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D-POPS GROUP’s CVC Investment Activities: Finding New Members for Our Ecosystem

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2025.05.12

*For more details, please read “Venture Ecosystem: A Platform for Growth and Sustainability”.

As part of these dynamic efforts, we conduct Corporate Venture Capital (CVC) investment with our annually-generated profits to support other startup companies. Below is an expanded account of these activities.

1. Investment Criteria

Many companies engage in CVC investment activities, but generally, their contributions to the profits and success rates of their investments are small. However, D-POPS GROUP focuses not merely on pursuing profits, but on building Ecosystem partnerships. We establish basic policies and conduct activities based on ways in which our more than 20 group companies (more than 50 companies if you include investments) can improve and grow.

A. Business Domains

① “Real Business × Technology × Group Synergy”, and most important: “× People”

We look for companies that exhibit more than one of these four foundational elements. Our group’s origins in mobile phone retail shops, human resource businesses, and subsequent new expansion into solutions and technology businesses give us unique strengths in real-world economic activities—dealing with physical stores, property, and tangible assets. No matter how widespread AI becomes, a human’s hands-on touch will always be needed for final tuning. We believe human capabilities will become even more important in the future. AI is merely a tool to maximize human potential, and we want to support initiatives that empower people. Finally, we emphasize the utilization of technology as a foundation.

While not all elements need to be present, we first confirm how many of them exist or if there is extraordinary strength in any one area.

② Preferably focused on ICT/DX domains

If a business is related to information and communication technology or digital transformation, this makes for easier and more immediate knowledge sharing, collaboration within the group, and joint sales activities. This is not a make-or-break issue, but creating synergies with group companies is one of our foundational elements.

③ Addresses important social issues and has high market growth potential

Our group believes that “companies are public institutions of society” and does not conduct business solely for profit. Whether the startup truly addresses important social issues is a key consideration. Naturally, we also examine whether the market is growing and whether the target company has clear competitive advantages within that growth area.

B. Ideal Founder Profile

Diversity is important for Ecosystem growth. However, within that diversity, there are still certain personality traits that we think are necessary. D-POPS GROUP considers whether the founders and management of target investment companies fit the following profile as an important criterion for welcoming them as partners:

① Entrepreneurs with strong social contribution awareness and determination to transform society
② Those who embrace challenges with entrepreneurial spirit
③ Those who demonstrate sincerity, humility, gratitude, honesty, frugality, and tenacity

C. Stages and Models

We don’t have strong preferences regarding the fundraising stages or business models that typical VC funds clearly define. Instead, we provide broad support from seed to Series A, B, and later stages. Whether B2C or B2B, our group includes companies with various models, and our advisors have diverse experiences, allowing us to accompany startups according to their needs.

If we had to choose a preference, it would be subscription-based revenue models or platform-type business models. This is because we believe such models align with our culture of valuing people, prioritizing long-term customer relationships, and ensuring stable growth of the entire Ecosystem.

2. Investment Results for Fiscal Year 2024

D-POPS GROUP was already conducting CVC investment activities prior to 2024, but in that fiscal year, we established an investment committee and advanced our activities in accordance with our investment policies. This means that for all candidate companies, we follow a process where the investment committee deliberates, and only with unanimous agreement does it submit an application to the CEO. After conducting appropriate due diligence, only when all requirements are met do we enter into an investment agreement. As a result, in fiscal year 2024 (March 2024 to February 2025), we invested in the following eight startup companies:
① fluctlight inc. (https://fluctlight.ai/)
With the corporate philosophy of “solving Japan’s labor shortage by developing convenient AI-powered services to realize enriched lives for people”, this company is working on developing new services using generative AI technology.

② The Salons Japan Inc. (*Capital and Business Alliance) (https://www.thesalons.co/)
With the motto “True independence for beauticians”, this company develops and operates “THE SALONS”, a chain of private salon studios. This is truly a real-world business that supports people with specialized skills.

③ Adora Inc. (https://www.kodomamo.com/)
A startup developing and operating “Kodomamo”, an AI-powered parental control app. Their focus on protecting children while utilizing AI is well-aligned with our investment policy.

④ X-Locations Inc. (https://www.x-locations.com/)
This company aims to “combine, analyze, and visualize various location and spatial information in meaningful ways, making it accessible to everyone”. With many existing customers, they met our investment criteria.

⑤ Lezily Inc. (https://corp.lezily.com/)
Through “Japan’s first private mental training directed at moving beyond simply having ‘guts and perseverance’”, this company’s vision is to eliminate mental health issues in the world. We resonated with their dedication to valuing people.

