Startup Investment Based on Business Partnerships: The Value of Challenges in Creating New Businesses Through Collaboration

Takahiro Uchida

Manager, Strategic Investment Center, Business Development Division, Toppan Printing Co., Ltd.

Joined Toppan Printing in 2010. Engaged in legal affairs primarily in the digital content sector, including BookLive and Mapion, at the Legal Affairs Division. After working in the advertising planning and development department, he took on business development through venture investments and M&As from 2016 at the Corporate Planning Division. Responsible for Soundfan, Chimera, Combo (with a concurrent secondment for business promotion), Nudge, and Liberaware.
Graduated from the Graduate School of Business and Finance at Waseda University. Visiting Researcher at the Waseda University Institute for Innovation and Finance.

‍

‍

‍

Investment and Business Alliances Go Hand in Hand

‍

- Mr. Uchida, you have been involved in Toppan's CVC activities since its inception in 2016, working as a capitalist. How does Toppan approach startup investments?

‍

Since the establishment of the CVC team in 2016, Toppan has made investments at a pace of about 10 companies per year, completing approximately 60 startup investments over 6 years.

When making startup investments, Toppan always concludes a "business alliance agreement" with the startup to outline a joint business development or collaboration plan post-investment.

In other words, we do not make investments unless a clear collaboration direction has been established. The investment is viewed as "for the creation of new businesses for both Toppan and the startup."

‍

‍

Of course, as an investment department, we do consider investment returns. However, the positioning of Toppan’s CVC as a means to create new businesses for this traditional company is clearly defined.

Therefore, in terms of exit, we have had three IPOs, and additionally, two cases where the investment led to participation in the Toppan Group via M&A.

‍

- Can you tell us about the structure of the CVC team?

‍

Currently, the CVC team consists of about 15 people, including those overseas. Around 30-40% of the team has been hired externally.

As for the investment entity, Toppan directly invests from its balance sheet without establishing LPs (limited partnerships) or CVC subsidiaries in Japan. While this setup is flexible and can adapt to external environmental changes, we believe that it has been advantageous, especially in terms of enabling close collaboration between the business divisions and startups.

‍

- Can you tell us about the stages of fundraising that you consider for investment?

‍

Because we focus on collaboration, the majority of our investments are in the Series A and B stages. However, we also invest in seed and later stages. For example, last year, we invested in a fintech startup founded by a serial entrepreneur during its seed round.

Our distinguishing feature is the ability to conceptualize specific collaboration possibilities. Therefore, we typically focus on startups that have already established a product, have a clear business direction, and wish to utilize our resources to accelerate growth or receive support from us.

‍

- How do you proceed with investment considerations while keeping business alliances in mind?

‍

The main sourcing route is through referrals. Most introductions come from VCs, CVCs, or existing portfolio companies. Other times, connections are made through pitch events, direct messages to startups, or inquiries from startups reaching out to us. Additionally, there are cases where business departments consult us about startups that may have potential business synergies.

The process then moves to the collaboration concept and due diligence (DD) phase, followed by the investment execution. Throughout this process, we work with the startup's management team, and sometimes with existing investors, to negotiate and adjust the business alliance contract. Discussions also take place with the business division about potential collaboration scenarios.

In this process, there are cases where the startup feels that collaboration with Toppan is too early in terms of timing, or situations where the CVC team leads the business development efforts. The investment process is not always uniform, but what is critical during this period is whether the passion for collaboration increases.

There are many instances where, for the startup's growth, the management team must make flexible decisions, such as revising the business strategy or reconsidering the product. After the investment is executed, the original collaboration scenario might be revisited, and the priority of advancing the collaboration may change. Therefore, during the due diligence phase, we place a strong emphasis on confirming the mutual enthusiasm for creating new businesses through collaboration, along with the practical and business aspects.

‍

‍

I want to be involved in work that generates passion and conveys it

‍

- Can you tell us about the things you enjoyed and were passionate about during your student years?

‍

I have loved sports since I was a child.

Personally, I played tennis, but I admire athletes across all sports. The part where they control their desires, such as hunger, and overcome tough competition through self-discipline to achieve results is something I respect and aspire to.

