Sumitomo Corporation Corporate Venture Capital (CVC): Founding Members Discuss Working With Trading Company-Affiliated Startups (Part 1)

Sumisho Venture Partners, a CVC that invests in startups in Japan, was established in 2022. Can you give us some background and an overview of SVP’s business?

(*1) One of the stages of investing in a startup. This is the stage when a product or service is launched, and a full-fledged business begins operating.
(*2) At this stage, the general framework of the business has been established, but the specifics of the product/service and sales method have yet to be determined, and a working prototype is in development.

What value and advantages do SVP offer?

YamakiWe have two major advantages. The first is that we are a "business producer." Second, we offer the global network and diverse assets of the Sumitomo Corporation Group.

What do you mean by "business producer?"

(*3) Pre- and post-startup, the preparatory stage before beginning a fully-fledged business.
(*4) Due diligence indicates investigation into the value, risks, etc. of a target business by a potential investor.

What exactly can the Sumitomo Corporation Group offer in terms of its global network and diverse assets?

As founding members of the company did you encounter any difficulties when you launched SVP?

YamakiActually, the concept of SVP was not that difficult. We had a clear image from the early stage. I had experience in several startup investments and believed that if we could create a CVC that combines investment skills with the ability to contribute to startups through business development in the style of a trading company, we could establish SVP as a unique player in the startup investment industry in Japan. However, I think that Mr. Minami, who was the only person in charge of the project on the ground, faced a number of challenges.

MinamiFor sure. I was under pressure because the company's reputation depended on my sourcing, or searching out, companies to invest in. To find target businesses, it's important to have a network of VCs, so in the beginning, I focused on building relationships by attending lunches, meeting up for drinks and meetups with VCs. Thanks to these efforts, we began receiving introductions from other VC firms and were gradually able to establish a track record.

A turning point for me personally was when we decided to invest in forest, a company that supports the succession and growth of Ecommercebrands through e-commerce and M&A. On this occasion, I sent a DM to the CEO of forest on social media. At first, he wasn't sure about it, but I was able to develop a relationship based on trust with a startup that I had spotted independently and connect it to investment, which gave me a lot of confidence.

In a popularity-based survey of Japan’s most innovative major companies of 2024,which covered 1,186 companies, Sumitomo Corporation ranked in the top twenty overall, and first in the trading company category. This suggests that open innovation through collaboration with startups is starting to gain real recognition. Among the businesses you have supported to date, what kind of evaluation and reaction have you received from your portfolio companies?

YamakiIn the two years since SVP was established, we have met with approximately 500 startups and currently have eight investments under our belt.

One comment from the CEO of Sorajima, a webtoon business (digital comics read vertically), was particularly memorable. He said, "While most of the advice was to grow the business steadily, SVP was the only CVC who told us from the outset to aim for the stars by building a bigger business."

The future is already looking bright for SVP, but what do you envision for the company?

YamakiCVC in itself remains an incomplete business model, and there isn't an established pattern of success even when viewed globally. This is why SVP must establish a track record that will be recognized by startups and the industry as a unique business producer, and pursue a future as a "model CVC." We will continue to support entrepreneurs who are striving to identify unresolved issues globally, and who will bring more apt and keen resolutions than we can possibly imagine.

MinamiSVP has a "business producer" policy, but I think it's quite rare to find a CVC that so clearly articulates its commitment to rolling up our sleeves in the process of building a new business. We don't have an extensive track record yet, but if this really starts to take off, we should have a distinct advantage. As a "CVC that invests in startups that pioneer new industries and produces dreams for Japan," our goal is to partner with entrepreneurs that have big dreams and visions and directly create innovation.