The Combination of World Market Share No.1 × Growth Environment Creates Strong CVCs

Atsushi Torii
Toshiba Tec Corporation
New Business Strategy Department, CVC Promotion Office, Director

‍Worked at Rakuten for about 10 years, involved in the launch of numerous new businesses including auction services, video streaming services, and e-book services. Joined Toshiba in 2013, where he worked on new business projects for the education sector. After transferring to Toshiba Tec, he promoted new business creation activities using open innovation and established Toshiba Tec's CVC in 2019. He has been leading CVC activities since 2021.

Tatsuya Ishii

Toshiba Tec Corporation
New Business Strategy Department, CVC Promotion Office, Expert

‍After graduating from Kansai University in 2010, joined Culture Convenience Club (transferred to CCC Marketing Holdings, a group company, in 2015). Worked in the President’s Office and Corporate Planning Department, promoting medium-term planning and new business collaborations in the data business sector. Later, as a project manager, he worked on M&A and startup investments. Joined Toshiba Tec in October 2022, responsible for medium-term planning for new business creation, strategy development, and managing investment projects in the CVC Promotion Office.

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Toshiba Tec, the World's No. 1 Shareholder, Fully Supports Serious CVC Initiatives

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- What kind of investment activities does Toshiba Tec’s CVC engage in?

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(Ishii) Toshiba Tec's product sales information management system, i.e., the POS business, boasts the world’s No. 1 market share, not just in Japan but globally. Additionally, while the leasing business for office printers is strongly associated with other companies in Japan, Toshiba Tec actually has a strong presence in China.

However, with changes in societal demographics and macroeconomic shifts, especially in the wake of the COVID-19 pandemic, consumer behavior has significantly changed. Despite our robust global business structure, management recognizes the growing risks associated with the evolving environment. To continue offering new value to retailers, Toshiba Tec's CVC operates with full company-wide commitment, including from top management.

Even though our investment activities have only started relatively recently, we have already invested in 13 companies, totaling 2.8 billion yen, focusing on themes that align with our business. For example, the restaurant industry has been heavily impacted by the pandemic, and labor structures have had to change significantly. In the store-based business, HR is a major common challenge. Although this is an area Toshiba Tec has not traditionally focused on, the business synergy is promising, and we have been actively investing in this field.

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Our CVC function is embedded within the company, specifically in the New Business Strategy Department, under the CVC Promotion Office. The CVC Promotion Office takes a long-term perspective on investment and explores future possibilities. Within the same department, we also have a team dedicated to promoting new business using data from our core POS business, allowing us to approach both fronts simultaneously.

Looking at Toshiba Tec's business model, both the POS and printer businesses can be considered platforms. On a unified database and network where customer information is aggregated, a wide range of retail business activities and customer touchpoints are integrated. With this in mind, it's essential to adapt the platform’s base and features to changes in the business activities of customers who rely on POS systems.

As part of our CVC investment concept, we are focused on predicting the future of retail, where store formats and business models will evolve, and we aim to approach new changes proactively. Additionally, we seek to expand our investments into areas such as data acquisition processes and data transformation, centered around the POS data we already have.

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- How did Toshiba Tec begin its CVC activities?

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(Torii) The activities I started were about 4–5 years ago. Since I had previously worked on new business projects at both Rakuten and Toshiba, when I joined Toshiba Tec, I first created a department to promote open innovation, fostering an environment for collaboration with startups. Through this, I educated the company about startups and the potential for exciting outcomes from such collaborations. I gradually developed this into a CVC structure to accelerate the process.

What took the most time was engaging in conversations with key people within the company. In the early stages, the executives had different levels of understanding and perspectives on the CVC business, and sometimes it was difficult to get them on board in meetings. Therefore, I took the time to explain in detail from the viewpoint of each executive, and only after this process did we finally present it to the management meeting. It was a process that involved careful steps and patience.

Some might say that the launch took too long, but I believe that the time spent in ensuring the CVC idea gained proper understanding within the company has ultimately been beneficial. Now that everyone has come to support the initiative, I’ve found that even unexpected people are stepping up to help, offering introductions, and generally, things are progressing smoothly.

(Ishii) I joined in October 2022, so I wasn't directly involved in the establishment of CVC. However, comparing my experience with CVC at other companies, I can genuinely feel that CVC is highly recognized within Toshiba Tec, thanks to Torii's efforts. This is especially evident in terms of budget allocation and, when talking to employees, it seems the CVC activities are well-accepted within the company.

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- You mentioned that there is a high level of understanding of CVC activities within the company, but how much freedom do you have in your daily activities?

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(Torii) Honestly, within CVC, I am allowed to operate with a significant degree of freedom compared to the main company. From discussing the overall strategy of CVC, identifying investment themes, sourcing investments, to monitoring, supporting growth, and collaborating with partners afterward, the CVC team at Toshiba Tec is able to autonomously handle the entire process. I believe this is a unique feature of our CVC operations.

