Mizuho Financial Group announced plans to create a debt fund that will focus on supporting Japanese startups operating in the technology sector.
This intention of the financial group was made public at a time when other giants of the Japanese banking sector are also actively preparing to interact with firms that are at the initial stage of their history.
Kazutoshi Isogai, head of retail and business at Mizuho, announced that the fund will be launched by the end of July, and its financial volume will be 10 billion yen ($72 million). According to him, as part of the implementation of this commercial initiative, support will be provided to those startups that are in the middle and late stages of development. He also said that the company will independently finance the fund without any interaction with other organizations.
Kazutoshi Isogai says that there is currently a high level of demand for credit funds by startups. Separately, he stressed that firms prefer loans and pay less and less attention to equity financing, which blurs the boundaries of personal property in the overall ownership structure.
The head of the retail and business department stated that the startup business has always been Mizuho’s strong point. He stressed that other giants of the banking sector are also showing high-level activity in this economic environment and said that the financial group does not intend to give up its positions.
Mizuho is currently the third-largest bank in Japan. The creation of a startup financing fund in a certain sense is a reflection of the general trend in this country, where there is an overall desire to actively invest in firms at the initial stage of existence. For example, this year the Sumitomo Mitsui Financial Group banking division together with its partners created a fund of appropriate specialization.
Startups traditionally face difficulties in obtaining credit funds, but the situation is currently changing as banking giants increase the volume of financing in this business environment. The new funds will step up efforts and transform the negative trend, gradually turning it into a favorable situation.
Kazutoshi Isogai says that the bank’s financial initiative will be primarily focused on startups working in the area of deep tech, including biotechnology and renewable energy. He also informed about the fund’s readiness to support firms that need to initially conduct research and create certain developments, after which it will be possible to make a profit.
Mizuho will seek to buy bonds with stock options to provide the lender with the opportunity to benefit if the borrower decides to conduct an initial public offering. If the fund’s activities prove successful, the bank will consider the possibility of implementing additional initiatives of an appropriate nature.
For Mizuho, the support of startups, among other things, is beneficial because it provides an opportunity to expand the range of clients in money management. Kazutoshi Isogai stated that the majority of private banking clients in Japan own a business, and the financial institution wants to establish interaction with future millionaires who will enter the IPO. According to him, succession and business planning are popular services among wealthy Japanese, the need for which the bank seeks to satisfy.
As we have reported earlier, Mizuho Rolls Out Generative AI to Bank Staff in Japan.