Corporate Venturing Insider #62 with Yamaha Motor Ventures Kei Onishi & TDK Ventures Nicolas Sauvage
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[00:00:00] Nicolas Sauvage: Welcome to the Corporate Venturing Insider series! Where I interview top practitioners in the CVC world and learn with you the best practices and golden nuggets that they have accumulated over their career. In this episode we will be learning from Kei Onishi, CEO and Managing Director of Yamaha Motor Ventures. K could you take a few minutes to share your story and how you got to where you are today?
[00:00:24] Kei Onishi: Thank you so much for having me here. It's my pleasure to share my personal and as a professional solely here. I studied about mechanical engineering and robotics in university and also grad school. And I joined Yamaha in 2008 so in the middle of financial crisis. So I was super passionate about, mobility cars and motorcycles. And also I wanted to work in the company that has enough exposure to overseas market outside of Japan and Yamaha. Yamaha has 90% of revenue comes from overseas, outside of which they know Yam is quite multinational company. So I joined Yam as a manufacturing engineer. So I spent first few years as a manufacturing engineer, setting up a new production line on the design, the production process for the craft shaft, which is a component for ice engine products. Then in 2012, I got some opportunity to study in the US. So I went to business school and I studied the business and the motivation for me to go to business school solely about like my the passion towards innovation. After that in 2015 I came back to the Mothership Yamaha Corporation, which is mothership of US Yamaha Ventures. And 2015 was actually the year that Yamaha owner started doing startup investment and set up Yamaha Ventures in the Bay Area, California. So back then it was all about balance sheet investment all deal are sourced by the team in the Bay Area but all deals go, need to go through management committee in parenting company side. So I was in the parenting company side to get through the global discussing this, my management committee members. I was doing such kind of stuff. And so after spending like the, doing few first few the of the balance sheet investments Yamaha also I was in I was part of the new business development division and Yamaha wanted to try something new to create new business internally. And Yamaha created a spin out startup. And I was stationed to the startup and led the business development, product development, et cetera, for two years. And we hit the milestone. And I came back to the parent company to found and also lead the the group of digital transformation. And I was leading two teams like digital marketing and also data analytics team and internal consulting group slash implementation partner to help each business unit globally to transform themselves using the power of digital technologies. Then last year January, 2022, I got opportunity to lead Yamaha Ventures in the Bay Area and I took this role and responsibility. And so far it's been really exciting and played challenging time and I quite enjoy working in this environment.
[00:03:37] Nicolas Sauvage: Thank you Kei. It's interesting so TDK is the same, 90% of the sales is outside Japan. One part of your experience, which is quite unique compared to other people I've interviewed is your experience of spinning out a startup and being involved with that startup. Can you talk about that experience and how useful it is for your job today as a head of a CVC?
[00:04:05] Kei Onishi: Sure. Back then Yamaha had only Yamaha has been only focusing on, in, in organic business development. Completely focused on internal development and maybe, yeah. Also we have some M&A, so like in organic or organic. So Yamaha wanted to try something different way to nudge your new business ideas. Ideas from in, in ideas are generated internally, but help the idea to hatch how having like external, resources or capabilities. So Yamaha actually invested into one VC and is a VC in Japan and the venture capital established one the sort of sub. But independent company under the fund and the LP can send the transfer the idea and also stationing one or two people to the company and the VC provides like capital and also the support and many kinds of support to the company to help them help the idea. To hatch. That was a, one of the new interesting way to nurture or sort of acceleration program. But it was pretty interesting one. So the idea of the business of the startup is I call gasoline environmental air quality environmental information using mobility. So we are mobility company. Back then we had an idea that. Why don't we use our mobility as a sort of fraud to gather environmental information? And I think it's, it was really too early to focus on sustainability or environment back then, but yeah, it was really great interesting idea. And similar to I think ACME I think Google invested into the company and that was our idea. And learnings from the experience was really enormous. I didn't realize how hard it is to start a company and starting from, incorporation and doing day to day and day stuff, and the hiring and business planning and going to customer and get rejected. And go and modify your product define your product and business model, and go to the clients again and again. And that's Andres, Andres journey. I didn't, you wouldn't be able to have that kind of experience if you are just a part of large corporation. So EE became I was, yeah, if I could do that, I would do it again, but I. It's I finally understood that's a startup life. You wouldn't be able to really, understand it from bottom of very hard without doing that. That's why I can, of course I didn't succeed as at Unicorn startup, but at least it helped me to understand what kind of. Support we should do to the, our to our portfolio companies. We are putting our foot into their shoes and that's help. It is really helpful for me running the CVC program,
[00:07:24] Nicolas Sauvage: I really like the way you answered, actually, first, I like the, some of the words you use, which is like nurture and hatch, like an egg hatching. Yeah. But also, and this is part of the hatching process, how hard it is to start a business. Yes. And what I like is that then you link that experience to empathy and understanding of how to support these young startups. So maybe I want to double click on that part. What it is that you've learned from that experience, which now you are very sensitive on how to support maybe one or two examples of what you do.
