Creating
industries

to pass on to
future
generations

What is the reason for being of startups?
We believe that startups are the engine to bring never-before-seen businesses and wealth into the world, and create new industries.
As times change, new social issues arise.
Startups are able to quickly address these issues through the incentive structure of business.
By building businesses to solve social issues, startups can create major new industries that can be passed on to future generations.
We believe that this is the most important role that startups fulfill in our society.

Signifiant provides necessary managerial resources to both private and public startups,
aiming to create new industries to pass on to future generations.

Scroll

About Signifiant

Why does Signifiant focus on the growth phase?

Signifiant's mission is to create industries to pass on to future generations. We aim to drive the following cycle in order to achieve our mission.
- Solving social problems by pouring capital, insight, and credit into growth companies (Solving social problems)
- Creating industries to pass on to future generations through solving social problems (Creating new industries)
- Sustainably accumulating capital, insight, and credit through creating new industries (Sustainably accumulating assets)

We think that the reason for being of startups is to be the engine to create new businesses. Startups are able to quickly address issues that arise with the changing times through the incentive structure of business.
In engaging in activities to create new industries, we all have the option to develop our own products & services, and grow our own business. We do not exclude that option. But many Japanese growth phase companies trying to achieve growth face the bottleneck of the lack of the key managerial resources that are capital, insight, and credit. We believe that the current times demand that Signifiant makes these resources more widely available.
By supporting the management strategy for growth phase startups, Signifiant aims to create new industries.

Why does Signifiant invest in the Japan market?

The Signifiant team is made up of people who were born and raised in Japan, but that is not the only reason that we work in the Japan market. We believe that Japan's startups have the potential to create new industries, and also that attractive returns can be gained in the Japan market. Japan has accumulated tangible and intangible assets, such as its technology, people, and infrastructure, that are sufficiently competitive with other countries, and we believe that Japanese companies have significant potential.
It is certainly true that compared to other developed nations, Japan's private market is small, and there are negative aspects that have been identified that made it more challenging for a global company with the potential to achieve major growth to emerge.
Meanwhile, Japan has a stock market where it is very easy to go public compared to other countries. In this unique environment, startups in the stage where in other countries they would raise funds from venture capitalists and other investors, instead choose to go public. If you combine the Pre-IPO startups (startups that have not yet listed) with the aforementioned Post-IPO startups (startups that have just listed) then we already have a diverse group of startups in Japan. Among the Post-IPO startups, there are some companies that will achieve several ten-fold growth in market cap compared to their IPO size.
Also, in Japan many people, including startup founders, tend to stay in the same company, leading to a unique environment where management insights do not travel fluidly. In this environment, we believe that we can drive smoother startup growth by providing the managerial resources of capital, management insight, and creditworthiness that are required to grow a company's intrinsic value.

Why does Signifiant focus activities broadly on both private and public companies?

Signifiant provides management support for rapidly growing startups that could drive the creation of future industries.
Generally the term "startup" is used to refer to rapidly growing private companies, but an IPO is simply one type of opportunity to obtain growth capital. If these startups aim to continue to grow after the IPO, then an IPO is no different from fundraising from venture capitalists or other investors.
We believe that the true nature of startups is to be the engine to create industries to pass on to future generations. If we define startups accordingly, then whether they are private or public makes no difference. Even if they are public, if a company is achieving energetic growth and providing major impact on society, then they ought to be called a startup.
Private vs. public is simply a distinction for the capital market, and we feel that it is irrelevant to the intrinsic value growth of the business.

Why do the three founders of Signifiant in particular engage in this work together?

Yusuke, Kenji, and Takafumi, the three founders of Signifiant, collectively have experience in public internet company management, private startup management, management consulting, and investment banking.
When providing assistance to startups, Signifiant prioritizes providing management strategy insight through discussion with management teams. We refer to providing this type of insight for company growth and discussion with the management team as "management engagement." To properly engage with management, its essential for us three founders to have both shared values and differing knowledge and experience to handle a variety of management issues.
The issues faced by startups change as the startups progress through different phases, so the three founders having differing backgrounds enables us to assist when facing these rapidly changing issues.
Please see here for more information about the history of the founding of Signifiant.

