Phase 3: Reflect and Recalibrate—Key Learnings Several key learnings have emerged regarding how the investments were structured. When the Hataraku Fund was first established, most startups were unfamiliar with the concepts of impact investing and impact-driven business. Though many had visions for social change and improving lives, few knew how to intentionally integrate that vision into their strategies and management. The fund primarily relied on the power of persuasion and sharing best practices to influence investees to adopt IMM practices. However, with a low equity stake and no board representation, the Hataraku Fund could only request that company management incorporate IMM practices without the authority to enforce them. This led to uncertainty about how the IMM approach would be received—whether it would be seen as an extra burden rather than a value-added practice. To date, however, investees have complied with integrating IMM into their management systems and reporting the resulting data. However, they also learned that supporting companies’ IMM integration is labor intensive. To address the limitations of their initial approach and manage the fund more effectively, Huang and Takatsuka increased the overall size of their third fund and raised the investment amount per company. The new fund, Impact Capital I Limited Partnership, launched in May 2024, had its first close at ¥6 billion (approximately US$37.8 million) and is currently undergoing its fundraising process, with a target size of ¥10 billion (approximately US$63 million). 31 This strategy would allow them to secure larger equity stakes, a means to providing greater influence over their investees and their ability to integrate impact in their investees’ business practices. Lessons Learned One of the critical lessons learned was about a fundamental difference between the Shinsei members and the SIIF members, who spoke different languages of finance and impact. This challenge was built into the foundation of what they were trying to do, as bridging the gap between these two worlds was essential from the very beginning. Building a team that integrated expertise in both finance and impact has been a partial solution to this translation challenge. Another challenge was ensuring that the Hataraku Fund staff had a direct and deep understanding of the changes experienced by beneficiaries. While interviews and site visits provided some insight, they were not sufficient to capture the full scope of unexpected or negative changes that may arise.
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Ten Years in the Making
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