PURPOSE

IDENTITY

Fueling perpetual growth;
investing in bold visions

Co-Founder

As a venture capital pioneer in Japan, JAFCO Group has led the way in opening up the market

JAFCO Group has always worked side by side with cutting-edge entrepreneurs. In addition towhile overcoming many challenges. In our early years, we encountered difficulties establishinga large number of investment professionals with broad experience, we have accumulated thea consistent revenue base. However, the 1980s marked a turning point when we establishednecessary resources and built extensive networks to foster the growth of portfolio companies.

Japan’s first venture capital partnership fund and pursued continued expansion of our businessas a venture capital firm. Having secured a stable source of capital for investment, we haveAn essential part of going beyond simply being an investor—to truly commit to achieving

been pursuing a uniquely Japanese approach as an investment firm specializing in private

business growth and increasing corporate value by working together with entrepreneurs andequity while working to recruit and train personnel with a long-term perspective.

management teams—is for each of our investment professionals to make a deep commitment tomanagement as a “Co-Founder” from the conceptual stage of businesses. In our venture

Over the years, the Japanese economy has grown, developed, and matured, and during thatinvestments, we work alongside entrepreneurs as a Co-Founder of nascent startups, and in ourtime, JAFCO has consistently invested in bold visions. Our business has two main pillars. In

buyout investments, we vigorously promote business growth as a Co-Founder of companies

venture investments, we pursue the creation of new businesses together with entrepreneurs. In

embarking on a “second start.”

buyout investments, we guide companies that seek renewed growth through a “second start,”
enabling them to achieve enduring growth and expansion. We have invested growth capital in

Furthermore, the corporate culture we have created motivates not only our investment

unlisted companies through fundraising and equity financing to support growth and to provide

professionals but all of our employees to do their best to ensure the growth and development ofreturns to investors through IPOs. Moreover, a stable supply of risk money will be required toportfolio companies. The mentality, knowledge, and experience passed down for decades

revive the now stagnating Japanese economy and put it back on track for growth. We arehave been developed based on the mindset of a Co-Founder, which creates a cycle of growthcommitted to maintaining and expanding the investment cycle, no matter how difficult theand provides the energy to achieve Our Purpose.

operating environment becomes, to fuel perpetual growth.
Simply maintaining the status quo is unacceptable in the mindset or behavior of a Co-Founder.
The problems facing the global environment and economy are more complex than ever before.

The attributes needed of a Co-Founder develop as each individual gains experience in thinking

Humanity must create a new form of prosperity in which everyone can coexist in harmony,autonomously and taking decisive action. In becoming an organization where each individual

regardless of race, gender, or culture. Since our founding, we have worked with various

plays an active role as a Co-Founder, we will continue to take on challenges with entrepreneurs

entrepreneurs to create and further develop innovative products and services that the world

and provide higher value to portfolio companies and society.

needs and ushered in a new era. By boldly investing in initiatives that create as-yet-unknown
value and committing to growth, we will fuel perpetual new growth and contribute to therealization of a sustainable society.

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JAFCO INTEGRATED REPORT 2022

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2

JAFCO Group’sValues

Applying Our Purpose: JAFCO Group’s History

JAFCO Group’sValue Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

By continually challenging ourselves as a pioneer in private equity investment in Japan,
we have developed an investment style that delivers stable results and contributed to the growth of a sustainable society.
JAFCO Group’s Initiatives
LaunchBusiness expansion

1973–1981

1982–1992

Dawn of venture capital in Japan
Raised funds from more than 100 financial
institutions in Japan and overseas andenhanced revenue base by expanding financing
operations in addition to investment operations

1981 Started new graduate recruitment

1993–1997

Steadily expanded fundraising after establishing
Japan’s first venture capital fundSlump indomestic investment

Achieved high performance backed by
Japan’s economic growth

Began full-scale
investment in Asia,
the United States,and Europe

Launched overseas investment activities

1973 Japan Associated Finance Co., Ltd. was established1982 Established Japan’s first venture capital fund, JAFCO No. 1
Investment Enterprise Partnership

Withdrew from financing
operations and expanded
private equity investment
Continued to achieve high performancein Japan and overseas boosted
by the dot-com bubble

1997 Changedcompany name toJAFCO Co., Ltd.

1986 Established JAFCO Investment Inc. as first business base in Asia
1987 Registered as over-the-counter (OTC) stock with Japan Securities
Dealers Association
Annual investment amount (left)

70

Full-line investment

Highly selective, intensive investment

2003–20092010–Present

Following the collapse of the dot-com
bubble, focused on increasing sharein the domestic IPO market andon expanding fund size throughinvestments covering a wide range
of industries and stages

Focused on achieving performance independent of market
conditions by investing in companies with high potentialand acquiring influential stakes to raise their corporate value

1998–2002

1997 Established Japan’s
first industry–
academia fund1984 Established U.S. subsidiary JAFCO America Ventures Inc.

(¥ billion)