(Ishii) This was one of the points that surprised me when I joined. In my previous company, the themes were mostly dictated by management. In the CVC Promotion Office, including Torii, we come up with the themes ourselves and actively pursue them. It’s challenging, but the freedom to explore trends and identify new themes ourselves is exciting, and I think it’s a highly rewarding aspect of the job.

(Torii) I think this approach really suits people with a strong WILL to drive things forward. The process of aligning your personal goals with the company’s objectives and turning them into investment themes is exciting. On the other hand, for those who are more passive, it might be a bit overwhelming at first (laughs).

As for the freedom in how we approach things, currently, we are focusing primarily on minority investments, but we are also considering M&A in the future. I think it will become necessary for large corporations to acquire startups in full to create new businesses. CVC should play a role in facilitating such transformations.

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A Team with a Mix of Experienced Hires and Long-term Employees, Balancing Departmental Collaboration and Autonomy

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- What kind of structure does the CVC team have?

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(Ishii) There are three people responsible for investments, three people managing collaboration with internal business departments, and one person in charge of PR. The three investment professionals are all mid-career hires, with Torii coming from the Rakuten Group, and both Yoshimura and I coming from the CCC Group. Interestingly, Yoshimura and I ended up at Toshiba Tec despite coming from the same company, which I only realized after joining (laughs).

(Torii) We intentionally hire mid-career professionals for the investment team. This includes Ishii, Yoshimura, and myself. Additionally, there is Ueno, who is responsible for CVC branding and external communications, and she, too, is a mid-career hire.

On the other hand, the three people responsible for promoting collaboration are internal transfers from various departments within Toshiba Tec. I believe it is essential to understand the company deeply to handle some of CVC's tasks, so we deliberately moved people from within the company to become dedicated members of CVC. Since collaboration with business departments is crucial, we intentionally selected members from sales and R&D. Some collaborations aim to use POS data for sales purposes, while others might focus on research and development, so we need to ensure we have the capacity to handle both types.

In the future, we plan to recruit more core members to cultivate a stronger CVC culture. There are times when we pursue themes that are closely related to the core business, so we are also considering allowing members from business departments to take on a supporting role for the capitalists.

If we only gather people with similar backgrounds, the team will end up focusing on the same themes. To create a diverse investment portfolio, it’s essential to ensure that the team members themselves are diverse. We aim to build a team with varied backgrounds to achieve this.

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The Next Career Path: I Thought CVC Was the Only Option

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- Ishii, who joined mid-career, what kind of career do you have?

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(Ishii) I’m originally from Kagawa Prefecture, and I spent my childhood there. After high school, I didn’t know what I wanted to do, so I decided not to go to university immediately and instead set off on a journey to Indonesia.
In Indonesia, I lived in a rural area and had the chance to experience a completely different culture from Japan. I saw firsthand how entertainment can empower people and make their lives joyful. In a neighborhood with poor security (though of course, this is not a good thing), I witnessed around 50 villagers gathering to watch pirated movies on a small screen and share their emotions together, or using manholes as instruments to dance and make a ruckus… it was quite the scene (laughs).

After returning to Japan, I immediately thought of Toho when it came to entertainment, so I contacted them hoping to join. However, they only hired graduates, so I decided to go to university. While in college, I set my sights on joining Toho and worked toward that goal, but I ultimately failed in the final interview (laughs). However, my passion for entertainment didn’t fade, and I continued looking for jobs related to entertainment. This led me to join the Culture Convenience Club (CCC), which operates TSUTAYA, right after graduating.

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- What kind of experiences did you have after joining CCC that led you to where you are now?

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(Ishii) It seems that I was well-suited to the work at CCC, as by my third year, I was appointed the youngest store manager in the company’s history. Being a TSUTAYA store manager was a lot of fun. However, because of my performance, I was unexpectedly transferred to the president’s office, where I started working on corporate strategy and budget management. While I didn’t find the managerial tasks particularly exciting, my passion for entertainment was still strong, so when CCC Marketing, a subsidiary focused on data use, was established in 2015, I transferred there.

CCC Marketing is a subsidiary that leverages T-Point data. It was there that I first learned about One-to-One communication and personalization through data, and I was very excited about it. For about two years, I was part of an organization that promoted business partnerships. We combined T-Point cardholder data with external media to create new products and establish a new sales channel that didn’t exist before.

Looking back, it was essentially an early form of personalized advertising. For example, social media platforms like Facebook hold digital ID data, whereas T-Point card data also includes real-world data. By combining the two, we could, for instance, target someone who bought Brand A beer at a physical store with an advertisement for Brand B beer online. While the product eventually disappeared due to changes in privacy laws and social media terms of service, I was involved in this highly innovative field. There weren’t many companies with both ID and cross-purchasing data, so it was an experience unique to CCC.

After the service closed, I returned to the president’s office and went back to working on corporate planning and strategy. It was there that I encountered the term "open innovation."
At the time, the T-Point membership base had surpassed 60 million, and the company felt secure. However, that’s when Pokémon Go was released. I saw the news that Pokémon Go had surpassed 50 million users in just 13 days. It was a shock. They built a customer base in just two weeks that we had spent over a decade developing. That’s when CCC as a company began to actively pursue startup investments, corporate partnerships, and even M&As.

