Yomiuri Shimbun Staff Writer
Sumitomo Mitsui Trust Group Inc. will establish a fund as early as September to invest in startups that have reached maturity. In a recent interview with The Yomiuri Shimbun, Takehiko Sakaue, a managing executive officer of group affiliate Sumitomo Mitsui Trust Bank Ltd., said the fund will support the startups' growth through secondary market trading, in which investors buy and sell unlisted shares. The bank is involved in startup-related strategies for the group.
Sumitomo Mitsui Trust Group will raise capital and establish a fund to purchase shares from venture capital $(VC)$ firms and others that provided initial funding. It will be the first time for a major Japanese financial institution to run such a fund independently. With assets under management expected to reach about 15 billion yen, it is projected to be one of the largest funds in Japan specializing in secondary markets.
The following is excerpted from the interview.
The Yomiuri Shimbun: The environment for startups is changing significantly, as initial public offerings have become more difficult due to the Growth Market reforms being promoted by the Tokyo Stock Exchange.
Takehiko Sakaue: The TSE's reforms make the criteria for staying listed after several years more stringent. However, market capitalization and growth potential are now being scrutinized more closely when a company tries to go public, which has raised the bar for IPOs. From the perspective of VC firms investing in startups, a return on investment is pushed further into the future. VCs have also become more selective when making new investments, leading to polarization where funding is concentrated on a select few companies (with promising growth prospects).
Stock prices on the Growth Market continue to stagnate, and one could say this is a necessary pain. "Small-scale IPOs" -- where companies go public before achieving sufficient growth -- are unlikely to attract institutional investors, leading to a vicious cycle where low stock prices make it difficult to raise further capital.
Yomiuri: What is needed for startups to grow?
Sakaue: As the time needed to go public grows longer, it becomes necessary to broaden funding options while the company is still private. Looking at the United States, there are various exit strategies for startups beyond IPOs, such as M&A (mergers and acquisitions) and sale to a fund. This diversity and depth of funding sources provide the fertile ground on which unicorns thrive.
The investment horizon for VCs investing in startups is generally around 10 years. If a company rushes to go public to recoup its investment, it will end up with a "small-scale IPO." We need to see more active secondary trading, where other investors purchase shares from early-stage VCs and management.
If the pool of capital providers diversifies -- to include crossover investments by institutional investors (which transcend the boundaries between listed and unlisted companies) and M&A by large corporations -- and the liquidity of unlisted startup shares increases, it will become easier to get the funding and time needed for growth.
Yomiuri: How will you manage the newly established fund?
Sakaue: We will focus on companies in the "later stage" -- when their businesses are stabilizing -- purchasing shares held by VCs and providing the growth period leading up to an IPO. In addition to lending operating capital, we will maximize the use of our tools -- such as IR (investor relations) and dialogue with institutional investors -- to stimulate the flow of capital.
Building relationships with leading startups creates a major asset for our company. We want to nurture as many leading companies as possible with whom we can build long-term relationships.
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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.
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July 09, 2026 23:04 ET (03:04 GMT)
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