Concentration on
venture capital andprivate equity investment

Post-bubble
economyShifted focus towardearly-stage IT investment
1998 Established specialized
division for buyout investment

2007 Registered as financial instruments
business operator

TOPIX

2015 Transitioned to company with a board-audit committee

2000 Established specialized
division for adding value
to portfolio companies

2017 Bought back and canceled all shares (27.8%) heldby Nomura Holdings, Inc. and Nomura Research Institute, Ltd.

2001 Listed on First Section ofTokyo Stock Exchange (TSE)2020 Changed company name to JAFCO Group Co., Ltd.

2018 Introduced partnership model to business structure2022 Transferred to TSE Prime Market

2001 Established specialized
division for investment inuniversity-originated startups

Cumulative funds under management (right)

2010 Shifted fully toward highly selective, intensive investment(¥ billion)
1,400

60

1,140.8 1,20050

1,000

37.1

40

800

30600

20400

10200001973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

197619851989199419992007201120162020

Japan OTC Securities Co., Ltd.
established

Rapid appreciation ofyen due to Plaza Accord

Nikkei Stock Averagereached all-time highRegulations eased forplacement of venture capital
directors and officers

Act on Supporting Business
Innovation of Small andMedium-sized Enterprises
entered force

Financial Instruments andExchange Act entered force

Great East Japan Earthquake

Bank of Japan introduced
negative interest rate policy

COVID-19 pandemic
spread globally

TSE Mothers Market established

1973

1983

1987

1991

1997

1998

2001

First oil crisis

New OTC market opened

Black Monday

End of Japan’s bubble economy

Asian financial crisis

Limited Partnership Actfor Investment enacted

Dot-com bubble collapses

String of bankruptcies
among financial
institutions

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JAFCO INTEGRATED REPORT 2022

2008

2012

Global financial crisis

Inauguration of second Abeadministration (start of “Abenomics”)

JAFCO INTEGRATED REPORT 2022

4

JAFCO Group’s
ValuesApplying Our Purpose: JAFCO Group’s Strengths

JAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable GrowthCorporateData

PurposeFueling perpetual growth; investing in bold visions

Investment Management Capabilities

Fundraising Capabilities

Our investment management capabilities stem from our strong

While the success or failure of fundraising is significantly

deal-sourcing skills, the ability of our investment professionals toaffected by the economic environment and performance, we

contribute to the growth of portfolio companies, and ourraise capital for large flagship funds every three years to secureorganizational ability to share, gather, and complement theinvestment capital. As the management of private equityexperience of individuals—all of which have been continuallyinvestment requires a higher than usual level of discipline andpassed down as part of our corporate culture. Leveraging thesetransparency, we have enhanced our regular reporting andstrengths, we conduct investment activities based on our policy

established a high level of trust with investors through supportof highly selective, intensive investment. Having carefully

tailored to their individual needs. We will continue to hone ourselected investment targets from among many candidate

fundraising capabilities to increase our ability to provide risk

companies, we acquire an influential stake and then intensively

money. Moreover, while deepening relationships with existing

provide management resources to boost corporate value. Amid

investors, we will also expand the scope of our activities tosigniﬁcant changes in the business environment, we will further

attract new ones.

develop this policy and thereby enhance our ability toreproduce successes.

Organizational Foundation
We have firmly established a unique model for recruiting and training new graduates to become investment professionals, as well as a culture in which experienced seniorpersonnel pass on their knowledge and mindset to younger team members. We are also bolstering mid-career recruitment of specialists, which has allowed us to expand ourinvestment domain and the scope of our involvement in the management of portfolio companies. We differentiate ourselves from other general venture capital and private equity
fund management companies, in having not only a dedicated fundraising division but also a back-office team well versed in private equity investment and fund management, as
well as sophisticated compliance and risk management systems. This organizational framework ensures that we continue to reproduce performance.

We fuel perpetual growth by harnessing the value derived from our investment management capabilities,
fundraising capabilities, and underlying organizational foundation.

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6

JAFCO Group’sValues

JAFCO Group’sValue Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Contents

JAFCO Group’s Business Overview

JAFCO Group’s Values
1 JAFCO Group’s Purpose / Identity
3 Applying Our Purpose: JAFCO Group’s History
5 Applying Our Purpose: JAFCO Group’s Strengths

Total Funds under Management

JAFCO Group’s Profit Structure
The Company conducts venture and buyout investment through fund management. Our main income sources are management fees and success fees
derived from fund operations and capital gains on direct investment in funds. The fund term is 10 years in principle, with a possible extension of two years.
The portfolio of a newly established fund is built over a period of about three years following the start of fund operation. We believe that continuallysourcing and investing in promising companies based on our policy of highly selective, intensive investment ensures stable investment performance,
regardless of the timing of a company’s establishment or business sentiment. After investment, we deepen management involvement and raise corporate
value with entrepreneurs to achieve exits (sales) through IPOs, M&A, and other means.

