What Japan’s CVCs can teach the rest of us

The future of Japanese industry depends on startups. At some point in the early 2000s the seemingly unstoppable engine of Japanese corporate innovation mysteriously began to spin down. Product quality was still high, of course, but corporate R&D seemed increasingly unable to launch anything truly innovative. Today we sit down with Nicolas Sauvage, President of TDK Ventures, who explains how Japanese enterprise is increasingly looking to startups to fill that gap. And it's working. We talk about what makes for successful enterprise-startup collaboration, how startup innovations are being adopted within enterprises, and exactly who CVC units really need to answer to. It's a great conversation, and I think you'll enjoy it. Show Notes How the parent's history and DNA effects CVC TDK Venture's four-year innovation horizon A strategy for finding and investing in innovative startups How to convince an enterprise to start a CVC unit The false dichotomy between financial and strategic concerns How CVCs can reliably drive innovation back to their parent Exploration vs exploitation CVC strategies The importance of (and difficulty in) investor transparency and accountability Tracking TDK Ventures' anti-portfolio What will drive Japanese innovation over the next decade Why the parent is not the CVC unit's customer Links from the Founder Everything you ever wanted to know about TDK Ventures TDK Ventures intro deck TDK United Reports TDK Ventures Deep Explorations Nicolas' Podcast: Corporate Venturing Insider [youtube.com] Nicolas' SubStack: From Frontier to Iconic [nicolassauvage.substack.com] Articles Nicolas & I discussed How VCs Can Create a Winning Investment Thesis [hbr.org] The Cold Email VCs Want [medium.com] Entrepreneurs Deserve a Better No [medium.com] Our Customer Is The Entrepreneur [usv.com] AM Batteries–ATL collaboration announcement [businesswire.com] Further Reading on building and running a CVC What Successful Corporate Venture Capital Funds Do Differently [hbr.org] The Opinionated CVC: A perspective on strategy, process and people Open-Source TDK Mothership Startup Engagements Tracker Open-source TDK Ventures Investment Scorecard What You Need to Unlearn to Succeed in Venture Capital Why VCs Should Use Net Promoter Scores with Founders [hbr.org] Is Corporate Venture Capital Right for Your Startup? [hbr.org] Starting a Corporate VC: An Olympic Approach [medium.com] Corporate Venturing: The Infinite Relay Race [medium.com] Leave a comment Transcript Welcome to Disrupting Japan, Straight talk from Japan's most innovative founders and VCs. I'm Tim Romero, and thanks for joining me. Venture capital is an industry that is defined by trends. Not only the technology trends that dominate the headlines, but by quieter, equally powerful trends that are going on behind the scenes. Over the last decade, Japanese enterprises have become increasingly active startup investors. They do this by making LP investments in other VC funds, having business units make startup investments directly. And increasingly, by setting up corporate venture capital teams to focus full-time on startup investing and collaboration. Results so far have been, shall we say, mixed. While a handful of Japanese CVCs have delivered tremendous strategic and financial value to their parent companies, others have spent a lot of money with very little to show for it. Well, today we're going to sit down and talk with someone who is doing things right, Nicolas Sauvage, the president of TDK Ventures. I helped set up both TEPCO and JERA's CVC units, and I've always been impressed with the way TDK Ventures runs things, so it's great to have Nicolas on the show. We dive into what corporate sponsors should actually expect from their CVC units, how TDK selects startups and makes investment decisions, and some of the most important reasons to be optimistic about the future of corporat