The Journal The Authority on Global Business in Japan

When Sophie Meralli looked online last summer for a community of women in the venture capital (VC) industry in Japan, her search came up empty. While she found industry events that had as their focus women in VC, there was no organization dedicated to connecting them as professionals.

Within weeks, however, that changed. In August, Meralli reached out to a friend, Shino Furukawa, and asked her to join forces. The result was Tokyo Women in VC, a closed commu­nity for women in VC- and investment-related fields in Japan, but with a focus on Tokyo.

The organization was co-founded by Meralli, an investor at global venture capital fund Eight Roads Ventures, and Furukawa, an investor at Pola Orbis Capital, a division of cosmetics company Pola Orbis Holdings Inc.

Through Tokyo Women in VC, Meralli and Furukawa aim not only to facilitate networking and collaboration among professional women in the industry in Japan, but to open pipelines and remove barriers, create programs for career devel­opment, and connect women in the industry to peers globally. Ultimately, their goal is to enrich diversity in the risk capital sector, improve the success of women founders, and increase the industry’s overall bottom line.

Speaking to The ACCJ Journal, Meralli explained, “This community is really about empowering women and creating more networking opportunities for them, given the fact that the VC world is very network- and people-driven.”

Tokyo Women in VC, which began as a community on social media platform Facebook, has some 34 members and is growing. The group has four key goals:

  • Networking and community building
  • Deal flow and knowledge sharing
  • Career development
  • Increased access to female founders and VC candidates

To tackle networking and community building, Tokyo Women in VC will facilitate in-person and online events for women in the industry and adjacent fields, such as investment banking and corporate development.

As for increasing deal flow and knowledge sharing, the community plans to create seminars for members focused on specific sectors and industry trends.

Career development, meanwhile, will involve establishing a mentorship scheme, running seminars on global and local best practices, and sharing knowledge on fund creation and management.

And to increase access for female founders and candidate venture capitalists (VCs), the group aims to launch joint events—where founders meet investors—and raise awareness of VC as a career option for women in other fields.

Tokyo Women in VC launch event at Cambridge Innovation Center, Tokyo in December 2020

Tokyo Women in VC is off to a solid start, Meralli noted. At their launch event in Tokyo in December, several women in the industry joined in person or participated remotely. Economist Kathy Matsui, who is vice chair and chief Japan strategist at Goldman Sachs, addressed the gathering.

Matsui, a champion of women in business, is in part noted for the Womenomics reports she has written, starting in 1999, on the link between Japan’s gender employment gap and gross domestic product.

Since she penned the first report, Japan’s female labor partici­pation rate has risen to record levels that surpass those of the United States and of European countries, according to the Womenomics 5.0 report, pub­lished in 2019.

This leads one to ask if there is a need for a women-focused organization for the VC industry in Japan. Yes, Meralli said.

Matsui shares a similar sentiment. While describing areas of success in women’s participation in the workplace in Japan, in her 2019 report she notes areas still ripe for improvement.

There’s “a dearth of female leaders, gender pay gaps, inflexible labor contracts, tax disincentives, insufficient caregiving capacity, and unconscious biases,” the report states.

In their own research, Meralli and her group agree with the report. Tokyo Women in VC—and, indeed, other organiza­­tions—have found stark gender disparities, particularly in the VC and entrepreneurship ecosystem.

In a recent online survey, Tokyo Women in VC found that the participation of women in the industry in Japan leaves a lot to be desired. According to their findings, 91 percent of VCs in Japan have no female partners; 59 percent of VC funds have no women on their investment team; and 44 percent of funds do not have any women employees.

Further, only 13 percent of VC employees, 10 percent of actual VCs, and three percent of VC partners are women. The last number, in particular, is in accord with Matsui’s lament about a “dearth of female leaders” in corporate Japan, despite im­prove­ments on other rungs of the corporate ladder.

In part due to the anemic representation of women VCs, the number of female Japanese founders lags the average of their cohort in other Organisation for Economic Co-operation and Development countries.