[00:07:59] Kei Onishi: Yeah the most important point most important thing I always keep in my mind is always we need to put the startup or entrepreneurs up, that at the core of first. Of course we can, maybe as a investor it's a, sometimes it's mixture. Like for example, Yamaha has a robotics business in it. And let's say we invest into robotic startup and potentially we can sell our units to the startup as a sort of, the under commercial agreement. But, or maybe asking the startup to have a agreement to always use our product, not the competitor that's not, That, that's not how we should do. They have their limitation. They have their own goals and mission. So we always need to respect that the, our portfolio company's direction first, not the, our interest. That's also challenge for CVC. But we, that's why Yamaha Motor Ventures is a separate entity from parent and company, and we have fund, so we have an independent decision making and move. So that's why we are very keen about, the having a light, wall or production from the, we really need to protect both side startup fund and also views. And what we are doing. Maybe I can share some examples how we support that.
[00:09:21] Nicolas Sauvage: Yep.
[00:09:21] Kei Onishi: Usually, CVC or management or views would say you know what how should we create like a win-win, relationship. We get something and they get something and we, it's waiting. Of course, it's an ideal word. If we can. Start building such a kind of engagement from the beginning, that would be great. Fantastic. But what we are doing right now is more focusing on how what we can give first. Give and give. What kind of support we can do that. And yeah. So one company one of the portfolio companies we highly engaging right now is auto balanced from technologies they are developing. The autonomous strawberry harvester you can Google the company and they are in the process of, ramping up the production, like scaling phase. But, prototyping few units, few machines. And also mass production, there are a huge gap. Very different. Very different, right? You need to have design for manufacturing and also you need to have a proper process for R&D manufacturing and also maybe support in the field as well. And so we sent two engineers from parenting company to the startup as a full-time employee. So one has the background in the R&D of motorcycles, and also he has he has been engineer for motor GP like F1 for motorcycle. And he was an engineer for motor GP in motor, excuse me. And he so he can help like design for manufacturing process. And another person is a software engineer. He can do like simulation for design. Strawberry or in any kinds of foods, there is seasonality. Yes. So if you wanna try, let's say apple if you miss something in this season, you'll need to wait another year. So you wouldn't be able to have the testing process. Advanced from technology lead rely on like simulation based testing for especially machine learning or image processing part.
[00:11:37] So the person the one in software engineer from our company help on that. We, we don't have, Yamaha doesn't have any commercial agreement with the company right now, but solely. We take those two engineers, they are super smart and good engineers. They're quite talented. Even business units want to keep them. But we decided to have those two taking up from existing businesses and stations to the startup. So we do. We do it. And also not only physically, they are in u in us, but not only physically, but also remotely. We support data analytics company asking getting support from my previous team. Digital transformation digital strategic division. Two data scientists are supporting one of our portfolio companies as well, remotely. So it depends on like the situation of the company. And also types of the job, but I think directly offering the human resources that can solve the challenge immediately is really what we are focusing on, like pushing for right now. And for us they are enjoying the work, enjoy, they enjoying working with in startup equals startup world. And they. They grow super rapidly and understanding the different work style and also that's similar to what I've experienced in the business school. You have, if you are only in Yamaha, the only thing you can learn is the Yamaha way. And there is no chance to learn other company's way. But maybe if you move to other large corporation, automotive part, maybe not that much different, but. Suddenly you go to startup World and know there are tons of things that they are not doing well compared to our view, but that's how they learn the business at their stage. So they can see Yamaha from outsiders view and also they can see themselves that from start, like engineer, engineers view like startup engineers view. That. That's been very beneficial for that, those individuals. And also young.
