater well-being.

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- What kind of entrepreneurs or capitalists would you like to meet?

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I don’t have a specific type of person I want to meet. I’m open to meeting anyone—whether their motivation is simply to make money or to become famous, or whether they’re someone who wants to tackle social issues.

From the perspective of a CVC capitalist, I personally have a negative view of entrepreneurs who underestimate the importance of IR and public relations. Startups often don’t have a solid core yet, and “how you present yourself” is far more important than you might think. If you do that well, you can attract resources by getting others involved. It may not seem like the essence of the business, but since my expertise is in IR, I place a great deal of importance on this. Companies that can strategically communicate their story through IR and public relations and then execute on that vision are extremely likely to become strong companies.

- Lastly, do you have any thoughts or messages about the role of a CVC capitalist?

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I’d like to see more foreigners in the role of a capitalist. There are differences in preferences for things like UI/UX between Japan and overseas. Overseas, if something works well, it can be quickly scaled globally without needing to redo the product. It would be great if there were capitalists who could provide investments or support in this area. This isn’t just about jumping on the diversity and inclusion bandwagon—it’s genuinely interesting when diverse people enter the industry, and since startups shape the future, if support for them comes from a narrow group, it could lead to a skewed direction. In a world that is neither black nor white, and where everything is fuzzy like sfumato, I believe it’s important to maintain a delicate balance. By gathering people with diverse, sharp perspectives, we can ultimately create a more harmonious future.

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