As I worked on innovation within corporate planning, I realized that among various career paths in new business development, venture capital, and M&As, CVC is the job that requires the highest level of comprehensive skills. As a business company, you need to understand both the current business and the medium- to long-term strategy while also keeping an eye on macro trends of the external environment. Additionally, to make investments, you must study individual startups and the activities happening within them. I decided that if I were to make a career change, it should be to CVC. It was around that time that Torii, whom I had known for a while, reached out and suggested I look into joining the CVC at Toshiba Tec. That’s how I ended up here.

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Investing in VC: Growth Opportunities for Capitalists

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- With the expansion of the CVC team, how are you addressing the development and support of new members after they join?

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(Torii) The work of a capitalist isn’t something you can learn from a thick textbook, so to be honest, we provide support based on each person’s characteristics and situation, mostly through on-the-job training (OJT). For example, if someone is weak in investment-related tasks, we have them work closely with the investment team for a while and provide mentoring. If their experience with collaboration with business departments is lacking, we have members from business departments support them in that regard. A certain level of understanding of the company as a whole is necessary for CVC, so we make an effort to keep internal information as open as possible.

Additionally, in a somewhat unique initiative, the task of monitoring investments is something that even those with experience in departments close to CVC may not be familiar with. Since we also invest in professional venture capital (VC) firms, we have organized events such as "Teach Me, Capitalist," where senior VCs are invited to meet with Toshiba Tec CVC capitalists and discuss challenges they’re facing and seek advice. We are proactive in providing these kinds of opportunities to help support career growth.

We frequently collaborate with VCs, for example, by asking them for their opinions on the reputation of startups we’re considering for investment or sharing information about promising startups they recommend. We also offer opportunities where VCs can explain macro trends from an investor’s perspective regarding portfolio companies, helping us catch up on the latest industry information. These exchanges with VCs happen at least once or twice a month and are valuable growth opportunities for CVC capitalists.

(Ishii) At Toshiba Tec CVC, we are also actively encouraged to participate in paid seminars. For example, I’m currently pursuing a certification in overseas data management, and the reference books are incredibly expensive. The company even provided funding for those (laughs). Of course, this is not only for my personal growth but also contributes to the overall development of the CVC. I believe it’s rare for a company to invest this much in opportunities for personal growth.

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- What kind of individuals would you like to join Toshiba Tec CVC in the future?

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(Torii) Since many of our investments are in tech-related fields, it would be ideal if candidates had a certain level of knowledge in software. Additionally, I would like them to have an understanding of the processes involved in business development and launching new ventures. On the other hand, I honestly believe that knowledge about investments can be learned over time, so that’s not a top priority.

As for after joining, I think it depends on the individual to make the most of the environment. As I’ve mentioned, we pride ourselves on offering a great deal of freedom, so I strongly believe that individuals who are motivated to grow and willing to challenge themselves with new things are the best fit for us.

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Creating the Future of Retail at Toshiba Tec

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- What value can Toshiba Tec offer to startups?

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(Ishii) For startups, it’s often challenging to expand nationwide and deploy staff across various locations. However, Toshiba Tec operates POS systems, which are essential business lifelines that cannot stop during operating hours, and we have a nationwide network of offices with strong customer support. This coverage is one of our key strengths.

Another strength is our vast accumulation of POS data. As a platform connecting retailers and customers through POS, we are proud to be one of the strongest in the industry when it comes to research and development of adding new data and services to the POS system.

For example, we’ve already implemented services where a customer picks up an item, and the checkout process is automatically completed through integration with an app, as though the transaction had already gone through the POS system. Another example is e-commerce orders where payment is already completed, and the customer simply picks up the item in-store. Since the last mile of product purchase is all about time efficiency, these types of collaborations improve service quality, and both businesses and end customers benefit from them.

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- What does Toshiba Tec aim to achieve for the future of retail?

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(Ishii) Looking ahead, we have a sense of urgency about the need to transform retail experiences and digitalize (DX) retail stores. Retail store DX requires significant investment in infrastructure, and traditionally, the burden of these investments has fallen on the retailers, which has been a bottleneck preventing faster DX adoption. We are thinking about how we might break through this challenge moving forward.

With its widely adopted POS systems and its position, which makes it easier to devise monetization strategies, Toshiba Tec, when partnered with startups, can help create new experiences and new business models. This collaboration can shape the next phase of retail. Given Toshiba Tec’s broad relationships with retailers, we believe this is a challenge we are uniquely positioned to take on.

Additionally, we also want to engage consumers directly. For example, sustainability-related corporate activities are gaining momentum, with increasing efforts to reduce CO2 emissions and create products using eco-friendly materials. However, in my opinion, there is somewhat of a force from the government and society pushing companies toward this, and it seems somewhat reliant on corporate awareness.

In this context, I think we could use POS infrastructure to shift consumer awareness as well. For example, in the context of addressing food waste, services that offer near-expiration products at discounted prices could be a starting point. Improving sustainability not only from the corporate side but also by raising consumer awareness is something I would like to focus on as one of the main goals for our CVC efforts.