[00:13:56] Nicolas Sauvage: So you mentioned two golden nuggets. One is that win-win doesn't mean that you force products on your portfolio companies, which would be actually the wrong way to do it. So I think that's one. The second one is finding the right time to help, which is not necessarily right at the moment of investments, but maybe at the time of scaling. And then you mentioned something which I want to double click, which is really about the opportunities for these employees of Yamar Motors to be able to go and engage with startups. I want to talk about something you mentioned earlier, which is, your company started making startups investment in 2015 from balance sheet and then moved away from balance sheet investment into fund when you joined, I think in January, 2022. Can you talk about the pros and cons of balance sheet and what drove to that change to be fund based?
[00:14:54] Kei Onishi: Okay. We currently let me talk a little bit about what we are doing right now. So currently we have, we take hybrid approach, so we still do the off the balance sheet investment led by BUs and highly strategic and also we have fund balancing the strategic benefit and also financial benefit as well.
[00:15:18] Nicolas Sauvage: Oh I see, you do both!
[00:15:20] Kei Onishi: Yeah. Currently we do both. Then let me talk about the history. So 2015 we were doing, I started started investment as a balance sheet. The investment and legal waste amount is even, it's a one US dollar investment. We had to get approval form the top. That was the deal. And, but of course it was for us, it wasn't necessarily a process. I feel. We need to give enough information and exposure about the startups and also how what CVC and what's investment to help top management to get up to the speed they shouldn't make decision on what they don't know so at first it it's a we load everything to them and how other companies are doing. And also each deal l we exchange deal pretty in detail. And it, it was really necessarily in great time to help them to get up to speed and not them, but Yamaha as a whole. But the challenge is it takes so long time and There are,
[00:16:31] Nicolas Sauvage: When you say long time, you mean two months, six months?
[00:16:36] Kei Onishi: Maximum, probably six months is okay. Okay. Yeah. And we were in such kind of pace we would be kicked out from good deals. Yep. And that, that's one challenge. And also after I started doing CDL investment, There are types of companies that are actually in between, BUs interest and also little bit agency area or more like exploratory area. So all of the, all types of deals, like the pretty core horizon one, horizon two, horizon three, those are actually mixing up in balance sheet deals. But, I think we think, we thought that, investment criteria, additional making process for pretty much core area core business area investment should be different from exploratory investment. Timescale is different. How we do the due diligence is different. So we believe that, just mixing up two into one market of the balance sheet deal was not good. So in 2019, we decided to have the hybrid approach, highly strategic BU led investment. A BU led engagement or investment should be led by bu using off the balance sheet, using balance sheet capital, but little bit, agency areas or like extraordinary areas from our core businesses that should be taken care by fund so that we can make decision in quite in the agile way. We don't need to have the BUs buy-in or commercial agreement requirements, something like that. But still, we wouldn't miss the opportunity to identify and capture the important to trend technical trend and the business trend, the potentially impactful for Yamaha in next five to 10 years. If we just have balance sheet deals, we'll probably miss the opportunity.
[00:18:43] Nicolas Sauvage: Let me test a little bit. I like the hybrid because it gives you options. Lemme double click on this hybrid mode. So you have balance sheet, very strategic driven by the business group then you have the fund. But my understanding of your fund is it's still very strategic. You don't have a very high financial goal beyond not losing money. It's still about strategy on the exploration side. Can you double click on this?
