Today we are excited to announce our partnership with General Atlantic through their purchase of ~$100m (~JPY 15 billion) worth of our stake in SmartHR. This transaction marks the largest secondary sale ever by a single seller in Japan’s startup history. With this sale, we’ve returned 6x the SPV we formed for the company in 2017.
General Atlantic is a world-renowned growth equity firm with a storied track record backing global category leaders including Airbnb, Bytedance, Slack, Klarna, Duolingo, and many more. We’re thrilled to welcome such a world-class investor to SmartHR’s cap table as the company continues its incredible growth journey.
The best part is that we still own about half of our stake. We continue to be a major shareholder in the company and are bullish for the years ahead.
So why sell at all?
Normally I wouldn’t discuss this openly, but since one of SmartHR’s founders, Shoji Miyata, founded another company called Nstock to accelerate and facilitate secondary transactions in Japan, I think this is an important milestone to broadcast as a case study.
In the US, secondary transactions of this scale are common. As companies have continued to raise larger and larger rounds in the private markets and delay their IPOs, the secondary market has served as an important way for early investors to get liquidity and for the company to bring in new shareholders to help with different stages of the company.
OpenAI just recently had a $6.6 billion secondary transaction done at $500 billion. Stripe had one earlier this year as well. SpaceX had one valued at about $1.25 billion late last year. The list goes on. According to Jefferies, global secondary market transaction volume reached US$162 billion in 2024. One estimate shows that about 70% of VC exits in 2024 likely came from secondaries. Secondaries have not only become common but an integral part of the startup ecosystem.
But in Japan, we are in the early innings. As companies have been able to raise much more capital and stay private much longer, the need for secondaries has increased significantly. As this trend continues, we’ll likely see many transactions of this nature.
For anyone that has been fortunate enough to work on something for almost a decade and get to this scale, transactions like this are simply about managing risk. We’ve been fortunate to enjoy so much appreciation from when we first invested that so much of our firm was tied to this one company. No matter how bullish you may be about the upside, managing risk is rational. With this sale, we’ve already returned more than 6x our fund, while still holding roughly half our position to enjoy the upside from here.
This is a great outcome for everyone involved, but the decision was bittersweet. SmartHR is a company that is near and dear to our hearts. It is our first big win that put us on the map. In 2017 we went all-in on this company through an SPV, which was the first of its kind in Japan at the time. We took a bet on SmartHR, but the SmartHR team also took a bet on us. Our deep gratitude cannot be captured in a blog post.
What made the decision even harder is that SmartHR continues to perform at a level that’s exceptional by any global standard. Even at this scale, its numbers dwarf most other software companies in Japan. And through countless conversations with global investors, I keep hearing the same refrain — the SmartHR team is one of the best they’ve ever met in Japan.
This transaction with General Atlantic isn’t just a transaction, but a partnership. It’s a bridge between Japan’s startup ecosystem and global capital. It reflects how far Japan has come, and how much further it can go when world-class investors and local champions work together.
We’re proud to have played a small part in this journey and excited for this next chapter. A heartfelt thank you to the SmartHR founders, the management team, General Atlantic, and our LPs, all of whom took a chance on us and made this milestone possible.
