Since its founding, JAFCO has pioneered a new era together with its stakeholders by committing to creating new businesses that society needs.

This time, we would like to talk about our support to Microwave Chemical Co., Ltd., which provides R&D and engineering using microwaves and was newly listed on the Tokyo Stock Exchange Growth Market in June, with Masahide Shibata of the Business Development Division and Mizuki Takahara, our Partner who is in charge of investment, from the perspective of  actual support and how to work with investee companies.

【Profile】
Tomoya Shimojo, Director and General Manager of Administration Division, Microwave Chemical Co., Ltd.
At Deloitte Touche Tohmatsu, he was engaged in statutory audits of listed companies and listing preparation support. After serving as Director and General Manager of Administration Division of Klingle Pharma Co., Ltd., he joined Microwave Chemical Co., Ltd. in November 2013. As the head of the Administration Division, he led the company's preparation for listing. He is a certified public accountant.

[What is Microwave Chemical Co., Ltd.?]
Microwave Chemical continued to work on the commercialization of microwave processes, which were said to be difficult to industrialize, and established a microwave technology platform. Currently, it is collaborating with companies and institutions in Japan and overseas to build and provide total solutions from research and development to engineering. Due to the recent trend toward carbon neutrality, its technology is being deployed in various fields as a key technology for industrial process electrification. In June 2022, it made IPO on the Tokyo Stock Exchange Growth Market.

Be ready to go public at any time in line with business growth

──Microwave Chemical was newly listed on the Tokyo Stock Exchange Growth Market in June 2022. About half a year has passed since the company went public. Please tell us how you feel now.

Shimojo Well, internally, we are seeing changes in our efforts to achieve our goals due to a heightened awareness of numbers among employees,including sales representatives. Externally, it has become easier to obtain acceptance of job offers.

Newspaper coverage is increasing, and every day I feel that the company is making an impact on the world.

Mr. Tomoya Shimojo, Microwave Chemical Co., Ltd.

──The listing brought about changes inside and outside the company. Now, I would like to ask you about the path that Microwave Chemical took to go public. First, Mr. Shimojo, please tell us about when you joined Microwave Chemical.

Shimojo When I joined Microwave Chemical in 2013, we had raised approximately 700 million yen in funds to work on the verification of microwave process commercialization and the construction of the first plant in Suminoe, Osaka. Therefore, even though the internal management system was being developed, it was a situation where the objects to be managed were just about to be completed.

I got down to work with the intention of setting up a system from scratch.

──Did you already have the knowledge and experience to prepare for listing?

Shimojo Before joining Microwave Chemical, I supported listings at an audit firm and prepared for listing at a bio-venture company. In particular, my previous job at the bio-related venture was a university-launched venture like Microwave Chemical, and we had many things in common. Including my previous job, I have been involved in listing preparations for about 15 years.

That's why, even when Microwave Chemical approached me, I decided to join the company relatively smoothly, with the stance of "If I'm asked, I'll go."

──You joined the company in 2013 and the company was listed in 2022. Looking back over the past 10 years, what are your impressions?

Shimojo In general, I get the impression that IPO preparations are carried out in one fell swoop after setting a goal, but in reality, a company is preparing for an IPO at any time according to the growth of the business, waiting for the right timing. For the past 10 years, it seems that this situation has continued.

Takahara Around 2018, when the company was preparing to go public, it was a time when the business model was undergoing trial and error.

JAFCO Investment Partner Mizuki Takahara

Shimojo That's right. If the business model changes, the indicators and management formats to be looked at will also change, so it was difficult to find the key to business management, such as how to manage accounting revenues and costing methods at each pivot.

In addition, the deep tech field like ours is an industry that continues to make losses until commercialization. In order to keep costs down, we couldn't allocate sufficient budget to in the Administration Division, so at first there were 4-5 people in addition to me: 1 person in charge of accounting, 1 person in charge of personnel and labor affairs, and 1 person in charge of public relations and general affairs. The team was carrying out normal work duties and preparations for listing at the same time.

Provide necessary support when needed. Focused on flexible response in line with business growt

── JAFCO's back-office support began right at the time when the business model was changing. What kind of support did you start with?

Shibata Around 2019, when JAFCO started back office support for the company, the business model was changing, and it was time to reorganize the system in preparation for an IPO and gear up to the next level. JAFCO mainly supported the organization and preparation of materials and regulations such as for J-SOX (internal control reporting system) and  joint development projects.