[00:19:09] Kei Onishi: Yeah, sure. We have currently two funds and the first fund focus was more like exploratory agency areas. But in these days, like we are really moving like shifting our forecast areas to closer to core businesses not the core, but like agency area, I would say. The reason why we are doing like this is to, to bring back the tangible strategic benefits to the parent company. A little bit shorter, short timeframe, not waiting for five or 10 years. Also like they're just simply investing into completely new areas for maybe. Yeah we invest in agriculture and also healthcare-wellness area as well. But technically we don't have the BU like agriculture BU or healthcare BU. So we have of course the advanced part technology I described is agricultural company, and we have a capability to support that. But if we keep investing into quite, exploratory area we don't have capability to support those companies. And also it's getting a little bit difficult to finding a landing place after the investment. But still we have like strategic the areas we want to build up new business like agriculture or health or medical. So we keep doing that. But at the same time, we need to balance the, the proximity to the core businesses. Not only core business, but more like the ancy to our core capabilities. If we have capabilities, we would be able to build a business or we would be able to help startups. But if there is no deviancy in our capabilities. It's challenging, so that's why we are taking modifying the focus areas in this case.
[00:21:06] Nicolas Sauvage: Very interesting. So maybe let me ask a few questions about this proximity getting closer to the core because typically that would be corporate R&D looking into it. So how do you align with corporate R&D, whether it's too close to what they were planning to do anyway, and is there a certain way where you align, you cooperate, or you create a wall between you.
[00:21:29] Kei Onishi: Yeah. I say we are quite aligned because our mothership organization is corporate R&D. So there are focus areas are like agriculture or mobility service or healthcare. We, they have a small, like new types of mobility. They have four core strategic areas. They are trying to build up new business and so we, we have alignment, but not I would say loosely tight. Because loosely tight if we completely, a line, it would limit. Our capability to look at like missing of like opportunities like the missed from parent mothers viewpoint. So of course we tie, but quite loosely tied, I would say.
[00:22:22] Nicolas Sauvage: Okay. Very interesting. And so when you look at these companies that are quite close to the core, the question would be about would they become M&A target? How do you think about it and how do you communicate about it?
[00:22:38] Kei Onishi: Yeah, you mentioned about the wall. That's like M&A CVC, that's like the street, a street maybe set wall between CVC and M&A. Yes, our portfolio companies can be like on the list of target and the list or whatever, like short list, long list, whatever it is. Yes they can be our target, but it's completely up to parenting companies decision making. So we are staying away from the discussion as a CVC because we want to keep supporting the startup and also maximizing their value as well. That's why we decided to set up Yamaha Motor Ventures. So we, we are different entity. We are service company, we are not tech company or in a mobility company. Yes, that's do we have m. Impairing company side and also each BUs have planning or strategic group think about like in organic growth, including M&A. So that's their role and responsibility.
[00:23:40] Nicolas Sauvage: That's another golden nugget, I think, which is this very clear separation, which is all about, like you mentioned very early being entrepreneurs first. I want to touch on the investment decision making. So clearly you have a hybrid model, and I think you clarified about the balance sheet investment. But for the fund do you need business group to champion an investment? How big is your investment committee? Who is in your investment committee?
[00:24:07] Kei Onishi: Yeah, so for fund side the investment committee we have six investment committee members and three are from baring. Three are from bus and list are from Yamaha Ventures. And so we don't need to have a champion from values to each investment, but we get feedback or, assessment from the, not like in champion or buying, but more like how do you think about this company and this business model, this technology, you are the expert. How do you think? And that if potentially, let's say if you investing, what kind of potential collaboration can be done? Don't think about the timeframe, but what kind of opportunities we have. To build like a win-win kind of relationship in mid to long term. So we have that kind of conversation with each views and get feedback and share the feedback to the IC members to help them to understand, how internal people see the technology and also the business model.
[00:25:14] Nicolas Sauvage: Very nice. Kei, I am so glad you could join today, and thank you again for all the insights and being so transparent about how you are building. Your CVC and engaging with entrepreneurs bringing value at the right time over time!
