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A new Japanese venture fund focused on good governance

Three veterans in the Japanese financial industry have set up a $ 150 million venture capital fund focused on good governance.

MPower Partners Fund LP launched on May 31 with funds from investors such as Dai-ichi Life Insurance Co., Ltd.

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, SOMPO Holdings Co., Ltd.

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Sumitomo Mitsui Trust Group. Cathy Matsui, one of MPower’s general partners and former vice chairman of Goldman Sachs Japan, focuses on Japanese start-ups and works with investees to meet governance standards. Said to confirm that.

Integrating good governance practices early is “one of the keys to revitalizing or innovating Japan’s venture ecosystem,” Matsui said in an interview. Although Japan has a wealth of money and talent, she said the startup industry is being constrained by “insufficient global ambitions, perspectives and diverse perspectives.”

MPower isn’t that big compared to many US venture funds, but it’s big for Japan. According to Tokyo-based data tracking company Initial Inc, only two venture funds were funded in 2020.

Japan’s venture industry has grown rapidly recently, but it is still small compared to its economic scale. And it’s small compared to the venture powers of the United States and China. Last year, Japan’s total venture investment was less than 1% in the United States and less than 5% in China, according to Venture Enterprise Center Japan, a foundation established to support Japanese venture companies.

MPower’s all-female leadership team is rare even in Silicon Valley, and twice as much in Japan, where women are significantly undervalued at the top of business and finance. Japan was ranked 121st out of 153 countries in the World Economic Forum’s 2020 Gender Gap Index. This is mainly due to low scores for political empowerment and economic participation.

Many Japanese startups downplay female directors and managers, which could prevent companies from preparing for an initial public offering and engaging more internationally with investors and other companies. Yes, says MPower’s partners.

Other general partners of MPower are Yumiko Murakami, a former Tokyo office manager of the Organization for Economic Co-operation and Development (OECD), and Miwa Seki, a portfolio manager of Japanese equities at Clay Finley, a New York-based asset management company. That’s right. Eriko Suzuki, the managing director of the fund, is a venture capital veteran who has experienced Mistletoe, a fund founded by Fresco Capital and Taizo Son, a brother of SoftBank Group. Co., Ltd.

Masayoshi Son, President and CEO.

MPower is primarily targeted at late-stage Japanese startups that are deploying technology to solve social challenges such as health care. We also plan to invest about one-third of the fund in early-stage overseas private sector companies, primarily the United States.

The fund wants to differentiate itself by asking its investees to work with their partners on environmental, social and governance practices, or strengthening ESG. Partners said the areas to be strengthened range from reducing carbon dioxide emissions to creating a more diverse board of directors and reviewing employee treatment.

Matsui said the fund will help investee companies make concrete plans to implement the necessary improvements.

Mr. Matsui has been lobbying for a long time to increase the power and representation of women in Japanese businesses and economies, and Mr. Matsui focused on such issues when he was still in his teens. He said it was important to let him.

“It’s really hard to change behavior when it comes to big companies,” she said.

Write to Phred Dvorak at phred.dvorak@wsj.com

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A new Japanese venture fund focused on good governance

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