¥ 332.3 billion

Total capital commitments
Amount subject to management fees

¥ 138.9 billion

JAFCO Group’s Value Creation
9 Message from the President
15 Value Creation Process
17 Sources of Value Creation
19 Materiality(¥ billion)

21 Sustainability
433.9

Investors

JAFCO Group and Partners

7 JAFCO Group’s Business Overview

348.5

23 Message from the CFO

451.5

27 Business Process

359.1

332.3

(Financial institutions, business firms, etc.)

Sustainable Growth Strategy
29 Venture Investment
31 Buyout Investment
33 Portfolio Company Case Studies

Success fees
Management
feesManagement
operation

Capitalcontribution

Distribution ofinvestment returns

Capitalcommitments

35 Business Development

Distribution ofinvestment returns

37 Fund Management

Funds
Investment

75.7
Capital gains

2018/3

Unlisted companies

129.0

75.5

2019/3

Total capital commitments

2020/3132.0

2021/3138.9

39 Global Investment

2022/3Business Foundation for Sustainable Growth

Amount subject to management fees

Notes: 1. Excluding JAFCO Group’s interest in funds, Icon funds, and funds under extension.
2. Foreign-currency-denominated funds are calculated based on the exchange rate at theend of each fiscal year.

41 Human Resources Strategy
43 Message from an Independent Director
45 Board of Directors
47 Corporate Governance
52 Compliance
53 Risk Management

Net Sales / Operating Income / Profit Attributable
to JAFCO Group Co., Ltd. Stockholders

56 Environmental Initiatives

Domestic IPOs

Fund Management Fees / Success Fees(including funds under management)

Net sales¥ 27.7 billion

First price-based capital gains¥ 38.4 billion

Fund management fees

¥ 2.9 billion

Operating income¥ 16.9 billion

Number of IPOs

4 companies

Success fees

¥ 4.5 billion

Profit attributable toJAFCO Group Co., Ltd. stockholders¥ 15.1 billion(¥ billion)

24.2

14.3

12.2
10.2

63 11-Year Summary
65 Changes in Fund Performance

70 Shareholder/Investor Information(¥ billion)

38.4

7

21.5
15.0
11.8

(Companies)

27.7

25.9

61 Financial and Non-Financial Highlights

69 Company Information

7.4

32.8

29.929.5

57 Review and Analysis ofthe Fiscal Year Ended March 31, 2022

67 ESG Data(¥ billion)

38.5

Corporate Data

21.3

4.9
3.6

6.2

2.5

business model that supports value creation, and our future growth direction. Seeking to further
communication with all of our stakeholders including shareholders/investors, our fund investors,
portfolio companies, and employees. In editing this report, we referenced the International
Integrated Reporting Framework of the IFRS Foundation and the Guidance for Collaborative ValueCreation released by the Ministry of Economy, Trade and Industry, and other resources.

0.8

12.1

shareholders and investors understand the social value that JAFCO Group has created to date, ourenhance our corporate value through dialogue, we have positioned this report as a means of

2.5

2.6

2

9.0

announcing our growth strategy and capital policy. We have published this report to help our

4.5

2.4

3

took the first step toward even greater growth by establishing our new purpose statement and

5.3

4

16.9
15.1

to the revitalization of industries through venture and buyout investment. In December 2022, we6.25Editorial Policy
JAFCO Group has supported the launch and rejuvenation of numerous companies and contributed

2.6

1.8

2.9

2.9

Scope of Report
Scope: JAFCO Group Co., Ltd. and its group companies (consolidated subsidiaries)
Reporting period: From April 1, 2021 to March 31, 2022

2018/3

2019/32020/32021/32022/3

Net sales
Operating income
Profit attributable to JAFCO Group Co., Ltd. stockholders
Note: A gain on sale of investment securities was recorded as an extraordinary gain in the fiscal
year ended March 31, 2018, and the fiscal year ended March 31, 2021.
Notes to graphs on pages 7–8:
1. Figures are rounded to the nearest unit.
2. The U.S. subsidiary is excluded from the scope of consolidation from the fiscal year ended March 31, 2019.

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JAFCO INTEGRATED REPORT 2022

2018/3

2019/3First price-based capital gains

2020/3
Number of IPOs

2021/32022/3

2018/3

2019/3Fund management fees

2020/32021/32022/3

Success fees

Note: Figures reflect the exclusion of the U.S subsidiary (JAV) from the scope of consolidation.

Note: Some information is based on activities that took place before or after this reporting period.

Note Concerning the Future Outlook
Information in this report relating to current plans, the future outlook, and strategies, etc., hasbeen determined based on the information available at the time the report was prepared. Please
be aware that various factors may cause actual future results to differ signiﬁcantly from theoutlook. Risks and variables that may affect results include macroeconomic trends surrounding theCompany’s business environment, market competition, exchange rates, taxation systems andother various regulations/systems, and internal and external factors.

JAFCO INTEGRATED REPORT 20228