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METI Releases Guidelines for Collaboration between Business Entities and R&D-based Venture Businesses (Third Edition)

April 22, 2019

Aiming to promote collaboration between business entities and R&D-based venture businesses (VBs), an important factor in driving innovation, the Ministry of Economy, Trade and Industry (METI) compiled the Guidelines for Collaboration between Business Entities and R&D-based Venture Businesses (third edition), focusing on corporate venture capital (CVC), which is attracting attention in recent years as one form of collaboration, and compiling the problems and solutions in CVC activities.

1. Background and objectives

With the advent of the Fourth Industrial Revolution resulting from technological innovation (e.g., IoT, big data, robotics and AI), product life cycles have been getting shorter. Under the policy concept “Connected Industries,” companies are therefore encouraged to create new added value by creating a variety of connections between devices and information, society and technologies, and between producers and consumers. As a means to achieving this effort, it is effective for companies to utilize so-called “open innovation programs” in which companies take advantage of both internal and external technologies, human resources, know-how and other advantages and smoothly and efficiently create innovative products and services.

In particular, business entities including large enterprises need to break away from the existing closed business models and incorporate the technologies and growth potential of R&D-based VBs* into their approaches to developing new business. R&D-based VBs, meanwhile, need to gain the support of large enterprises in acquiring know-how to cultivate new sales channels or enter new markets, thereby giving their core technologies access to larger business opportunities.

*Note: The term “R&D-based venture businesses” refers to entities engaging in business by developing and utilizing cutting-edge and innovative technologies developed in-house.

However, most Japanese companies still face obstacles in engaging in open innovation programs, particularly in collaboration between business entities and R&D-based VBs. Based on a recognition of this challenge, METI compiled the first edition of the guidelines for collaboration that are meant to be useful for both business entities and VBs in FY2017, and the second edition focusing on successful cases of collaboration with VBs from the perspective of business entities in FY2018.

This fiscal year, with focus on corporate venture capital (CVC), which is attracting attention in recent years as one means to facilitate collaboration, METI conducted case studies in and outside Japan, had discussions with personnel responsible for external collaboration of business entities, executives of VBs, university officials, and experts in legal affairs and intellectual property rights, and compiled the third edition.

It is expected that full utilization of the third edition of the guidelines, with the former two editions as the basis of collaboration, will deepen mutual understanding, vitalize collaboration between business entities and R&D-based VBs, and facilitate the development of innovation, ultimately strengthening Japan’s industrial competitiveness.

2. Details and key points of the guidelines

The guidelines consist of four major sections.

The first part (Section 2 and Section 3) describes the significance and positioning of CVC activities in collaboration with VBs as the basis for carrying out CVC activities. METI hopes that these sections will help readers understand the value of CVC activities and are referred to when making preparations for formulating CVC and reviewing past CVC activities.

The latter part (Section 4 and Section 5) outlines problems in designing and operating CVC or otherwise promoting CVC and countermeasures based on case examples. Section 4 can be referred to in solving individual problems currently arising in promoting CVC, while Section 5, which compiles case examples of pioneering companies’ CVC activities into roadmaps, will be helpful when considering methods of proceeding with CVC activities.

Company personnel responsible for business collaboration are expected to understand through the guidelines as a whole that there are no common solutions and each company must devise measures suited to their companies, and that it is important to find out measures necessary for each company based on pioneering companies’ initiatives, instead of merely referring to best practices indicated in the guidelines. METI hopes that the guidelines will be fully utilized in promoting individual efforts.

< Contents of the guidelines >

  1. Introduction
  2. Significance of CVC activities by business entities
  3. Positioning of CVC in corporate venturing
  4. Problems in promoting CVC and countermeasures
  5. Case examples of pioneering companies’ CVC activities

3. Opinions of experts

  1. Mr. Hirokazu Hasegawa, Professor, Waseda Business School
    “CVC does not mean merely the outsourcing of R&D departments of business entities. CVC may provide a spark to explore technology seeds, speed up decision making, and spread entrepreneurship within the company. For venture businesses, CVC may enable them not only to secure risk money but also to accelerate growth through collaboration. CVC activities will work as an indispensable engine to facilitate innovation.”
  2. Mr. Masakazu Masujima, Partner, Mori Hamada & Matsumoto
    “Many companies position CVC as one of the measures to achieve OI. However, it is not fully understood that there is no ‘one-fits-all’ strategy for CVC. As a result, many seem to struggle, failing to achieve expected outcomes.
    I hope that the guidelines will help companies understand the need to adjust CVC in line with their respective strategies and prompt them to reconsider their CVC activities.”

Related information

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Division in Charge

Innovation and Industry-University Collaboration Division, Industrial Science and Technology Policy and Environment Bureau