[00:25:30] Kei Onishi: Thank you so much, Nicolas.
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[00:00:00] Nicolas Sauvage: Welcome to the Corporate Venturing Insider series! Where I interview top practitioners in the CVC world and learn with you the best practices and golden nuggets that they have accumulated over their career. In this episode we will be learning from Kei Onishi, CEO and Managing Director of Yamaha Motor Ventures. K could you take a few minutes to share your story and how you got to where you are today?
[00:00:24] Kei Onishi: Thank you so much for having me here. It's my pleasure to share my personal and as a professional solely here. I studied about mechanical engineering and robotics in university and also grad school. And I joined Yamaha in 2008 so in the middle of financial crisis. So I was super passionate about, mobility cars and motorcycles. And also I wanted to work in the company that has enough exposure to overseas market outside of Japan and Yamaha. Yamaha has 90% of revenue comes from overseas, outside of which they know Yam is quite multinational company. So I joined Yam as a manufacturing engineer. So I spent first few years as a manufacturing engineer, setting up a new production line on the design, the production process for the craft shaft, which is a component for ice engine products. Then in 2012, I got some opportunity to study in the US. So I went to business school and I studied the business and the motivation for me to go to business school solely about like my the passion towards innovation. After that in 2015 I came back to the Mothership Yamaha Corporation, which is mothership of US Yamaha Ventures. And 2015 was actually the year that Yamaha owner started doing startup investment and set up Yamaha Ventures in the Bay Area, California. So back then it was all about balance sheet investment all deal are sourced by the team in the Bay Area but all deals go, need to go through management committee in parenting company side. So I was in the parenting company side to get through the global discussing this, my management committee members. I was doing such kind of stuff. And so after spending like the, doing few first few the of the balance sheet investments Yamaha also I was in I was part of the new business development division and Yamaha wanted to try something new to create new business internally. And Yamaha created a spin out startup. And I was stationed to the startup and led the business development, product development, et cetera, for two years. And we hit the milestone. And I came back to the parent company to found and also lead the the group of digital transformation. And I was leading two teams like digital marketing and also data analytics team and internal consulting group slash implementation partner to help each business unit globally to transform themselves using the power of digital technologies. Then last year January, 2022, I got opportunity to lead Yamaha Ventures in the Bay Area and I took this role and responsibility. And so far it's been really exciting and played challenging time and I quite enjoy working in this environment.
[00:03:37] Nicolas Sauvage: Thank you Kei. It's interesting so TDK is the same, 90% of the sales is outside Japan. One part of your experience, which is quite unique compared to other people I've interviewed is your experience of spinning out a startup and being involved with that startup. Can you talk about that experience and how useful it is for your job today as a head of a CVC?
[00:04:05] Kei Onishi: Sure. Back then Yamaha had only Yamaha has been only focusing on, in, in organic business development. Completely focused on internal development and maybe, yeah. Also we have some M&A, so like in organic or organic. So Yamaha wanted to try something different way to nudge your new business ideas. Ideas from in, in ideas are generated internally, but help the idea to hatch how having like external, resources or capabilities. So Yamaha actually invested into one VC and is a VC in Japan and the venture capital established one the sort of sub. But independent company under the fund and the LP can send the transfer the idea and also stationing one or two people to the company and the VC provides like capital and also the support and many kinds of support to the company to help them help the idea. To hatch. That was a, one of the new interesting way to nurture or sort of acceleration program. But it was pretty interesting one. So the idea of the business of the startup is I call gasoline environmental air quality environmental information using mobility. So we are mobility company. Back then we had an idea that. Why don't we use our mobility as a sort of fraud to gather environmental information? And I think it's, it was really too early to focus on sustainability or environment back then, but yeah, it was really great interesting idea. And similar to I think ACME I think Google invested into the company and that was our idea. And learnings from the experience was really enormous. I didn't realize how hard it is to start a company and starting from, incorporation and doing day to day and day stuff, and the hiring and business planning and going to customer and get rejected. And go and modify your product define your product and business model, and go to the clients again and again. And that's Andres, Andres journey. I didn't, you wouldn't be able to have that kind of experience if you are just a part of large corporation. So EE became I was, yeah, if I could do that, I would do it again, but I. It's I finally understood that's a startup life. You wouldn't be able to really, understand it from bottom of very hard without doing that. That's why I can, of course I didn't succeed as at Unicorn startup, but at least it helped me to understand what kind of. Support we should do to the, our to our portfolio companies. We are putting our foot into their shoes and that's help. It is really helpful for me running the CVC program,
[00:07:24] Nicolas Sauvage: I really like the way you answered, actually, first, I like the, some of the words you use, which is like nurture and hatch, like an egg hatching. Yeah. But also, and this is part of the hatching process, how hard it is to start a business. Yes. And what I like is that then you link that experience to empathy and understanding of how to support these young startups. So maybe I want to double click on that part. What it is that you've learned from that experience, which now you are very sensitive on how to support maybe one or two examples of what you do.
