Possibility of CVC Leading Investments

As corporate venture capital (CVC) investment activities intensify, there is growing attention on the role of lead investors. The JAPAN CVC SURVEY 2023 reveals the current state and challenges of lead investment in Japanese CVCs.

■ Relationship Between Investment Track Record and Lead Investment

【Lead Investment Record Trends】
・Number of investments in 2023: 61 (a significant increase from 28 in the previous year)
・Number of finance transactions: 16 (2018) → 61 (2023), approximately 4 times more
・Active investment activities and accumulated experience are progressing

【Attitude Toward Lead Investments】
According to the survey, regarding the potential for lead investments in CVCs:
・66% have experience with or are interested in lead investments
・The remaining 34% are more focused on investments as followers of other companies

■ Features by Organization Type

1. Financial CVC
・Most active in lead investments
・High degree of freedom in investment decisions
・Seeks a VC-like investment style

2. Strategic CVC
・Mainly invests as a follower
・Emphasizes business synergies
・Prudent investment approach

3. Hybrid CVC
・Balanced approach
・Flexible response depending on the characteristics of the project

■ Factors That Increase Lead Investment Potential

1. Accumulation of Investment Experience
・Increase in investment track records
・Establishment of investment processes
・Improvement in risk management capabilities

2. Organizational Structure Enhancement
・Securing specialized personnel
・Streamlining decision-making processes
・Clarifying investment authority

3. Expansion of Investment Scale
・Increase in investment budgets
・Increase in investment potential per transaction
・Achieving portfolio diversification

■ Future Outlook and Challenges

【Expected Changes】
・Increase in lead investments as a result of accumulated investment records
・Improved market presence of CVCs
・Strengthened influence within the startup ecosystem

【Challenges to Overcome】
・Speeding up investment decisions
・Strengthening due diligence capabilities
・Building a value-adding system after investment

■ Conclusion

Japanese CVCs are steadily enhancing their presence as lead investors, with a rapid accumulation of investment track records. The high percentage (66%) of CVCs expressing interest in lead investments suggests that the maturity of CVC investment activities is increasing.

In particular, the proactive stance of financial CVCs is an important change for Japan's startup ecosystem. Going forward, it is expected that further accumulation of investment experience and strengthening of organizational structures will lead to an increase in lead investments by CVCs. This, in turn, will diversify funding sources for startups and promote innovation creation.

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