Our CEO, Shiraki, honorably contributed, as Head of LP relations committee of Japan Venture Capital Association (“JVCA”), to a project to propose “an industry-standard investor due diligence questionnaire and quarterly reporting template” (a “Report”), which Ministry of Economy, Trade and Industry, Japan (“METI”) has entrusted to JVCA and announced on 11th May, 2020.
DDQ is taking a role to standardise items in the checklist for questions regarding the investments and investment manager / general partner.
In recent years, interests from institutional investors to invest into Japan local venture capital funds has raised so institutional investors are expected as a new supplier of growth funds to local start-up companies. In the international market, general partners to VC/PE funds generally provide a set of “Due Diligence Questionnaire (“DDQ”)” to disclose qualitative and quantitative information regarding their organization, investment strategy, investment track records (performance), operations, compliance attitude etc., based on typical and anticipated questions, when fundraising to investor candidates in advance to commitments.
This time, METI announced this Report to provide a DDQ, both of which LP investors, mainly as institutional investors, and general managers can use as standard, and a standard format of quarterly report as disclosure to LP investors. These are referring to a DDQ and reporting template proposed and internationally standardized by International Limited Partners Association (ILPA), and reflecting voices from member GP of JVCA and local institutional investors to adapt to Japan market practice.
This Report is not intended for a mandatory template which general managers should use for, or not to cover all needs to due diligence which all LP investors perform, but, is intended to increase investment flow from institutional investors by filling gaps of information asymmetry between GPs and LPs.
Hope you can utilize this Report.
You can download the Report from the following URL to METI website (in Japanese):
https://www.meti.go.jp/policy/newbusiness/main_01/press001/reiwagannendo_gyoumuitaku.html