Investment in AsMama, Inc. by Japan Venture Philanthropy Fund (JVPF)

JVPF is a fund established and managed jointly by Social Investment Partners (SIP) and The Nippon Foundation. It is a fund funded by donation; whose total amount is JPY 890 million as of March 2020.

JVPF supports the growth of social enterprises with mid- and long-term financial and management support. AsMama, Inc. is JVPF’s third case of support. The company received both management and financial support over a 4-year period from 2015 to 2019.

Investment Overview

Fund Scheme

AsMama is a social venture that aims to create a society where people can rely on and support each other by connecting people to people and people to community.

The company provides a platform to facilitate community-based child care through IT tools, organizes community-based event to promote child care sharing, and initiates various activities in partnership with local governments and companies.

JVPF provided both management and financial support to AsMama, which marked its 5th anniversary, to strengthen its business foundation.

Total funding amount was JPY 30 million and the support was provided in the form of unsecured convertible bond-type bonds with stock acquisition rights. The end of payment terms was August 31, 2018 (later changed to August 31, 2019). Support was provided by SIP and pro bono partners of SIP during the support period.

Overview and Conditions of financial support
Fund Scheme
Highlights and Key Takeaways
  • 1)Provision of financial support utilizing unsecured convertible bond-type bonds with stock acquisition rights

In this project, financial support was provided utilizing convertible bond (CB) -type bonds with stock acquisition rights.

Convertible bond-type bonds with stock acquisition rights are, unlike straight bonds, characterized by being able to be converted to stock at predetermined conversion price. In this project, considering that the investee was a venture-stage company, convertible bonds with fluctuating conversion price were used, that is, the stock price of the investee was not evaluated at the time of providing support, but conversion price would be determined based on the future market value when the market value would become available.

The advantage of using this type of convertible bonds is that since the stock price is not evaluated at the time of providing support, there will be no effect on the stock price even when the investee attempts to raise funds by means of equity financing after receiving support, as such the degree of freedom of management of AsMama can be ensured.

In addition, financing utilizing convertible bonds ensures financial returns. In the case where the convertible bonds are not converted into stocks, the principal can be recovered by redeeming bonds in so far as the company is able to build a profit model.

  • 2) Embedding a mission lock clause

In utilizing CB, JVPF added the mission lock clause to the redemption clause. Mission lock means requiring sociality of corporations or businesses being supported to be maintained and sustained regardless of the growth or expansion of the business.

JVPF is a venture philanthropy fund that aims to solve social issues facing Japanese society by fostering and supporting social enterprises. Unlike most venture capitals, it gives top priority to solving social issues rather than seeking financial returns. As such, in executing investment, JVPF required AsMama to continue to pursue its social mission as a condition for investment. This enables JVPF to withdraw support and investment in the case where investee deviates from its original social mission of building a community where people can trust each other and realizing a society where local residents can support each other, by expanding its business or pursuing profits.

  • 3)Growth support through accompanying support

The JVPF provided AsMama with management support from three perspectives of (1) reviewing core value of business, (2) reinforcing organizational base, and (3) redesigning business strategies. The support was provided by SIP, one of the management bodies of the JVPF. Staff of Bain & Company, Inc. and Clifford Chance Law Office, as pro bono partners of the fund, provided more technical support.

People belonging to venture capitals and private equity firms participated in SIP. Accompanying support provided by those people with knowledge and networks led to more effective management support.

  • 4)Redemption and flow of funds through donation

AsMama redeemed all of the grant and the support was completed in August 2019, four years after the support began. The redeemed JPY 30 million is transferred back into the fund to be utilized to invest and support new social enterprises. In that sense, to JVPF, supporting AsMama was a case where it could expand social return of fostering responsible individuals and creating infrastructure for a society where people can support each other while achieving financial returns by recovering funds it invested.

AsMama made a donation to the JVPF in addition to funds for redemption. AsMama, whose business had grown and become stable, made a contribution in the form of a donation, which was not originally envisioned, with the intention of supporting social entrepreneurs who would follow in its footsteps. This means that the JPY 30 million invested in the social venture, AsMama, has not only been recovered, but also generated additional funds available for the use of further investments and supports.

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