In soccer, I particularly admired players like Ronaldinho and Shinji Ono, who seemed to enjoy the game more than anyone else while being outstandingly skilled. Also, I just loved watching players like Aimar, who was an icon of my favorite team (laughs).

Due to the pandemic, I haven't been able to go recently, but I absolutely love attending J-League matches. I enjoy the sense of enthusiasm and unity between supporters and the club, and the excitement of the match itself. I think I enjoy being in a space where I can feel that passion.

‍

‍

‍

- What was the turning point that led you to decide to join Toppan Printing?

‍

When I first started thinking about my career, I initially thought it would be great to work on a sports magazine, like "Sports Graphic Number" published by Bungeishunju (laughs). I had always been interested in the publishing and media industry. As I deepened my thoughts, it wasn't about a specific magazine or publication, but rather the idea of being involved in work that generates passion and conveys that passion that began to attract me. Toppan Printing, with its infrastructure that supports and refines the publishing industry, seemed very appealing to me.

Moreover, I wasn’t necessarily looking for a specific job role, but I knew I wanted to work in a team. When I played tennis, I enjoyed doubles and team competitions more than singles, and I felt I could perform better in a team setting. As a liberal arts major, I knew I would likely end up in a sales-related role, but I also knew that working with a team to serve clients, rather than working individually, would suit me better. Toppan Printing’s approach to sales, which emphasized teamwork, was one of the reasons I chose this company.

‍

- What kind of work did you do when you first joined as a new graduate?

‍

After joining in 2010, I was assigned to the Legal Affairs Department. I’m not sure if it was the department I had hoped for (laughs). At that time, Amazon's Kindle was starting to become widely popular, so working in the digital content sector, including e-books, was both fresh and interesting. I was involved in legal affairs for the e-book subsidiary, as well as handling legal matters related to M&As and fundraising.

There was a growing sense of crisis within the company that printed media would decline, and at the same time, I could see that Toppan's strengths in processes like color management and plate-making could also be applied in the digital space.

The company was in a transformational phase, grappling with the disruption caused by the digitization of print media. I had a rare opportunity to be involved in the development of new businesses, particularly e-books, and also in the subsequent phase of business sales and strategic decision-making, all from a legal perspective.

‍

- What led to your transfer to the Corporate Planning Department in 2016?

‍

Since I was in the Legal Affairs Department, I had expressed interest in transferring to the Corporate Planning Division’s business investment team on various occasions.

The trigger for this was my involvement in an M&A project related to e-books. I worked late into the night to address legal issues, hedge strategies, and contract negotiations. It was an intense experience, but I thoroughly enjoyed it.

However, the legal work often came at the later stages, such as verifying legal barriers or finalizing contract details. I felt that it would be more exciting to be involved in shaping the idea from the conceptual stage, before things were fully finalized.

During this M&A project, I worked closely with the Corporate Planning team, and my current boss was the person I collaborated with. While working with the Legal Affairs team, I began to think that in the near future, I would like to take on a role on the Corporate Planning side.

With this desire in mind, I communicated with my boss at the time and, after gaining experience in the Legal Affairs department and some experience in business divisions, I transferred to my current role.

‍

- How did you feel when you were told you would be responsible for CVC investments after your transfer?

‍

I was excited. I had a strong sense of anticipation about being able to work with people I had wanted to collaborate with.

Before the transfer, I hadn't specifically thought about venture investments, but I realized that unlike M&As or business restructuring, which happen only a few times a year, minority investments in startups would happen more frequently. I felt that there would be more opportunities to actively engage and contribute, which was very appealing to me.

‍

- What was the team structure like when you first started working in CVC?

‍

By the end of fiscal year 2015, the core team of three members had already been exploring and discussing the possibilities of co-creation with startups. In April 2016, several more members, including myself, joined the team, and by August 2016, the team had grown to about 5–6 members.

At first, I was involved in managing the operations of the investment committee and gradually got a better understanding of the flow and content of the work.

‍

- Given that CVC was not as common in 2016, what do you think contributed to the successful accumulation of investment achievements?

