Progress is not only slower in Japan, it is often different.

Looking at the numbers, it's clear that venture capital is even more male-dominated in Japan than it is in the West. Our guest today explains not only how that's changing, but how she's changing it.

Sophie Meralli is a Partner at Shizen Capital and co-founder of Tokyo Women in VC. We sit down and dive deep into the keys to developing a creative, global mindset among Japanese founders and VCs, the role immigrants have to play in developing Japan's startup culture, and what really works in changing, not only minds, but actions related to the role of women in startups and venture capital.

It's a great conversation, and I think you'll enjoy it.


Show Notes


The kind of startups Sophie and Shizen are looking for
Why Japanese AI startups need to be especially careful
The percentage of Japanese VCs are women, and how it's changed over the past 5 years
Why more and more VC funds are being started by women in Japan
What Women in VC does, and how you can get involved
The main things holding back women in VC in Japan today
The critical next steps for women in VC
Is it easier for foreign women to defy gender stereotypes?
Are Japanese women founders making faster progress than women VCs?
What a “global mindset” really means for startups
How to develop cultures of creativity and innovation


Links from our Guest

Everything you ever wanted to know about Tokyo Women in VC

Tokyo Women in VC Job Board
Tokyo Women in VC Research: The 7 Stats


Shizen Capital
Friend with Sophie on Facebook
Follow her on Twitter @Soph_VC
Info on rate of Japanese Passport holders



Leave a comment



Transcript
Welcome to Disrupting Japan, Straight Talk from Japan's most innovative founders and VCs.
Finance and venture capital in particular has always been male dominated, and in Japan, well, it's even more so, but things are changing here and not quite in the way you might expect.
Today we sit down with Sophie Meralli, a partner at Shizen Capital, and co-founder of Tokyo Women in VC. And we have a frank discussion about what it's really like for female founders and venture capitalists here in Japan.
And some of it is surprising.
In some areas it seems that Japan is ahead of the west and in others, well, not so much. The conversation is at times both frustrating and hopeful. Sophie explains the one thing holding female VCs back more than any other, how things are changing for female founders and for male founders as well, and why so many new Japanese venture funds are being founded by women.
But you know, Sophie tells that story much better than I can. So, let's get right to the interview.
 
