Japan-headquartered property developer Hulic launched a corporate venture capital (CVC) subsidiary late last month called Hulic Startup, forming a ¥2bn ($17.6m) vehicle dubbed Hulic Startup 1.
Founded in 1957, Hulic runs real estate development, investment and leasing businesses that owns substantial properties including stores and company housing linked to former Fuji Bank, now part of financial services firm Mizuho Financial Group.
Hulic serves as a limited partner for Hulic Startup Fund 1 along with Mizuho Capital, an investment arm of Mizuho Financial Group. The vehicle will invest in sectors relevant to its core businesses including real estate, healthcare, tourism, environment and education.
In addition to these main areas of focus, the fund will also invest in developers of products or technologies that have growth potential and that can support the social infrastructure of the future. The portfolio companies will have access to Hulic’s resources including tenant networks.
Hulic had already been carrying out some corporate venturing activity, having backed local companies including satellite servicing provider Astroscale, electricity retail marketplace operator Minna Denryoku (rebranded to Updater in October this year) and EcoNavista, which develops sleep analysis technology.
The corporate disclosed alongside the latest announcement that its investment in Updater was carried out through Hulic Startup 1, also identifying water infrastructure technology developer Wota as a portfolio company of the fund. Both Updater and Wota have formed strategic business partnerships with Hulic.
Various Japanese real estate developers already have corporate VC schemes in place, such as Tokyu Fudosan’s TFHD Open Innovation Program, Nomura Real Estate subsidiary NN Corporate Capital’s NREG Innovation Fund, Hankyu Hanshin Properties’ HHP Co-Creation Fund and Mitsui Fudosan’s 31Ventures. Some groups – including Mori Trust and Nippon Steel Kowa Real Estate – also make direct investments in startups.
Takeshi Kodama, founding manager of 31Ventures, told Global Corporate Venturing that he was one of the first people in the real estate industry to explore open innovation and CVC activities beyond running co-working spaces.
31Ventures currently has $400m of combined capital under management across CVC funds and a budget pool for LP commitments, running its second vehicle, 31Ventures Global Innovation Fund II, with VC firm Global Brain, similar to its initial iteration.
Curiously, Hulic is adopting a similar approach – rather than going solo, it has leveraged its close relationship with Mizuho Financial Group to forge a strategic partnership with Mizuho Capital, a VC veteran outfit formed in 1983.
When Saburō Nishiura, formerly deputy president of Mizuho Bank, took office as Hulic chairman in 2006, he began promoting a “transformation and speed” strategy. Japanese CVCs often point out that teaming up with startups improves their agility, the lack of which is a pain point shared by many large Japanese corporations.
Hulic will combine its real estate industry know-how with Mizuho Capital’s network in the Japanese innovation ecosystem to identify promising investment opportunities and provide support to portfolio companies.