‍

I think the actions of the three core members who launched the initiative were very significant. Starting around 2015, they proactively approached VCs, startups, and entrepreneurs, building relationships from initial touchpoints.

They didn't just create connections, but actively arranged meetings that also involved the company's management team. Through these actions, consensus began to form within the company about how important collaboration with startups would be for Toppan's future. I feel that this steady but strategic accumulation of efforts played a large role both inside and outside the company.

Additionally, in terms of corporate culture, the lack of a “fear of failure” or a culture that emphasizes "pursuing failure" worked in our favor.

‍

‍

The "Mindset, Knowledge, and Skills" Required of a Capitalist

‍

- What challenges or realizations have you faced personally in your work as a capitalist?

‍

The biggest challenge was developing a sales mindset. Until then, I had mostly worked as part of the Legal Affairs or business teams, operating under Toppan’s brand, which made me less aware of the need to “sell myself” when building connections with startups. At first, I often followed the lead of the founding members, and there were times when I felt like a “borrowed cat” sitting quietly in the background.

However, as I continued in the role, I realized that this approach wasn’t going to work. I learned from the support of senior colleagues and from observing how people with VC backgrounds operated. I recognized that I had to shift my awareness and actions, regardless of my own comfort zone.

In addition, in terms of knowledge and skills, this work requires an understanding of a wide range of areas, including business structure, accounting, finance, HR, and technology. Early on, I struggled with many things I didn’t fully understand, which led to some confusion and challenges.

‍

- Was it difficult to continue working on strengthening your weaknesses and fostering a new mindset?

‍

Despite the struggles, I kept moving forward with a strong feeling of "I want to be able to do this."

During this time, I realized that I could make up for my lack of knowledge and skills through my own efforts, which would eventually build my confidence. This led me to attend business school.

‍

- While currently facing such challenges and walls, what is the most rewarding aspect of your work as a capitalist?

‍

For example, let's say that six months ago, you had an idea of "this is what I hope will happen." The reward comes from seeing that vision turn into reality. Being able to repeatedly experience that progress is a truly fulfilling part of the job.

The speed of startups is extremely fast, and as the PDCA (Plan-Do-Check-Act) and feedback cycles accelerate, it's exciting to receive quick feedback on your own actions.

Also, personally speaking, I feel that entrepreneurs are somewhat like athletes. They dedicate their lives to their products and ideas, passionately working on them, and their ability to attract others around them. When I can support them in this process, I feel a great sense of purpose and fulfillment.

‍

‍

- Are there any challenges or difficulties you feel in your work as a capitalist?

The process of co-creating and collaborating with entrepreneurs to bring new businesses to life is exciting but not easy.

‍

Through capital and business alliances, I am highly motivated to work on concrete plans and actions for progressing collaboration concepts. I strive to create successful case studies where I can proudly say, "We were able to create a new business."

Within this process, I do find it challenging to think about "how to deal with changes in the situation." Startups often experience abrupt changes, and even within business divisions, situations are constantly evolving depending on various factors. There are times when the assumptions for collaboration may no longer be valid. While this is something I had anticipated from the beginning, I need to answer questions like how to adjust the collaboration model or whether adjustments are even necessary.

Sometimes, the plans you initially envisioned are no longer executed, which can be discouraging. In such moments, I think it's necessary to accept that some things won't go as planned, but I also believe that you shouldn't pursue them without attachment. This balance is difficult.

‍

- What kind of startups would you like to encounter in the future?

‍

Startups that value their teams. When it comes to creating and continuously growing a business, I believe the most important factor is the issue of organization and people. The ability to manage and value these aspects is absolutely essential.

Furthermore, I would like to work with startups that have a strong desire to contribute to solving social issues, creating new value together.

‍

- What are your thoughts on collaboration with other companies' CVCs?

‍

I believe that connections between CVCs and investors are very important.

From my experience, rather than only connecting during specific deals, having casual communication with other companies about corporate policies or individual capitalists' thoughts regularly creates a base relationship, which seems to offer more potential for development in various ways.

I participate in a community called 'FIRST CVC' where businesses and CVCs from all over Japan gather, and I have high expectations that such activities will lead to new opportunities.

‍