Interview
Tim: So we're sitting here with Sophie Meralli, a brand new partner at Shizen Capital. So, thanks for sitting down with me.
Sophie: Thank you so much, Tim. It's a pleasure to be here.
Tim: You're not new to VC, but you're new to Shizen. So, tell me a little bit about your new role, what kind of things you're looking for.
Sophie: Yeah, sure. For me, it's kind of interesting because I was in early stage in Boston and then when I came back to Japan, I was with Eight Roads Ventures for about five and a half years looking more into growth stage startups in FinTech, Enterprise SaaS. And those are really the area that I think are super interesting to me in Japan where I see a lot of potential. And so at Shizen, given this is much more like early stage, there are tons of ideas for which there are already unicorns abroad, but in Japan, those haven't surfaced yet. And I'm really excited to either incubate new businesses or just be able to be a partner for very early stage startups in those sectors.
Tim: Now, you mentioned your experience back at InSpark in Boston?
Sophie: Yes.
Tim: If I recall back then you were looking at AI startups and sort of the previous generation of AI startups. What's your take on the situation of AI startups here in Japan right now?
Sophie: I think AI right now, industry is very, full of hype and very Agentic.
Tim: For various meanings of that word.
Sophie: Yes. Back in the days it was much more about machine learning and being very application driven. So, I invested, for example, in companies that help construction site being able to do inspection in a less manual way with drones and AI automation. And that enabled drop the time to do a survey from two months to 30 minutes. And that was really new at that time. We did that also for dentists.
Tim: Yeah, I think that that kind of previous generation of AI was really use case focused. And there's still a lot, whether it's in like predictive maintenance, a lot of medical applications, do you see the same thing happening in the current crop AI startups, the LLM startups?
Sophie: I still have to try to understand the business model and use cases. So, I'm trying to be a bit more, I wouldn't say skeptical because I'm very excited as well, but I think generative AI and it's to be taken with a grain of salt, and if you have a lot of average input, then you get average output too. So, what can really a big data set do is become average quality sometimes. So, I'm excited to learn more about the data that these startups are using and the exact use cases that they want to tackle, rather than trying to completely, fully automate jobs. I think we're still a bit far away from that, although I'm using cloud and ChatGPT every day myself.
Tim: I'm the same way actually. I use ChatGTP, I use perplexity every single day, but I'm also a huge AI skeptic in terms of actually investing in the companies and whether they can live up to the hype. But actually one thing I really want to talk to you about, let's talk about women in VC. Both the organization and, well, the actual women who are in VC. So, you and Shino Furukawa founded Tokyo Women in VC a couple of years ago, back in 2020?
Sophie: Yes, exactly.
Tim: Tell me about the organization. What do you do? Why did you start it?
Sophie: Sure. I would love to. Basically, when I was in Boston, there was an amazing women in VC community called Breaking 7% because there were only 7% decision makers that were women back in the days. And we met almost every month through dinners and exchange ideas. And it was more of a ask me anything kind of community where members come up with problems and they share it with each other. And that really helped me a lot to build my network because in the US, I knew almost like no one. And when I came back to Japan, it was 2020, it was COVID, it was very hard to network. And I felt that women were also a bit isolated. And so I discussed with a few women in VC, and Shino is a very dear friend of mine. She was actually pregnant at that time, so I felt a bit guilty to ask her to take on…
Tim: More work.
Sophie: My co-founder for this, but at the same time, I was like it must be her. And so she accepted and she was very enthusiastic about it. So, we launched a community in 2020 with about 30 members only.
Tim: Well, and you were mentioning the 7% decision makers in the US, I would imagine that number is lower in Japan.
Sophie: Yeah, so now in the US it's about 16%, 18% so a lot of progress in Japan. We are doing a survey every year since 2020. And back in 2020, the number of decision maker was about 3%, total VCs.
Tim: So, what is a decision maker? Is it a partner?
Sophie: Yeah. It's a partner or a GP basically someone who has a voice at the investment committee. And now in 2024, we have about 8.4% women decision makers.
Tim: Well, I mean, it's low, but that's a lot of progress. In just five years.
Sophie: Yes. And one interesting trend is that rather than being internally promoted, it comes a lot by launching your own fund because the fund cycles are so long, 10 years. So, there's promotion to partner or decision maker. Often when there's a new fund coming up and there's not a new fund every year, it's mostly every three, five years. So, a lot of women actually launch their own funds and that's how they become partner. Of course, there are some exceptions, which is a great sign for the ecosystem when women are also promoted internally.
Tim: That is interesting. So, I mean, of course it makes sense that there'll be more women at the newer funds. Just because you don't have a whole lot of mobility in an existing fund. You just don't. But are there a lot of women raising their own funds now in Japan? Because it would seem to me that that's a lot harder than joining a fund.
Sophie: I mean, so in terms of women launching their own fund, I wouldn't say that there are a lot, unfortunately, we need many more to do that, but it's growing and we're seeing a lot of women launching their own. And I think we are about 20 to 30 women who are decision maker right now in the industry. And by 2030, we want to double that to 60 or more. And we have another KPI, which is the total number of women investors, and that's now 17% of the industry. And we hope to bring that to 30% by 2030.
Tim: The women who are decision makers. So, men in VC in Japan are overwhelmingly finance guys from good schools who worked at tier one companies before jumping to VC women fit the same profile, or is there more variation there?
Sophie: I think a lot of women who launched their own firm come from the VC industry, or some of them finance industry as well. I see some who are actually in the startup space.
Tim: So, similar profile as the male VCs, then?
Sophie: Yes, I would say that there is not a trend that women have a different profile than male counterpart. That being said, when they launch their own fund, they tend to have a different lens. And I see a lot doing funds focused on women entrepreneurs or women's health or impact, ESG, but obviously there are also sectors like healthcare in general or B2B SaaS,  and we don't want to have only women VC investing in women founders.