​Masahide Shibata, in charge of business development at JAFCO

Shimojo Yes. At that time, the Company was building a system for listing, so I asked for back office support via the person in charge of investment at the time. Although the organization and preparation of such materials are an important point in pre-listing due diligence, it is an area that tends to fall behind due to difficulty in allocating resources. Mr. Shibata took care of that part, which was really helpful.

Shibata The stance I had in mind when providing support  was to fill in the areas that Mr. Shimojo couldn't reach. Mr. Shimojo himself had a lot of experience in IPO preparations, and the team was made up of talented members. While discussing the work flow with the team,  JAFCO shared the knowledge necessary for listing when needed and often asked Mr. Shimojo for final confirmation.

Shimojo Mr. Shibata cooperated with our IPO team, so I had the impression that the work had been done before I knew it.

I had previously outsourced IPO preparations to an external company, but it was frustrating because I needed time to explain the background and purpose of the request. However, Mr. Shibata already understood our business flow and current situation, and was extremely helpful in that we didn't have to explain the background one by one.

──A deep understanding of the business flow is also an important factor in making the materials you organize and prepare "meaningful".

Shimojo Yes. In order to organize and prepare materials, it is important to identify the key elements of management by understanding the flow of business using a flow chart, and the risks and controls that occur in the process through job description. Identification is important. Furthermore, in the deep tech field like ours, there was no similar business model in the past...

Mr. Shibata understood such business characteristics and verbalized the essence of the business.

Takahara Information is constantly shared between investment personnel and the back office support team. If we don't have enough information to provide support and ask Mr. Shimojo to take time for information sharing, then what's the point of the support? Necessary information is strictly shared within JAFCO to ensure that perceptions are aligned.

Shibata Back office support is not just about organizing and creating materials. We needs know the purpose of the regulations to be created and the circumstances under which will they be operated. It is meaningless to create only formal materials, so naturally, understanding the business is important.

──Mr. Shibata, what else did you keep in mind or were you conscious of when providing back-office support?

Shibata Mr. Shimojo and everyone else in Microwave Chemical were busy, so I tried to provide pinpoint support so as not to waste as much of their time as possible.

In addition, as Mr. Shimojo said, an IPO cannot be carried out in one go. Since the needs will change according to the business situation, I also tried to be prepared to provide the necessary support when needed.

Originally, JAFCO's back-office support had a history of providing support for a fee as a subsidiary. It moved in-house in 2010. In a sense, we are able to provide essential support, such as being able to respond flexibly when in trouble and being able to respond freely to requests for advice, because we don't ask for afee. 

Takahara If you outsource to an external company, the contents of the support tend to be packaged, or you will have to make an estimate each time. We at JAFCO have experienced more than 1,000 IPOs, and we have many specialists within the company. We provide support to the extent necessary for an IPO according to the situation of each portfolio company. I think my strength lies in having the knowledge and experience necessary to "pass the test."

──It's exactly like providing necessary support to allow an IPO at any time.

Shimojo Depending on the situation, we may need 70-80 percentage point  support instead of 100 points. There are few people who know the level and passing line in that respect,  so I have the impression that JAFCO helped me where I really needed help.

It was reassuring to have someone to talk to when I was in trouble

──What do you think of JAFCO's back-office support so far?

Shimojo JAFCO first invested in the Series B financing and supported us when we were still undecided on the direction of our business. Mr. Shibata and Mr. Takahara worked closely with us in the process up to the IPO, so they are just like "relatives".

Especially immediately prior to the IPO, I thought that if I had a problem, I could talk to Mr. Shibata or Mr. Takahara, and would be able to solve it. Even now that we are listed, when some administrative question arises in a meeting, we sometimes say,  "Why don't we ask JAFCO?." I was very grateful to have such a reassuring presence.

Takahara We are happy to hear that.

─Finally, please give a message to the Administration Division heads who are aiming for an IPO.

Shimojo The position of the Administration Division manager like me requires an ability to think ahead, but in a venture company, there are always unexpected events.

That is why I would like to recommend "having a brain inside and outside the company. I think that just having someone who objectively evaluates your thoughts and whom you can talk to freely will change your mind considerably. Once you think about the future to some extent, then make up your mind and just concentrate on the present. For that reason, I think it would be good to have a brain that you can turn to inside and outside the company.

* In "IPO STORY," which traces the path from the encounter between an entrepreneur and JAFCO to its listing, a conversation between Mr. Tsuyoshi Yoshino, President and CEO of Microwave Chemical Co., Ltd. and Mizuki Takahara, Partner of JAFCO, is featured. If you are interested, please take a look.

Attempt for IPO of university startup. A 15-year journey of turning headwinds into tailwinds