Supporting the Dreams of High-Minded Startups That Change Society and Life

Shintaro Haraguchi
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‍(Career)

Principal at Zenrin Future Partners Co., Ltd.

Joined Zenrin Co., Ltd. in 2007. Engaged primarily in accounting, finance, and tax duties in the corporate department. In 2021, seconded to Zenrin Future Partners Co., Ltd., where he began working on investment and support activities for startups. He oversees investment areas related to smart cities, disaster prevention, AI, and other fields utilizing map information to solve social issues.

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Combining Japan’s Leading Map Data with Startups to Create New Business Value.

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- Can you tell us about the background of Zenrin Future Partners (ZFP)?

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Zenrin’s main business involves maps, related databases, and the sale of GIS (Geographic Information Systems). It holds the top market share in Japan for maps used in car navigation systems.

Zenrin's map data includes hidden attribute information that isn’t immediately visible, and its strength lies in its ability to continuously update highly accurate information.

For example, with roads, it includes detailed data such as road width and the maximum height for vehicles to pass through tunnels. For buildings, it includes information about entry points, vehicle entrances, the number of floors, and current tenants. Zenrin maintains a nationwide database that covers specific and detailed information, which is crucial for various needs, from delivery planning and site selection to urban development. This data is constantly updated by gathering data from vehicles and people every day.

While Zenrin established this strong foundation of map data over many years, the rise of free online map services, along with the widespread use of smartphones, has caused the quality of these services to improve rapidly.

To leverage Zenrin's strengths while creating new added value, it became clear that open innovation was necessary. As a means to achieve this, Zenrin established ZFP to focus on collaboration with startups through investment activities and CVC operations.

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- Could you tell us more about ZFP’s structure and activities?

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ZFP is a corporate venture capital (CVC) firm with Zenrin as its single LP (Limited Partner). Established in January 2021, practical team members, including myself, began working at ZFP in April of the same year. To date, we have made investments in 19 companies.

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- Could you explain ZFP’s investment and business collaboration strategy?

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Our investment style primarily focuses on follow-up investments.
When it comes to collaborating with startups on business development, we typically target middle and later-stage startups whose products or services are already developed.

In cases involving early-stage startups still refining their products or services, we may not initially invest, but instead collaborate through business development by providing Zenrin’s map data and other assets. We aim for a win-win situation, so we are flexible in creating schemes that don’t necessarily require investment right away.

To ensure smooth collaboration in business development, we request to participate as observers in key meetings such as the board of directors and management meetings.

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- How do you collaborate with the business departments when working with startups?

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Currently, among the six team members responsible for investment activities, three are external hires with financial backgrounds who joined to establish the CVC operation, and three, including myself, are seconded from Zenrin. While Zenrin’s seconded employees are expected to facilitate collaboration with the business divisions, the financial experts are quickly deepening their understanding of Zenrin’s operations and are actively involved in business development with their expertise in industries and corporate management. I, too, am learning a lot every day. I believe that through the collaboration between the Zenrin seconded employees and the financial experts, the organizational strength of our CVC is growing.

Before the investment committee, there is a meeting for introducing investment cases, which is attended by three senior executives from Zenrin. This structure allows us to receive direct feedback on business aspects. Based on this feedback, we explore possibilities with the startup and discuss further before bringing the case to the investment committee. The support from Zenrin’s executives makes our collaboration with the business divisions smooth and is one of the strengths of our CVC.

If a business synergy is expected in a case meeting, we contact the relevant department to propose a business collaboration and work with the business unit heads to jointly consider whether an equity story can be developed for the investment. The investment evaluation process typically takes about three months. It's rare for a case to be approved on the spot during a meeting. If there are issues raised, we discuss them with the startup or the business department before bringing it back to the meeting for approval by the investment committee.

Additionally, many of our investment cases have been introduced to us by business divisions, and out of the 19 companies, 7 were brought to us through such referrals. In these cases, as the potential for business collaboration is already clear, the evaluation process tends to move more quickly.

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- Does the CVC team commit to creating synergies through business collaborations and business development?