⑥ BLUEISH Inc. (https://www.blueish.co.jp/)
With the philosophy of “Creating the future with AI and infinitely expanding business possibilities”, this company supports the efficiency of business processes. We decided to invest due to their executive leadership’s character and deep knowledge of AI.

⑦ Payke, Inc. (https://payke.co.jp/)
A company developing and operating “Payke”, a shopping support app for customers coming from overseas. This app is one of the most used by international visitors and represents a business that truly exemplifies the elements of real-world interaction and people.

⑧ WORKPORT, Inc. (https://www.workport.co.jp/)
With the mission of “Connecting people and companies to their desired future with limitless integrity and extreme rationality”, they are a recruitment and talent development company. We support their creation of a “reliable port of call for working people”.

For a more complete picture of our investment portfolio, please visit:
https://d-pops-group.co.jp/en/group/
https://d-pops-group.co.jp/en/press-release/

3. Post-Investment Support Activities

In our group’s CVC activities, we place special importance on supporting the business operations of the companies in which we invest. Below is just a short introduction of these support activities.

A. Trial Implementation at Group Companies

We have allowed test usage of services and products from Lezily, X-Locations, and BLUEISH at some of our group companies. This has enabled us to provide feedback on user experience and obtain hints for business development opportunities, preparing for future collaboration.

B. Collaboration with Group Companies

For Adora, we are introducing their contract services at all TOP1 mobile phone shops operated by D-POPS, while also negotiating nationwide distribution through carrier shops and electronics retailers’ smartphone stores with support from Advancer (another of our group companies). Additionally, we are working with BLUEISH and two other group companies to develop new business solutions.

C. Development of New Customers and Collaboration Partners

For almost all of our investment targets, we have introduced potential new customers and major companies that could become distribution partners. Thanks to our advisors’ extensive networks and companies within our Ecosystem tackling the same societal issues, these connection activities have progressed relatively smoothly.

D. Other Management Consulting

At first glance, The Salons Japan may appear to have no synergy with our other companies, but their private salon studios development and subleasing model is essentially a real estate business in disguise. Similarly, D-POPS’ expansion of mobile phone shop networks can also be considered a real estate business. Regular discussions between these executives have contributed to store development strategies that enhance brand power.

In this way, we are pouring our efforts into supporting companies that have newly joined our Ecosystem by providing what startup companies often lack: human resources, customer base, organizational strength, networks, and experience. In D-POPS GROUP’s CVC investment activities, we emphasize these support activities even more than financial backing.

4. Future Vision

As mentioned in our column article “Venture Ecosystem: A Platform for Growth and Sustainability”, D-POPS GROUP intentionally upholds collaboration, mutual learning, and assistance within the Ecosystem. As a concrete implementation of these values, we have recently started the following activities:

A. Business Introduction & Networking Events

We have begun organizing events where founders of newly invested startups give presentations about their businesses, followed by Q&A sessions and networking gatherings in the evening. The leaders of our group companies are all filled with entrepreneurial spirit, so they are greatly interested in the business models of thriving startups, stories of overcoming tremendous challenges, and the perspectives of uniquely talented entrepreneurs. These stories provide inspiration, and good questions lead to discovering seeds of new ideas for each other. After the formal event the participants move to a drinking establishment, where the presenters face nothing but more questions in what amounts to a second round of climactic interaction.

So far, we have had presentations from Mr. Tameto, CEO of BLUEISH, and Mr. Furuta, CEO of Payke. We hope to hold study sessions like these approximately once a month, inviting many of the companies within our Ecosystem to present and organizing them around certain topics.

Furthermore, as measures to help the entire Ecosystem grow and persist, regardless of investment ratio, we are considering adding the following activities in the future:

B. Exchange

We want to facilitate exchanges and information sharing between members of different companies who hold similar positions or roles (CxOs, engineers, marketers, etc.) to inspire each other. We aim to create systems that enable short-term secondments, temporary relocations, and even personnel transfers within the Ecosystem.

C. Mutual Aid

If there is a temporary shortage of personnel at Company A, such as during the launch of new routes or systems, personnel from Company B—which has sufficient staff at the time—can be sent to Company A to help them. In the same way, if Company B finds themselves in the same situation, Company C can send personnel to aid them, too.

D. Alumni Network

Eventually, within our group, there will likely be executives who successfully exit through IPOs or profitable business transfers. Other members may graduate from our group’s companies. However, if they continue to hold onto our group’s philosophies and personal values like integrity, humility, and gratitude, these alumni remain our friends and allies. They may participate as lecturers in our study sessions or serve as temporary substitute executives to rebuild underperforming companies.

