Investment Philosophy

1. Invest in Accordance with the Nature of Venture Capital

(1) Focus on Potential

The appeal of a venture does not lie in its current circumstances, stability, or available resources, but whether it has the potential for significant growth. We examine critically whether or not a venture possesses such potential. If we believe a venture does have potential, whether hidden or untapped, we will seek to invest regardless of its present condition.

(2) Evaluate the Management Team’s Ability

The resources available to a firm’s management can be described as its “people, products, money, and information”. However, the questions of what things to invest in, how to raise money, and where to find information, need answering, and that depends entirely on the ability of the people. FVC emphasizes the people. Namely, we rigorously evaluate the management team’s ability in determining whether or not to invest.

(3) Take Bold Risks for Higher Returns

Risk and return are intimately related, since risk must be taken if high returns are hoped for. To realize the appeal of VC investment in generating high returns, we firmly grasp the true nature of each enterprise and take the bold but necessary risks to make an investment succeed.

2. Pursue an Active, Hands-On Approach

(1) Build Mutual Trust

We maintain an active approach by offering timely suggestions and hands-on support to the management team. However, if the management team cannot trust our officer in charge, they will be unlikely to accept the tough but necessary steps we propose. Thus, we emphasize the building of mutual trust with the management team as a first step in every investment.

(2) One officer in Charge Throughout

In many Japanese VCs, responsibility for a particular investment passes through many hands due to sectional organization and personnel changes. In contrast, FVC actively pursues a policy whereby one officer is responsible and hands-on throughout the entire investment process to support and advise, from initial research to exit. This officer, with enthusiasm, patience, and belief in the investment’s potential, will spare no effort in leading the investment to success.

(3) On-Site Approach

How can the causes of a firm’s lack of growth be identified? Even as an enterprise enjoys steady growth, can the warning signs of approaching pitfalls be recognized? We do not believe that financial statements and documentation alone allow a full or accurate picture of a firm’s condition to be painted. Without witnessing the daily work of managers and employees on-site, we cannot understand or mediate the firm’s true problems. Through constant, close, and prudent communication with the management team, we can catch the true problems and warning signs ahead of time.

3. Diversify Investment

As was clearly illustrated by the IT bubble, certain industry sectors will occasionally receive intense but short-lived attention, and it can be very difficult to tell whether we’re only in the midst of a boom or something more lasting. Therefore, as a form of risk management, we avoid concentrating our investment targets in specific industry sectors or specializations, and instead pursue diversified investment in a broad range of industrial sectors. In this way, we are able to generate stable returns from high risk VC investment.