00:00The theme really is Japan is back.
00:03Obviously, this AI boom and Japan really seems to be well positioned here right now.
00:07What are you seeing on the ground?
00:11Right. Thank you so much for asking.
00:13Obviously, you know, Japan's startup ecosystem has been really dramatically changed.
00:18And, you know, when I kind of joined the GIC in the past kind of six years,
00:23obviously it was pretty domestic driven market.
00:26And, you know, the risk capital has been really provided with a limited VC fund.
00:33But now obviously with the help, the strong support with GICs,
00:38more and more the local VCs are participating in this kind of ecosystem.
00:43And moreover, we invited more the global leading VC firms capital into this ecosystem.
00:51So obviously, you know, boom is still there.
00:53And obviously that, you know, AI is definitely the, you know,
00:57the strong key themes in this market are the same for the global market.
01:04Yuka, what are some of the financial gaps that you see among the high potential companies
01:11that are maybe making foreign VCs have a second think for these startups?
01:19Okay. Well, obviously, you know, as I mentioned that, you know,
01:23more and more the capital is into this market.
01:26But obviously the challenge here is the size of the gross capital.
01:33GIC has a subsidiary called VGI.
01:36VGI has been really supporting quite strongly to the gross capital market.
01:42But still the gross capital that needs is quite strong,
01:48especially that we are shifting more supporting to the physical AI, deep tech.
01:54These are the, you know, the technology that requires a lot of capital.
01:59So definitely we need the market to be connected to the global market.
02:04So that's why that, you know, we are strongly inviting more the global leading managers
02:10into this kind of ecosystem.
02:12So GIC has been set the global strategy since 2022.
02:17And since then, the GICs are investing the global leading managers
02:23so that they are particularly, you know, with a strong support with the GIC itself
02:29and our subsidiary VGI connecting to the local managers,
02:34they are strongly motivated to really work on Japan's startup ecosystem
02:38with the capital as well as the strong support for the growth with their platform.
02:46I was looking at some of the strategic sector investments you guys made last year, Yuka,
02:52and, you know, predominantly it seems to be your number one,
02:55I mean, you had close to 170, well, 176 deals in the AI and semiconductor space.
03:02What would be, what is the GIC's investment thesis around AI right now?
03:06Is it still built around the sort of infrastructure side of things,
03:09or are you looking more at the AI application side now more?
03:14It's absolutely the AI application is this kind of strong need.
03:17And as you say, that Japan's are facing the strong kind of issue with the labor shortage.
03:25And, you know, with that challenges, we definitely need, you know,
03:31to upgrade our, you know, the industry digitalizations and robotics.
03:37So that's something that the AI has a strong support to increase the,
03:42improve the productivity in the manufacturing side as well as even the kind of retails,
03:51customer facing, or even like a white color, you know, office side as well.
03:56So that's something that AI is playing a strong, important role
04:01to provide application to each industry or the business side.
04:08Yuka, AI, as we know, a very competitive space.
04:13I mean, we've seen this week South Korea also unveiling massive investments for chips, data centers.
04:20How is Japan looking to maintain its competitive edge?
04:27Well, thank you so much.
04:29So, obviously, Japan's, you know, industry overall that we are putting money to the,
04:37obviously, data centers, the infrastructure base, or lifting up to the energy needs.
04:43So that's something.
04:44It's an overall ecosystem trying to kind of supporting to provide a risk capital in that place.
04:51But moreover, Japan has a strong industry depth in this market.
04:56So, to create more kind of strong physical AI opportunities,
05:04definitely that, you know, Japan has a sort of, you know,
05:09the strong kind of foundation to provide data.
05:12So that's something that we have a strong competitive edge
05:15to create more strong physical AI space out of this kind of market.
05:23Yuka, I was going to ask you about the regulatory environment as well,
05:25because we heard from the Tokyo Stock Exchange.
05:28They recently tightened some of the listing maintenance sort of criteria
05:32for some of these emerging companies, right?
05:34So they announced that the current requirement of a market cap of at least 4 billion yen
05:39after 10 years of listing will be changed from 2030 now
05:43to a requirement of at least 10 billion yen after five years of listing.
05:48What is your sort of role, I guess, in JIC and helping to support some of these, you know, startups
05:55through the VC sort of channels here in order for them to actually meet these IPO requirements?
06:03Actually, this kind of gives kind of a strong opportunity for the local manager to think
06:09IPO is not only exit route.
06:12It used to be before.
06:14So that's something that, you know, more and more local managers start to work with industry and M&A market.
06:22And we have seen a strong increase of the M&A market for the startup space.
06:27And a strong startup also for their, you know, inorganic growth.
06:32They are actually using kind of this kind of M&A to bring their growth to the next stage.
06:40So overall, it's not just the exit market for the M&A.
06:45This is also the, you know, great support for the startup kind of growth.
06:52And at the end of the day, if this kind of startup to create more inorganic growth,
06:58they can actually go more, you know, global-scale IPO in the Tokyo stock exit market.
07:05And on the other hand, since 2022 and 2023, JIC is promoting to supporting the secondary manager in this market.
07:14And increasingly, the Japanese VC are using this kind of secondary market for partial exit.
07:22That's improved the DPI for the LP's perspective.
07:26But that's also the great, the momentum that, you know, the VC firm in the past, they wait and see
07:34for the exit route.
07:35But now they are more using their, you know, strategy to how they can improve more the DPI,
07:43how they can actually accelerate the IRR for the performance perspectives.
07:47So overall, I think the Japan's kind of startup ecosystem are moving to the next stage for the fund management
07:54perspective.
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