“Venture capital is about nurturing and supporting founders throughout their journey. So, you start [by creating a] trust relationship with the founder. And, because of homophily, you tend to do that more with people of the same gender,” Meralli said, speaking of the tendency for people to be drawn to others who are similar to them. “This means a female VC can have more chances to fund—or is more likely, or more willing, to fund—women entrepreneurs.” Of course, this requires more of women to be in decision-making positions.

Commencement ceremony on the MIT Cambridge campus in June 2018

Homophily can be a barrier to access for women in industries, such as the VC industry, that are majority male.

This arises in areas such as old-boy university and work networks, social class, and even racial and gender identity, argues Siri Chilazi, a research fellow at the Women and Public Policy Program at the Harvard Kennedy School.

“VCs are extremely homogeneous and similar to each other in terms of gender, race, educational background, and work experience,” Chilazi writes in a 2019 report entitled Advancing Gender Equality in Venture Capital: What the Evidence Says about the Current State of the Industry and How to Promote More Gender Diversity, Equality, and Inclusion.

“This demographic uniformity resulting from a common human tendency of individuals to associate and bond with similar others—homophily—has not only perpetuated the exclusion of women in the past but continues to hamper the VC industry’s ability to diversify today.”

If, as the research suggests, homophily is a primary factor in the under-representation of women in the VC world and the underperformance of women founders—in the United States as in Japan, for instance—then groups such as Tokyo Women in VC are well placed to begin tackling it.

Indeed, the community was, in part, inspired by similar organizations in the United States, such as Breaking 7%, a Boston-based women-in-VC group, and All Raise, a non-profit in San Francisco that aims to accelerate the success of female investors and founders.

Tokyo Women in VC also works closely with Global Women in VC, a community of some 2,500 industry professionals from around the world connected through the workplace commu­nications platform Slack. Meralli and Furukawa manage the Tokyo channel on the app.

AI startups and investors networking event in Boston in 2019

Before relocating to Japan in 2020 and co-founding Tokyo Women in VC, Meralli worked at venture capital firm Innospark Ventures in Boston. As their first employee, she sourced and invested in several early-stage artificial intelligence startups in a variety of industries.

A French national, Meralli is a certified public accountant who began her career at professional services multinational Ernst & Young, with stints at the company’s Paris and Tokyo offices.

She also holds a master’s degrees in business administration from the MIT Sloan School of Management, and science in accounting and finance from the London School of Economics and Political Science, and a bachelor of arts from Paris Dauphine University. Which begs the question: What makes for a good venture capitalist?

“That’s actually a great question. Because there’s no right background. I know many VCs who previously worked in a startup, investment bank, consulting, or even as a lawyer—it doesn’t really matter.

“But I think that the most important thing is intellectual curiosity. Because you’re going to assess things that you don’t know about. So, being able to dig deeper is surely a skill. But if you don’t have that passion or that curiosity to, let’s say, learn about organs-on-a-chip (OOCs), and to read tons of papers about it, then you won’t be able to enjoy it that much.”

Meralli is referring to a time when she worked on a deal involving a company that was developing complex in vitro models such as OOCs—a cell-culture technology, or artificial organ, that mimics the phenotypic and molecular functions of actual organs. The technology is used in drug discovery research.

Is there more, beyond intellectual curiosity, required to being a good VC? There is. As Meralli explained: “The other part is communication and people skills. VCs develop strong relationships with entrepreneurs to support them in their journey. Many aspects of communication, such as transparency, man­aging expectation, listening, and conveying feedback, are very important to develop long-term trust.”

People skills are also important as VCs meet new en­tre­preneurs and peers on a daily basis.

When meeting an entrepreneur, a good venture capitalist needs to be able to analyze information in real time,” she added. “Every interaction with an entrepreneur is precious, and it’s important to understand their business, ask the right questions, and convey feedback to have productive discussions on both ends.”

John Amari is a writer and editor from the UK who specializes in articles on startups, entrepreneurs, science, tech, and business.
Homophily—has not only perpetuated the exclusion of women in the past but continues to hamper the VC industry’s ability to diversify today.