What are Signifiant's businesses?

Signifiant engages in an Industrial Finance Business, mainly providing risk money and management strategy insights to later stage private startups to support their post-IPO growth, a Management Advisory Business, providing management insights for high-growth companies whether Pre-IPO or Post-IPO, and a Public Equity Investment Business, investing in public equity.
The above three businesses are closely and organically related for the purpose of achieving Signifiant's mission of "Creating industries to pass on to future generations."
We believe that the engine that will create new industries for the future is startups. To enable these startups to achieve long-term growth, we need to give them management insight, capital, and credit.
The three businesses at Signifiant may have different methods, but our activities aim to pour these managerial resources into startups both private and public, and this is precisely the role that Signifiant aims to fulfill to help the Japanese startup ecosystem to develop.
As we fulfill our roles at Signifiant, we are also prepared to pursue a variety of businesses, not limiting ourselves to our existing three businesses. All businesses that aim to solve social problems, create new industries, and sustainably accumulate assets are targets for Signifiant.

About our Industrial Finance Business (THE FUND)

What is Industrial Finance?

Industrial Finance generally refers to the function and concept in finance of providing risk money necessary for industrial growth & expansion.
We believe that startups are the engine to create wealth, and fulfill the role of driving the creation of industries. Signifiant works to pour risk money, management insights, and credit into these startups that are driving the creation of industries through our Industrial Finance Business.
For startups to create major new industries, we feel that management and investors need to share the same vision. In short-term timeframes, the interests of management and investors may be at odds. However, to create new industries that will become established in society, both sides need to have a shared vision. In other words, we need management that understands the viewpoint of investors, and investors that understand the viewpoint of management. The Industrial Finance approach is a methodology embodying the sharing of this vision.
As a part of our Industrial Finance Business, Signifiant works with Mizuho Financial Group on the management and operation of the growth capital fund called "THE FUND."

What is "growth capital?" How does it differ from venture capital and buyout funds?

THE FUND is a growth capital fund, and invests in private startups with business in the growth stage. Among those, this fund particularly focuses investment in later stage startups that can expect sustained growth as public companies.
Usually venture capital funds engage in diversified investment over many startups that have just been established, occasionally doing additional investment in those companies at the next round, and generally following a high risk, high return investment style. Asset owners who invest in these types of funds generally expect the shares in the invested companies to be sold quickly after the startup goes public, as venture capital is considered an alternative investment into private equity.
In contrast, THE FUND targets later stage startups for investment, which have a higher certainty of going public. As we also engage with management, we necessarily must limit the number of invested companies to a few companies. Also, our main approach is to continue management engagement even after the IPO, until the companies are at a stage where they can move forward on their own.
Shareholdings at the time of investment are limited to minority investments. This differentiates our approach from buyout funds, which aim to acquire almost all of the shares of the invested company.

In what stage of company does THE FUND invest?

THE FUND invests in later stage private startups. THE FUND does not invest in seed or early stage companies that were recently established.
The following type of startup is a typical investment target for THE FUND:
- Have already done product/market fit and are doing business
- Already have customers paying for services/products and revenue
- Have already raised funds from external venture capital or other sources multiple times
- In process of preparing to go public, or are exploring the idea in detail
THE FUND does not consider if potential investment targets are generating operating profit or losses.

Does THE FUND only invest in Japan?

THE FUND generally invests in private startups in Japan.
We do not proactively explore investment in startups outside of Japan, but we have previously considered overseas startups that have a strong connection with Japan, such as in their business area or development structure. Please contact us to discuss your case.

Does THE FUND have a policy about particular industries for its investments?

THE FUND does not designate any particular industry for its investments. If there is potential for a major industry to be created in the long term, and Signifiant can contribute to raising the company's value, then Signifiant will consider investment.
Meanwhile, we prioritize management engagement, so we will be especially careful when considering businesses such as those involving R&D, where management improvements may not necessarily lead to company growth.

Does THE FUND only invest in rounds where you will be the lead investor?

Generally THE FUND only invests if we can form a round where we are the lead investor.
For forming the round, unlike investors that come into a round where the investment conditions have already been decided, we need time for our consideration process, so if your startup is interested in investment from THE FUND, please contact us early to allow sufficient time.

