CVC's Investment Policy: Target Investment Stages

In Japan's corporate venture capital (CVC) investment strategy, the selection of investment stages has become an important indicator. The latest findings from the JAPAN CVC SURVEY 2023 reveal distinctive trends in the investment stages of Japanese CVCs.

■ Current Situation and Characteristics of Investment Stages

According to the survey, Japanese CVCs show the following preferences for investment stages:

【Early Stage (Series A)】
・53%, the highest preference
・Balancing business model establishment and growth potential
・Optimal balance between risk and return

【Early Stage (Pre-Series A)】
・18% are paying attention
・Aiming for early-stage acquisition of technological seeds
・Preferred by CVCs with relatively higher risk tolerance

【Seed Stage】
・5%, the lowest preference
・Concerns over commercialization risks
・Requires a long-term nurturing perspective

■ Factors Behind the Preference for Investment Stages

The following factors are considered behind these trends:

1. Risk Management Perspective
- Emphasis on companies with proven business models
- Prioritizing investment certainty
- Consideration for internal accountability

2. Pursuit of Business Synergies
- Exploring collaboration possibilities with existing businesses
- Expectation for relatively short-term results
- Easier to plan specific collaboration strategies

3. Organizational Constraints
- Degree of establishment of the investment decision process
- Allocation of internal resources
- Accumulation of investment track records

■ Conclusion

It has been revealed that Japanese CVCs adopt a relatively stable investment strategy centered around growth stages. This trend is understandable from the perspective of creating business synergies and managing risks.

On the other hand, from an innovation perspective, investing in earlier stages is also crucial. Moving forward, it is expected that the diversification of investment stages will progress with increased risk tolerance and enhanced investment capabilities.

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