RSP recently invested in Conversica, a US-based developer of an AI-powered sales assistant. How are innovations like AI transforming HR tech and other business applications?
For human resources management, customer relationship management and others, embracing AI and data will bring about more transparency in processes that will enable businesses to improve productivity and efficiency. Automation will be key. My forecast on AI is that it will become commonly implemented in various applications, which is bound to lead to its commoditisation and, consequently, drive its price down.
What other disruptive drivers do you see in the services sector?
There are emerging technologies such as blockchain. Consumer as well as business applications across industries will get ever more automated and intelligent, powered by AI and blockchain. At the same time, a data-oriented approach – that is, asking what data is most important to us, how should we acquire such data, and how should we utilise such data? – will become more relevant not only to large but also to small and medium-sized enterprises.
In RSP’s investment approach, how important is the financial element compared with technological potential?
Our objective at RSP is to look for innovative technologies and business models with the potential to become next-generation businesses for Recruit Holdings in the mid-term. Such strategic considerations come first whenever we commit capital to a startup. Then we look at markets, types of products and services, the particular product or service of the startup, as well as what other venture capital firms do. Financial return is also important, but it is a secondary priority to us when we conduct due diligence.
What stage of development do you target?
We focus on early-stage companies, primarily seed and series A rounds.
Is there a preferred size of stake RSP typically seeks in an emerging enterprise?
We do not follow any specific guidelines on this. What we aim for is a limited stake in order to sufficiently diversify our portfolio.
Given that RSP has offices in Japan and the US, do you focus on these countries, or do you also look elsewhere? Are any new or emerging innovation hubs catching your attention?
We focus on startups based in the US and Japan primarily. As for emerging geographies, Israel has definitely caught my attention and we have already done some investments there.
What internal synergies are there with other divisions within Recruit?
It is mostly about business development between our portfolio companies and Recruit’s business units and divisions. For example, we invested in DataRobot, a Boston-based developer of a predictive analytics platform that uses machine learning and artificial intelligence. Several corporate units adopted that technology and later we saw great business results from that.
How has your investment strategy evolved over time?
We have seen lots of changes in work and lifestyle, in people’s behaviour and consumption patterns. For example, if you look at millennials – a segment that has gained a lot of attention in various markets – they changed considerably compared with previous generations. So I would say our investment thesis so far has evolved around such changes and adapted to them, and always should.
What kind of investment can we expect from RSP in future?
Something more disruptive and innovative. We are always tackling friction and aiming to solve difficulties through technologies such as AI, robotics, blockchain and so on.