What is the general investment amount from THE FUND?

Given that we are a growth capital fund, and that we engage with management at each of our invested companies, in contrast to venture capital funds that diversify their investments into many startups, we engage in more concentrated investments in a limited number of startups.
More specifically, our general approach is to invest about 2 to 4 billion yen, and in principle we will only invest in startups that can accommodate a minimum of 1 billion yen in investment.
On the other hand, for startups where we can expect to conduct additional investment, then we can set up a framework to invest a smaller amount for the initial investment. We consider individual company circumstances when deciding investment amount, and make these decisions individually after considering each opportunity.

Does THE FUND have a policy about shareholding percentage for invested companies?

In our investments, THE FUND does not place particular emphasis on increasing our shareholdings. We feel that it is not appropriate to try to raise our shareholdings to have external control of decision-making, as the management team should be the ones making decisions to drive growth, and it would not be appropriate for the governance of startups in the growth phase.
Generally we set our maximum shareholding in any particular company to be 15%.

What is the typical investment process for THE FUND?

For investment from THE FUND, the management team and three founders of Signifiant discuss the strategy, based on the business plan. At the same time, we do specific product checks, interviews with customers and key people, as well as survey legal, technological, and development structure aspects.
As THE FUND considers later stage startups, which have considerable business results and would constitute a larger investment size, compared to seed or early rounds the investment process necessarily tends to take more time. Given this, startups that are interested in investment from THE FUND should contact us as early as possible.
When THE FUND does decide to invest, we do not designate one team member to handle any particular company. The three founders discuss together, and make a joint decision about investment. Rather than having just one person handle each startup, all three of us work together to contribute to increasing intrinsic business value.
See here for more information about the key elements we examine for our investment decisions.

Does Signifiant engage in hands-on support for THE FUND's invested companies? How do you get involved in companies, and what is your approach for increasing value?

With investment from THE FUND, Signifiant will also engage with the company management team to clarify the management strategy to increase company value. Given our involvement approach, in our investment decisions we prioritize factors such as management's openness to discussion with external parties, flexibility, and intellectual capabilities.
On the other hand, while we may discuss operational topics such as online marketing methods or implementing hiring by referral as subtopics for discussion, we will not treat them as main discussion topics. For such individual operational discussions, to the extent that we are able to, we may recommend other advisory business operators with deeper knowledge.
Similarly, we will not dispatch such staff as engineers or designers to be a continuous part of the value-adding team. In general our management engagement will exclusively be the three founders of Signifiant.
Also, the aim of our management engagement is not to force our views on the management team. We may provide a new approach or different thoughts from the management team from our external viewpoint, but if the management team considers our view and still decides that their view is best, then we respect the management team's decision. What is most important is deepening understanding of the path to growth through our discussions.
We also look forward to learning from the management team through our engagement with them, and flexibly gaining new insight.

What are THE FUND's standards for investment decision-making?

THE FUND looks at the following five elements as our standard for investment:
1) Management team
2) Intrinsic worth of the business
3) Probability of going public
4) Financial standing
5) Investment conditions
We do not require companies to fulfill all these conditions at a high level. We consider the company's situation for each of these elements, consider if there is potential to supplement lacking areas in the future, and then make the final investment decision.
As THE FUND places so much importance on management engagement, the most important element for us is the intellectual integrity of the executives and the management team.
Just as with seed stage startups, for Post-IPO startups the ability to grow is dependent on the quality of the top executives, and for this reason we believe that whether we will be able to have healthy discussions about increasing corporate value with executives is the most important factor.

Please share more details about the five elements that THE FUND examines for its investment decision-making.

We break down our standard mainly to the following five elements for assessment.
Our process for reviewing the situation of the business includes requesting that companies share necessary materials to assess the following elements, holding interviews, and conducting external surveys.