Above, we have briefly introduced D-POPS GROUP’s investment policies and the group’s investment activities in FY2024. This is just one part of D-POPS GROUP’s efforts to realize a Venture Ecosystem.

We appreciate your continued support and encouragement.

Written by D-POPS GROUP Advisor Genta Sugihara

Venture Ecosystem: A Platform for Growth and Sustainability

At D-POPS GROUP, we understand a “Venture Ecosystem” to be a dynamic platform that enhances the growth and sustainability of a community of enterprises. United by a shared identity and philosophy, these companies continuously innovate to address critical social challenges through groundbreaking business models. We are committed to making this ideal a reality through daily strategic efforts and unwavering dedication. Below is an expanded explanation of a Venture Ecosystem. 1. What is a “venture company”? In Japan, startup companies—whether in the early stages of seed financing or the late stages of major corporate development—are also known as venture companies. Kotobank, a Japanese online dictionary, contains the following definition: During times of transition in industrial structures, the leading role of industry changes, new businesses that did not exist before are born in cutting-edge fields, and new markets are created. Companies that rapidly invent unique technologies and products according to the needs of such times are called “venture companies”. To put it a little more broadly, if a culture of challenge permeates a company from the top executives to the employees, and if that company is tackling new areas with unique ideas and business models, it can be called a venture company. In addition, an enterprise that did not start up recently but continues to challenge itself with ever bolder undertakings can also be considered a venture company, no matter how large it may be. In this sense, any Japanese company can be called a venture company as long as it has the spirit of a startup. With this viewpoint, we consider the consumer-to-consumer online marketplace Mercari (which has released new services one after another according to their value statement, “Go Bold”) and Rakuten Group (which launched Rakuten Mobile with completely new base station technology even after it had achieved significant growth) to be exemplary Japanese venture companies. Internationally, companies like Alphabet and Meta are still brimming with venture spirit, as well. 2. What is senmitsu? In the real estate industry, it is said that only about three out of every thousand negotiations will successfully close a deal, and this concept is expressed in the Japanese business term senmitsu (literally translated, ‘thousand-three’). In the food industry, it is said that only three products out of a thousand will become an enduring staple in the marketplace, so the term senmitsu is used there, as well. In the venture capital (VC) industry, the data from a case study on funding reveals that out of a thousand companies interviewed, 3% of those are considered for investment, one-third of that 3% actually receive funding, and then only 30% of those ventures successfully exit. Therefore, (1000) ✕ (0.03) ✕ (⅓) ✕ (0.3) = 0.3% = 3 out of 1000…in other words, senmitsu. Thus, the probability of success for a venture company is extremely low. However, the probability of success can be increased, depending on the following factors: (1) Continuing to strive with greater effort than anyone. (2) Learning from and helping other colleagues in the same situation. (3) Consulting and receiving support from senior managers and mentors. (4) Learning from both successes and failures in starting new businesses. 3. What is an ecosystem? In ecology, the term “ecosystem” refers to a community of organisms and the environment that surrounds them as a somewhat closed system. When the organisms that exist in a certain area and the nonliving environment that surrounds them are considered together as one system that is closed to some extent, this is called an ecosystem. (Source: Wikipedia.org) If we transpose this to the business world, we can say that it is a group of companies with a certain common identity and philosophy, regardless of whether or not they are physically gathered in a certain area. Imagine a forest, which is composed of a variety of plants, the insects and small animals that carry those plants’ seeds, and the larger animals that prey on them. The forest is perpetuated and grows through the mutual interdependence of these animals and plants, which eventually decay and turn to soil, providing nutrition for future generations in an unending cycle. Now, replace this metaphorical forest with a group of actual companies. When a community grows and sustains while mutually influencing other members, that is what we call a business ecosystem. Now, what are the specifics of a business ecosystem? 4. Collaboration Companies in an ecosystem are not enemies or competitors who are constantly at each other’s throats. Rather, they are colleagues who have a good relationship and positively influence each other. As such, there will be a natural tendency for them to initiate the following cooperative measures. (1) Pioneering customers Introducing each other to new corporate and consumer customers, and jointly cultivating new markets to increase the number of fresh clients. (This means more than simply providing work for each other.) (2) Industrial cooperation Supporting sales efforts by leveraging the existing sales channels of one company to introduce new products or services from another. Such business partnerships are not marked by mutual distrust, but rather by discussions conducted in good faith and contracts based on consistent, reasonable terms. (3) Personnel exchange Companies within the ecosystem will exchange information as well as executives, engineers, marketers, and others in the same position and job category with other companies to stimulate each other. This includes everything from short-term secondments and temporary relocations to personnel transfers. (4) Generating new business This collaboration and personnel exchange among companies will act as the impetus for inspiring ideas to improve efficiency and create new businesses, products, and services. This not only increases profitability, but also sows the seeds for future growth. 