[00:07:59] Kei Onishi: Yeah the most important point most important thing I always keep in my mind is always we need to put the startup or entrepreneurs up, that at the core of first. Of course we can, maybe as a investor it's a, sometimes it's mixture. Like for example, Yamaha has a robotics business in it. And let's say we invest into robotic startup and potentially we can sell our units to the startup as a sort of, the under commercial agreement. But, or maybe asking the startup to have a agreement to always use our product, not the competitor that's not, That, that's not how we should do. They have their limitation. They have their own goals and mission. So we always need to respect that the, our portfolio company's direction first, not the, our interest. That's also challenge for CVC. But we, that's why Yamaha Motor Ventures is a separate entity from parent and company, and we have fund, so we have an independent decision making and move. So that's why we are very keen about, the having a light, wall or production from the, we really need to protect both side startup fund and also views. And what we are doing. Maybe I can share some examples how we support that.
[00:09:21] Nicolas Sauvage: Yep.
[00:09:21] Kei Onishi: Usually, CVC or management or views would say you know what how should we create like a win-win, relationship. We get something and they get something and we, it's waiting. Of course, it's an ideal word. If we can. Start building such a kind of engagement from the beginning, that would be great. Fantastic. But what we are doing right now is more focusing on how what we can give first. Give and give. What kind of support we can do that. And yeah. So one company one of the portfolio companies we highly engaging right now is auto balanced from technologies they are developing. The autonomous strawberry harvester you can Google the company and they are in the process of, ramping up the production, like scaling phase. But, prototyping few units, few machines. And also mass production, there are a huge gap. Very different. Very different, right? You need to have design for manufacturing and also you need to have a proper process for R&D manufacturing and also maybe support in the field as well. And so we sent two engineers from parenting company to the startup as a full-time employee. So one has the background in the R&D of motorcycles, and also he has he has been engineer for motor GP like F1 for motorcycle. And he was an engineer for motor GP in motor, excuse me. And he so he can help like design for manufacturing process. And another person is a software engineer. He can do like simulation for design. Strawberry or in any kinds of foods, there is seasonality. Yes. So if you wanna try, let's say apple if you miss something in this season, you'll need to wait another year. So you wouldn't be able to have the testing process. Advanced from technology lead rely on like simulation based testing for especially machine learning or image processing part.
[00:11:37] So the person the one in software engineer from our company help on that. We, we don't have, Yamaha doesn't have any commercial agreement with the company right now, but solely. We take those two engineers, they are super smart and good engineers. They're quite talented. Even business units want to keep them. But we decided to have those two taking up from existing businesses and stations to the startup. So we do. We do it. And also not only physically, they are in u in us, but not only physically, but also remotely. We support data analytics company asking getting support from my previous team. Digital transformation digital strategic division. Two data scientists are supporting one of our portfolio companies as well, remotely. So it depends on like the situation of the company. And also types of the job, but I think directly offering the human resources that can solve the challenge immediately is really what we are focusing on, like pushing for right now. And for us they are enjoying the work, enjoy, they enjoying working with in startup equals startup world. And they. They grow super rapidly and understanding the different work style and also that's similar to what I've experienced in the business school. You have, if you are only in Yamaha, the only thing you can learn is the Yamaha way. And there is no chance to learn other company's way. But maybe if you move to other large corporation, automotive part, maybe not that much different, but. Suddenly you go to startup World and know there are tons of things that they are not doing well compared to our view, but that's how they learn the business at their stage. So they can see Yamaha from outsiders view and also they can see themselves that from start, like engineer, engineers view like startup engineers view. That. That's been very beneficial for that, those individuals. And also young.