1) Management team
Top management (executives)
- Integrity
- Flexibility
- Awareness of own limits
- Intellectual capabilities
- Healthy ambition
- Leadership
Team
- Sufficiency of management functions
- Relationships within the management team
- Organizational management ability
- Execution ability
- Ability to negotiate externally

2) Intrinsic value of the business
- Completeness of product
- Establishment of unit economics
- Competitive advantage (barriers to entry)
- Potential for sustainable growth in the existing business
- Potential for non-continuous growth
- Social nature & sustainability of business

3) Probability of going public
- Accuracy of business plan
- Executive management structure
- Governance structure
- Compliance structure
- Resilience to handle organizational expansion

4) Financial standing
- Soundness of financing
- Soundness of balance sheet
- Relationships with stakeholders
- Flexibility of capital policy

5) Investment conditions
- Economic rationality of continuing to hold shares after the IPO
- Involvement as lead investor
- Securing of governance rights

Would a director ever be dispatched to a company into which THE FUND invests?

We generally do not anticipate ever dispatching directors from Signifiant on the occasion of investment from THE FUND.
We place priority on strengthening corporate governance following the IPO of our invested companies. For that reason, we prefer to proactively provide advice on the selection of independent outside directors, who will represent all shareholders, as appropriate for a public company, rather than dispatching an outside director just to represent the interests of THE FUND.

What is THE FUND's policy on exits?

Among the Post-IPO startups that aim to achieve continuous growth after going public, many struggle to escape stagntion at the few tens of billions of yen market cap level. We believe that this "Second Valley of Death" is a bottleneck for startups who are trying to build major industries for society.
THE FUND aims to support companies in overcoming the Second Valley of Death, and engage with management until they reach the stage where they become the target of investment from high-quality institutional investors. For that reason, we do not envision continuously holding shares in Post-IPO startups that had put off their IPO to prioritize growth during their private stage, and thus grew to a significant size by the time of their IPO.
This is THE FUND's general approach, but we also handle each case in accordance with the state of our management engagement and other unique factors for each company.

Would THE FUND consider investment in companies that are exploring an exit through M&A?

THE FUND will consider investment in companies exploring M&A.
We aim to support the growth of startups to create new industries. For startups that want to go public, we aim to continue engaging with them after their IPO to support them in achieving further major growth.
However, we also think that a startup being acquired by another company can also enable it to function as an engine to create new industries and achieve greater impact.
Based on this thinking, through our Management Advisory, Signifiant has previously supported startups through the M&A process.

When should companies contact THE FUND to express interest in receiving investment?

If a startup is interested in receiving investment from THE FUND in the future, you may contact us at any time.
As mentioned, THE FUND targets later stage private startups for investment. For that reason, we do not invest in startups that were recently established.
However, even with later stage startups, we are able to proceed with the investment consideration process more smoothly if we have contact and have communicated with the executives of a company previously, rather than with executives we have only just met.
Even if there is no opportunity to invest now, we welcome requests to talk with us about company business strategy and other matters, and we may be able to provide useful assistance for you.

What is THE FUND's investment approach for public companies regarding ESG?

Signifiant's mission is to create industries to pass on to future generations. We break that down into three individual goals: solving social problems, creating new industries, and sustainably accumulating assets.
Our mission is directly related to the themes of Environment, Social, and Governance (ESG).
To fulfill our mission, Signifiant conducts activities with consideration for each aspect of ESG, while at the same time in our investments we make decisions based on whether the prospect company will contribute to future generations in the long term from an ESG perspective.

What is THE FUND's approach to your fiduciary duty after invested companies go public?

For THE FUND's invested startups that go public, THE FUND conducts activities, including investment and exercising our voting rights, in accordance with the Stewardship Code.

About our Management Advisory Business

What companies does the Management Advisory target?

We target any growth company led by passionate executives who desire sincere dialogue about how to grow the intrinsic value of the company, regardless of whether the company is private or public, large or small cap.
Up to this point, we have covered several-year-old startups to 100 billion yen plus market cap public companies, and we have about half private and half public companies.
No matter the company size, generally our target is the management team, including the executives.

Does the Management Advisory only target companies in Japan?

Generally, the Management Advisory only handles Japanese companies. However, if there is a relationship with the Japan market and we determine that Signifiant may be able to contribute to raising corporate value, then we have previously advised overseas companies. Please inquire about specific cases.

Please share the exact content of the Management Advisory.