5. Mutual learning and support Corporate management is not always smooth sailing. Competitive conditions and rapid changes in the marketplace often put companies in very difficult situations. To successfully navigate through these stormy seas, they need to learn from and help each other. (1) Study groups In fields where expertise is required, affiliated companies hold study sessions. These are taught by knowledgeable individuals from within the ecosystem or by guest lecturers. Social events are also held on a regular or irregular basis, and great ideas can come out of these, as well. (2) Lending and transfers When there is a temporary shortage of personnel at Company A, such as during the launch of new routes or systems, personnel from Company B—which has sufficient staff at the time—are sent to Company A to help them. In return, when Company B is in the same situation, Company A sends personnel to aid them, too. (3) Joint recruiting activities Joint information sessions allow the recruitment of many talented individuals to their optimal positions among the many companies within the ecosystem. However, these activities can only be successful if the identities and fundamentals of every member are aligned, since that will attract candidates who resonate with those shared principles. 6. Ecosystem renewal The ecosystem is not just a collection of companies that are all the same size and in the same industry. Rather, it includes diversity and a wide range of development, from startups that have just begun to senior entrepreneurs who have a long track record but continue to take on new challenges. As mentioned above, corporate management is not always smooth sailing. Indeed, there are times when companies have to close their businesses. Therefore, the idea of constant renewal is a crucial feature of the ecosystem. (1) Startup businesses The most important role in the ecosystem is played by startup companies that create new businesses. They exemplify the seeds of a forest or the eggs of a nest. Internal entrepreneurship and the budding of independent off-shoot companies is encouraged, and parent companies invite them to continue a business relationship. Equally as important, when the community encounters outstanding startup companies that share its philosophy, it invests in them and welcomes them to join the ecosystem and establish capital ties with the other members. (2) Mentors Within the ecosystem, a group of advisors and mentors with a wealth of knowledge and experience is absolutely essential. In our forest analogy, they stand as giant, centuries-old trees that store abundant nutrients and provide water. They introduce prospective clients from their network of contacts built up over time; they happily allow junior leaders to bounce ideas off of them for planning business strategies; and they provide training for the executives and managers of each company in the ecosystem regarding organizational theory and how to cultivate a healthy working culture. If an entrepreneur has a mentor or senior manager who can be consulted at any time, he or she will have exponentially more success than one who works alone without anyone to consult. (3) Role of alumni As companies grow through friendly competition and mutual learning and support, it is only natural that some leaders will successfully exit through going public or through strategic acquisitions. When these “alumni” (former leaders in the community) leave to pursue other opportunities, they may or may not choose to return to their original company in the future. Either way, because they are still united in philosophy and principles, they do not cease to be a part of the ecosystem. Rather, alumni remain involved in the community as lecturers in study sessions, as interim managers to help restructure companies that are struggling, and in other roles as they are invited. (4) Rebirth and revival Suppose there is a company that unfortunately cannot avoid liquidation. However, among the employees of this company, there are many talented people who would be valuable anywhere. Perhaps the leader of this company was not well-suited for management, but was an incredibly capable lead engineer. If these skilled employees are able to change roles and transfer to other companies in the ecosystem, they could very well make tremendous contributions there. Providing a platform for people in the ecosystem to continue to shine as brightly as possible by starting again, or opportunities for recovery—this is what truly characterizes an ecosystem. 7. What is a Venture Ecosystem? To synthesize all of the various aspects mentioned above, a Venture Ecosystem has the following defining features: (1) Consisting of companies with an indomitable, entrepreneurial spirit (2) Members that learn from and help each other (3) Personnel united under a common philosophy and culture (4) Growth and renewal on an individual basis, leading to continuous growth as a whole (5) Birthing new startups from within, and expanding through acquisitions (6) The entire community standing together, with a united front, to face changes in the environment (7) A platform that supports the growth of the community More comprehensively, a Venture Ecosystem can be described as: “A platform for growth and sustainability that supports a community of enterprises that are united by a common identity and philosophy and continue to take on the challenge of solving social issues through highly innovative business models.” D-POPS GROUP and the companies participating in its Ecosystem will continue to learn from and support each other, striving daily to become a platform that is indispensable to society. We hope this article helps you to understand the meaning of “Venture Ecosystem” in D-POPS GROUP’s long-term vision of developing a Venture Ecosystem that is essential to society. Written by D-POPS GROUP Advisor Genta Sugihara

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2024.11.26

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