After 30 years in Japan, former Goldman Sachs vice chair Kathy Matsui, known for research that shifted government policy on women at work, is starting a venture fund that could help put some of her ideas into practice.
Matsui, who left Goldman Sachs Group Inc. at the end of 2020, has teamed up with three other experienced female financial executives to build a fund that aims to invest US$150mil (RM617.92mil) in sectors including health care, fintech, next-generation work and education, as well as the environment.
The MPower Partners Fund, a rarity in Japan for its female leadership, will seek to secure high returns while imbuing startups with environmental, social and governance values, Matsui said.
"Our thesis is that for Japanese startups to really go global and to scale, one of the missing links is actually ESG,” she said in an interview last week. "We believe strongly that integrating ESG into their business strategies, good companies can become great companies and sustainably growing companies of the future.”
Credited with coining the term "Womenomics,” Matsui published a series of reports over 20 years detailing the economic benefits of empowering women, as Japan’s labor force ages and shrinks. While former Prime Minister Shinzo Abe espoused her ideas, the country fell well short of a goal of having women in 30% of management positions by 2020, the year he stepped down. Japan ranked 120th in the World Economic Forum’s Gender Gap index for 2021.
Japan’s venture investment market has expanded rapidly in recent years, but remains small by comparison with the U.S. and China, Matsui said. The new fund will aim to invest two thirds of its capital in growth to late-stage startups in Japan, she added, with the other third in early-stage startups overseas.
The governance part of ESG can be interpreted to include things like ensuring diversity on corporate boards, something Japanese companies have often struggled to achieve. Women made up just 10.7% of board positions on the largest publicly listed companies in Japan in 2020, according to the Organisation for Economic Co-operation and Development, below the OECD average of 26.7%.
According to Matsui, a "gap” in funding at the growth stage often prompts Japanese startups to go public on the Mothers section of the Tokyo Stock Exchange prematurely, which can limit their potential. Targeting businesses at this phase is also a chance to influence them more deeply.
"Our hypothesis is, rather than try to change the ways of an adult or large company after they’ve gone public, let’s get proper ESG principles and values embedded into these organizations when they’re teenagers or children, before they go public,” Matsui said. "That should set the stage for longer-lasting and deeper integration.”
The launch comes at a time of growth for ESG investment in Japan. Assets under management in Japanese ESG exchange-traded funds have risen to about US$35 bil (RM144.18bil), compared with US$24bil (RM98.87bil) at the start of 2020, according to Esther Tsang, an ESG analyst with Bloomberg Intelligence.
Yumiko Murakami, previously head of the OECD Tokyo Centre who spent 20 years working for Goldman Sachs and Credit Suisse, is also a partner in the fund. The third partner is Miwa Seki, who had switched to university teaching and translating business best-sellers after a career in portfolio management and investment banking. Eriko Suzuki, who has worked for Morgan Stanley and UBS Securities, serves as managing director.
MPower’s lead investors are Dai-ichi Life Insurance Co., Sompo Holdings Inc. and Sumitomo Mitsui Trust Group.
Like Matsui, the daughter of a Japanese farmer who became a successful California flower wholesaler, Murakami comes from an entrepreneurial background. Her mother started a chain of pharmacies in rural Shimane prefecture at the age of 48, later selling out to a larger company. It wasn’t easy for a woman to get started decades ago.
"My mother, in the countryside of Shimane, housewife, no one would make loans to her — nobody, ” Murakami said of the venture. "I’d like to change that with this fund.” – Bloomberg