Companies in the growth phase each can have any number of a wide variety of management issues, and we do not do detailed discussions of generalized topics. What each company shares are strategic topics required for important management decision-making.
While we may discuss operational topics such as online marketing methods or implementing hiring by referral as subtopics for discussion, we will not treat them as main discussion topics. For such individual operational discussions, to the extent that we are able to, we may recommend other advisory business operators with deeper knowledge.
Previously the Management Advisory has consulted on such topics as the following.
- Formulating mid-term management plans
- Formulating the equity story
- Major restructuring of the management team
- Selection of independent outside directors for private companies
- Exploring the IR communication strategy/composition of operating results briefing materials at public companies
- Exploring IPO process for private companies
- Exploring spinouts of new businesses for public companies
- Exploring sale to a public company for private companies

How often does the Management Advisory provide advice?

We adjust the frequency depending on the situation of each company, but generally we meet about once per month. This is based on our experience that this frequency is appropriate for discussing company level management issues, rather than discussing operation level issues.
However, there may be one-time topics that require focused discussion (IPO, M&A, spinouts, etc.) and are not subject to the above limits, and we have conducted such focused discussions in the past. Conversely, there have been topics where the company needed to take more time to explore internally, and we have postponed discussions for several months. We are flexible and adapt to the needs of each company.
However, we do not create highly detailed materials or proposals as you may envision from general management consulting.

What are the differences and separation between the Management Advisory Business and the Industrial Finance Business?

The Management Advisory Business and the Industrial Finance Business have different meeting frequencies (the former is generally once per month, while the latter has no limit and can be adjusted in accordance with circumstances), but the management engagement content is roughly the same.
The Management Advisory receives fees from the target company, while the Industrial Finance Business does not collect fees as the intention is to increase the value of the invested company.
To prevent a conflict of interest, if a company receiving advising from the Management Advisory receives investment from THE FUND, then we cancel the contract with the Management Advisory.
In July 2019 Signifiant invested in SmartHR through THE FUND, but from about one year prior Signifiant had been providing advising through the Management Advisory. When the investment took place, we cancelled the Management Advisory contract.
Given that through the Management Advisory both startups and Signifiant are able to deepen their mutual understanding and enjoy a smoother process in the fundraising stage, we believe that going through the Management Advisory and then investing is meaningful for both parties.

About our Public Equity Investment Business

What is your investment approach for public equity, and your policy on exits?

Just as with our Industrial Finance Business, the investment targets for our Public Equity Investment Business are growth companies that can expect long term growth in their intrinsic value, regardless of the industry or market cap size. We do not invest in companies already invested in by THE FUND.
Our general policy is to hold shares as long as possible, as long as the market cap continues to grow in conjunction with the invested company's value. However, if the value of one of our invested companies grows to be too high compared to the actual situation, for example due to dramatic upward movement in the market overall, then it is possible that we may decide to sell our shares.

What is Signifiant's investment approach for public companies regarding ESG?

Signifiant's mission is to create industries to pass on to future generations. We break that down into three individual goals: solving social problems, creating new industries, and sustainably accumulating assets.
Our mission is directly related to the themes of Environment, Social, and Governance (ESG).
To fulfill our mission, Signifiant conducts activities with consideration for each aspect of ESG, while at the same time in our investments we make decisions based on whether the prospect company will contribute to future generations in the long term from an ESG perspective.

What is your approach to your fiduciary duty in public equity investment?

Signifiant conducts activities, including public equity investment and exercising our voting rights, in accordance with the Stewardship Code.

About other content

Is Signifiant currently hiring?

Signifiant prioritizes management by a small team. For that reason, we are not generally proactively hiring.
However, there are rare occasions where we hire for a specific position. If you are interested, please get in touch through the Contact page and include a link to your LinkedIn page.

How can I get in contact with Signifiant?

For our investment and management advisory, we generally talk with companies where we already know someone on the management team or have been introduced by someone we trust.
We prioritize working together with people with whom we already have a relationship of trust, and we feel that networking with people is an important skill required of executives.
That being said, we do want to expand our connections with new people, such as those who have only just started their business, so please reach out to us over the website Contact page.
As Signifiant is a very small team, we may not be able to respond to everyone who reaches out to us. We appreciate your understanding.