[00:13:56] Nicolas Sauvage: So you mentioned two golden nuggets. One is that win-win doesn't mean that you force products on your portfolio companies, which would be actually the wrong way to do it. So I think that's one. The second one is finding the right time to help, which is not necessarily right at the moment of investments, but maybe at the time of scaling. And then you mentioned something which I want to double click, which is really about the opportunities for these employees of Yamar Motors to be able to go and engage with startups. I want to talk about something you mentioned earlier, which is, your company started making startups investment in 2015 from balance sheet and then moved away from balance sheet investment into fund when you joined, I think in January, 2022. Can you talk about the pros and cons of balance sheet and what drove to that change to be fund based?
[00:14:54] Kei Onishi: Okay. We currently let me talk a little bit about what we are doing right now. So currently we have, we take hybrid approach, so we still do the off the balance sheet investment led by BUs and highly strategic and also we have fund balancing the strategic benefit and also financial benefit as well.
[00:15:18] Nicolas Sauvage: Oh I see, you do both!
[00:15:20] Kei Onishi: Yeah. Currently we do both. Then let me talk about the history. So 2015 we were doing, I started started investment as a balance sheet. The investment and legal waste amount is even, it's a one US dollar investment. We had to get approval form the top. That was the deal. And, but of course it was for us, it wasn't necessarily a process. I feel. We need to give enough information and exposure about the startups and also how what CVC and what's investment to help top management to get up to the speed they shouldn't make decision on what they don't know so at first it it's a we load everything to them and how other companies are doing. And also each deal l we exchange deal pretty in detail. And it, it was really necessarily in great time to help them to get up to speed and not them, but Yamaha as a whole. But the challenge is it takes so long time and There are,
[00:16:31] Nicolas Sauvage: When you say long time, you mean two months, six months?
[00:16:36] Kei Onishi: Maximum, probably six months is okay. Okay. Yeah. And we were in such kind of pace we would be kicked out from good deals. Yep. And that, that's one challenge. And also after I started doing CDL investment, There are types of companies that are actually in between, BUs interest and also little bit agency area or more like exploratory area. So all of the, all types of deals, like the pretty core horizon one, horizon two, horizon three, those are actually mixing up in balance sheet deals. But, I think we think, we thought that, investment criteria, additional making process for pretty much core area core business area investment should be different from exploratory investment. Timescale is different. How we do the due diligence is different. So we believe that, just mixing up two into one market of the balance sheet deal was not good. So in 2019, we decided to have the hybrid approach, highly strategic BU led investment. A BU led engagement or investment should be led by bu using off the balance sheet, using balance sheet capital, but little bit, agency areas or like extraordinary areas from our core businesses that should be taken care by fund so that we can make decision in quite in the agile way. We don't need to have the BUs buy-in or commercial agreement requirements, something like that. But still, we wouldn't miss the opportunity to identify and capture the important to trend technical trend and the business trend, the potentially impactful for Yamaha in next five to 10 years. If we just have balance sheet deals, we'll probably miss the opportunity.
[00:18:43] Nicolas Sauvage: Let me test a little bit. I like the hybrid because it gives you options. Lemme double click on this hybrid mode. So you have balance sheet, very strategic driven by the business group then you have the fund. But my understanding of your fund is it's still very strategic. You don't have a very high financial goal beyond not losing money. It's still about strategy on the exploration side. Can you double click on this?
