Dependence on Startup Investment and Hiring Demand

「We recognize that hiring demand and competition among companies to recruit talent have, if anything, become more active.」

「To address these risks, the Group is working to expand its customer base and the range of positions it handles so that it is not overly dependent on any particular customer group. In addition, in response to changes in the market environment, including greater IPO difficulty and diversification of exit strategies following the increase in listing maintenance criteria on the TSE Growth Market, the Group has launched a new startup M&A advisory service. Through this service, the Group is working to address the diverse needs of startups and reduce risk by diversifying its earnings base.」

「To address these risks, the Group is working to expand its customer base and the range of positions it handles so that it is not overly dependent on any particular customer group.」

「Although the domestic startup fundraising market had continued to decline under the influence of financial conditions, signs of recovery have emerged, with the amount raised in January–September 2024 increasing 3% year on year and the amount raised in July–September 2024 increasing 19% year on year (source: STARTUP DB).」

「Meanwhile, fundraising by U.S. startups declined significantly because of concerns about a recession following tighter financial markets in major countries, including the United States, and the collapse of Silicon Valley Bank. Following conditions in the United States, fundraising by Japanese startups also declined by approximately 30% year on year (source: STARTUP DB).」

「During the cumulative second-quarter period, the environment surrounding the startup industry deteriorated because of concerns about a recession following tighter financial markets in major countries, including the United States, and the collapse of Silicon Valley Bank, causing a significant decline in fundraising by U.S. startups. Following conditions in the United States, fundraising by Japanese startups also declined by approximately 30% year on year (source: STARTUP DB). Although continued monitoring of the uncertain economic and business environment is necessary, the company expects the market to expand over the medium to long term in response to startup policies.」

「During the cumulative first-quarter period, the environment surrounding the startup industry deteriorated significantly because of concerns about a recession following tighter financial markets in major countries, including the United States, and the collapse of Silicon Valley Bank. Funding raised by Japanese startups in the January–June 2023 period fell 35.2% year on year (source: STARTUP DB, 2023 First-Half Domestic Startup Investment Trends Report). The uncertain business environment described as a “startup winter” continues.」

「However, financial markets have shifted toward tightening in major countries, including the United States, where large companies have implemented substantial workforce reductions and other measures in anticipation of an economic downturn. In Japan, concerns have arisen over weaker consumer sentiment because of rising prices, and startups have also taken steps such as restraining costs to extend their runway, meaning the period remaining before a company runs out of cash, in anticipation of an economic downturn.」

「Meanwhile, global stock market weakness stemming from volatility in the financial and capital markets has caused the number of IPOs and the amount of capital raised in global markets to decline year on year. In Japan, although large fundraising transactions and the establishment of large funds have been observed, conditions remain uncertain, with the amount raised in the first half of 2022 (January–June) declining by approximately ¥200 billion year on year, from approximately ¥650 billion to approximately ¥450 billion, according to the STARTUP DB 2022 First-Half Domestic Startup Investment Trends Report, and the amount raised in the July–September quarter also declining by approximately ¥140 billion year on year, based on the company's calculations from STARTUP DB data.」

「Meanwhile, global stock market weakness stemming from volatility in the financial and capital markets has caused the number of IPOs and the amount of capital raised in global markets to decline year on year. In Japan, although large fundraising transactions and the establishment of large funds have been observed, conditions remain uncertain, with the amount raised in the first half of 2022 (January–June) declining by approximately ¥200 billion year on year, from approximately ¥650 billion to approximately ¥450 billion, according to the STARTUP DB 2022 First-Half Domestic Startup Investment Trends Report.」

「Potential risk factors include reduced asset-owner allocations to venture capital, a decline in the amount of funding raised by startups as a result of lower valuations of private companies, and the resulting stagnation in hiring activities.」

「The company provides services for or related to domestic startups and is potentially affected by trends among domestic startups, hiring demand, and other factors.」

「Although the number of job openings has been trending toward recovery from its low in the first quarter, the recovery has been gradual, and conditions were generally difficult during the cumulative third-quarter period.」

「Although the number of job openings has been trending toward recovery from its low in the first quarter, the recovery has been gradual, and conditions were generally difficult during the cumulative second-quarter period. As the total volume of job openings among clients declined, the company worked to strengthen support for companies with strong hiring needs and for high-demand positions, such as executive and engineering roles.」

「As many of the startup companies that are our clients reviewed their hiring plans because of COVID-19, the number of job openings has declined compared with before the pandemic.」

「In particular, the company's core Talent Agency Service may be affected by hiring needs at startup companies. If the number of startups and the supply of funding to startups decline significantly because of deterioration in domestic and overseas economic conditions and business trends resulting from the recent COVID-19 pandemic, this could affect the Group's financial position and operating results.」