Recruit Strategic Partners (RSP), is the corporate venturing arm of Japanese human resources (HR) company Recruit Holdings, run through the parent company’s research and development department.
The unit focuses on investing in technology-based businesses in order to build a new non-HR “business pillar” in the next 10 years. For Akihiko Okamoto, this means the team “never make[s] an investment if we cannot expect any strategic return. We believe financial return and strategic return can be compatible.”
The fund is supported solely by Recruit Holdings and has annual investment capital of between $50 to $100m. Its total assets under management are now over $200m.
Okamoto and RSP report directly to Recruit’s chief executive, while also having authority to make investment decisions, meaning RSP can move swiftly. According to Okamoto, the unit is looking at companies “that have the potential to become game-changers of existing industries”.
He added: “We are currently focusing on artificial intelligence (AI), robotics, the internet of things and blockchain. We are also keen on fintech and business applications that can potentially support small to medium-sized businesses (SMBs), since we believe we can contribute a lot to the growth and efficiency of the Recruit Group’s core SMB customers.”
Many of the testimonials on RSP’s website are about bringing western startups into the Japanese market, in part because, as Okamoto says, Recruit is not just about HR.
He said: “Recruit is a leading company that has built overwhelmingly strong customer bases – both business and consumer – not only through HR, but also internet media business in non-HR verticals such as housing, dining, beauty salons, travel and school education. These media businesses have the number-one market share in Japan in terms of revenue, profit and transaction volume.
“I believe Recruit can become the best partner for American or European startups for entering the Japanese market, based on our knowledge and experience.”
RSP’s advantage is furthered by the volume of online transaction data Recruit holds from its other business units, and its strong customer base. Like many other CVCs, RSP also has what they call a “business success team”, designed to provide hands-on support and integration as startups enter Japan. That and RSP’s agility relative to other Japanese CVCs mean RSP has a unique package, Okamoto believes.
However, Okamoto and RSP are not open to every startup looking to enter Japan. Okamoto personally feels there are too many overvalued AI startups. For Okamoto, here is where Recruit’s strengths really come to the fore:
“AI is a technology that needs to be trained with real data. In that sense, Recruit’s transaction data and customer base play an important role in determining the quality of AI startups’ technologies.
On the other hand, blockchain has great potential to become a breakthrough technology.
Lots of startups will transfigure blockchain into a practical technology infrastructure.”
Publicly, RSP has been quiet over the past few months, with its last major deals including healthcare robotic relay company Savioke’s $17m series B, and India-based online lending platform Rubique Technologies’ latest round, reported as being between $15m and $20m. Both were announced in the middle of last year. While RSP already has a sizeable portfolio – nearly 60 companies, with 10 successful exits and eight IPOs – Okamoto is now seeking to add to that, with another pair of deals in the pre-announcement stage.