[00:19:09] Kei Onishi: Yeah, sure. We have currently two funds and the first fund focus was more like exploratory agency areas. But in these days, like we are really moving like shifting our forecast areas to closer to core businesses not the core, but like agency area, I would say. The reason why we are doing like this is to, to bring back the tangible strategic benefits to the parent company. A little bit shorter, short timeframe, not waiting for five or 10 years. Also like they're just simply investing into completely new areas for maybe. Yeah we invest in agriculture and also healthcare-wellness area as well. But technically we don't have the BU like agriculture BU or healthcare BU. So we have of course the advanced part technology I described is agricultural company, and we have a capability to support that. But if we keep investing into quite, exploratory area we don't have capability to support those companies. And also it's getting a little bit difficult to finding a landing place after the investment. But still we have like strategic the areas we want to build up new business like agriculture or health or medical. So we keep doing that. But at the same time, we need to balance the, the proximity to the core businesses. Not only core business, but more like the ancy to our core capabilities. If we have capabilities, we would be able to build a business or we would be able to help startups. But if there is no deviancy in our capabilities. It's challenging, so that's why we are taking modifying the focus areas in this case.
[00:21:06] Nicolas Sauvage: Very interesting. So maybe let me ask a few questions about this proximity getting closer to the core because typically that would be corporate R&D looking into it. So how do you align with corporate R&D, whether it's too close to what they were planning to do anyway, and is there a certain way where you align, you cooperate, or you create a wall between you.
[00:21:29] Kei Onishi: Yeah. I say we are quite aligned because our mothership organization is corporate R&D. So there are focus areas are like agriculture or mobility service or healthcare. We, they have a small, like new types of mobility. They have four core strategic areas. They are trying to build up new business and so we, we have alignment, but not I would say loosely tight. Because loosely tight if we completely, a line, it would limit. Our capability to look at like missing of like opportunities like the missed from parent mothers viewpoint. So of course we tie, but quite loosely tied, I would say.
[00:22:22] Nicolas Sauvage: Okay. Very interesting. And so when you look at these companies that are quite close to the core, the question would be about would they become M&A target? How do you think about it and how do you communicate about it?
[00:22:38] Kei Onishi: Yeah, you mentioned about the wall. That's like M&A CVC, that's like the street, a street maybe set wall between CVC and M&A. Yes, our portfolio companies can be like on the list of target and the list or whatever, like short list, long list, whatever it is. Yes they can be our target, but it's completely up to parenting companies decision making. So we are staying away from the discussion as a CVC because we want to keep supporting the startup and also maximizing their value as well. That's why we decided to set up Yamaha Motor Ventures. So we, we are different entity. We are service company, we are not tech company or in a mobility company. Yes, that's do we have m. Impairing company side and also each BUs have planning or strategic group think about like in organic growth, including M&A. So that's their role and responsibility.
[00:23:40] Nicolas Sauvage: That's another golden nugget, I think, which is this very clear separation, which is all about, like you mentioned very early being entrepreneurs first. I want to touch on the investment decision making. So clearly you have a hybrid model, and I think you clarified about the balance sheet investment. But for the fund do you need business group to champion an investment? How big is your investment committee? Who is in your investment committee?
[00:24:07] Kei Onishi: Yeah, so for fund side the investment committee we have six investment committee members and three are from baring. Three are from bus and list are from Yamaha Ventures. And so we don't need to have a champion from values to each investment, but we get feedback or, assessment from the, not like in champion or buying, but more like how do you think about this company and this business model, this technology, you are the expert. How do you think? And that if potentially, let's say if you investing, what kind of potential collaboration can be done? Don't think about the timeframe, but what kind of opportunities we have. To build like a win-win kind of relationship in mid to long term. So we have that kind of conversation with each views and get feedback and share the feedback to the IC members to help them to understand, how internal people see the technology and also the business model.
[00:25:14] Nicolas Sauvage: Very nice. Kei, I am so glad you could join today, and thank you again for all the insights and being so transparent about how you are building. Your CVC and engaging with entrepreneurs bringing value at the right time over time!
[00:25:30] Kei Onishi: Thank you so much, Nicolas.