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We refer to investments in startups where collaboration can begin immediately as Synergy A, and the business department takes responsibility for realizing these synergies. On the other hand, investments in startups where immediate collaboration is not possible but where future collaboration can be envisioned are considered Synergy B. In these cases, CVC capitalists maintain communication until the collaboration theme becomes more concrete.

When it comes to investments aimed at business development, the most important thing is gaining the business department's buy-in, so we engage in thorough communication. Over the past year and a half, we’ve been able to offer new perspectives on business development, and communication with the business side has become smoother. We’ve also noticed an increasing interest from the business side in collaborating with startups.

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- How can startups utilize Zenrin’s resources?

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For example, Zenrin can provide map data and facility information from its extensive database.

Zenrin’s database assigns unique IDs to buildings nationwide, linking detailed information such as tenants and floor numbers. Startups that can utilize this information to create value could find great benefits in leveraging our resources. Gathering such data independently would be challenging, and even if possible, partnering with us would offer a more cost-effective solution.

While it's difficult to share specific examples of investment cases that have arisen from such collaborations, we have received many inquiries from startups seeking our map data, indicating strong demand for it. I believe this is one reason why we’ve been able to maintain a steady investment pace, averaging 10 investments per year since our operations began.

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- Is there a division of roles among the capitalists?

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Each capitalist handles their own cases.

Regarding investment areas, my personal interests lie in smart cities and disaster prevention, but Zenrin excels in other fields as well. I’m open to hearing various ideas from startups without being fixated on any particular area from the start, to see how we can collaborate effectively.

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“A World I’ve Never Seen Before” – Continuing to Grow and Be Inspired by Startups.

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- Could you tell us about your career path from joining Zenrin to joining ZFP?

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I grew up in Fukuoka and had always considered working for a local company. In college, I also obtained a bookkeeping qualification and was focused on job hunting in the finance sector. However, I was drawn to Zenrin, a company based in Kitakyushu but with a nationwide presence, and decided to join.

After joining Zenrin, I gained experience in corporate accounting. I was responsible for tasks such as preparing financial statements, securities reports, and quarterly reports. I was involved in finance and tax-related departments for an extended period. The work, especially around financial statements, was always challenging. Completing disclosure documents required confirming details with multiple departments, and collaborating with external experts such as accountants was necessary. At first, I struggled to keep up with the workload.

It wasn’t until about five years in that I gained enough confidence to take a more holistic view of my work. Once I understood the company’s overall cash flow, I began to appreciate the significance and enjoyment of the tasks I was handling.

While focusing on my management-related work, I was also interested in new business models, and I actively participated in internal initiatives to generate new business ideas.

When I was selected to join ZFP and begin working in CVC, I was thrilled. I’m not entirely sure why I was chosen, but I think it may have been because of my ability to analyze business numbers and my proactive attitude toward exploring new types of business.

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- What have you felt or realized since you started working as a capitalist with startups and new businesses?

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It was a world I had never seen before, and that was my initial impression.

Zenrin was already a listed company and a mature organization. Since joining, I have been involved in managing the cash flow and financial numbers of such established companies. However, in startup companies, it's normal for the sales cash flow to be insufficient, and for profits to be in the red. The gap between my previous experience and conventional wisdom was significant. At the same time, I find it inspiring to see startups continuously challenge themselves in such situations. Additionally, making investment decisions in these dynamic conditions has been an incredibly valuable learning experience.

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- What are your goals as a capitalist in the future?

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In order to continue meaningful investment activities at ZFP, I want to stay mindful of ensuring strong financial returns. While we haven’t had any exits yet, achieving financial returns will mean that our investments have grown and the value of the invested companies has increased, which, of course, is important.

To contribute to enhancing value through business collaboration, I would like to create as many examples as possible where we can deliver new value while keeping the startup's perspective in mind, rather than imposing Zenrin’s interests on them.

Personally, I want to support the dreams of startups with high aspirations to change society and people's lives.

Moreover, one of my future goals is to bring back the insights, knowledge, and experiences gained from my work in CVC at ZFP, and apply them to Zenrin's side as well.

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