About Soliton Capital..
Solitons can be observed in various natural phenomena. For example, they appear in tsunamis, ocean currents, large surfing waves, the aurora, blood flow, the functioning of genes and DNA, and the formation of black holes. Solitons exist wherever energy flows and transmits stably.
For instance, a large wave grows as it moves from the open sea towards the shore, reaching the shore without breaking. Surfers ride these waves and enjoy surfing. Without solitons, surfing would not be possible. (Adapted from "What is a Soliton?" by Yasumi Tsuboi)
Like soliton waves, we aim to be a company that, under a foundation of stable and strong principles, remains flexible in the face of uncertainties and grows steadily alongside our clients.
Every business activity accumulates into accounting data, which is presented in formats such as the Balance Sheet (BS), Income Statement (IS), and Cash Flow Statement (CF). While analyzing financial statements is important, we believe that a deep understanding of each transaction is essential for forming effective strategic advice.
In analyzing financials, understanding the management's willingness and intentions is a crucial element. Global rating agencies use two indicators in their assessments: 'business risk,' which reflects the management's willingness and intentions, and 'financial risk,' which is primarily derived from financial statements. Business risk, in particular, is given significant weight because it cannot be easily replicated; it is cultivated through years of experience and proven performance.
We also focus not only on the financials but also on understanding the underlying context, and we strive to provide higher quality recommendations based on this comprehensive understanding.
We believe that utilizing IT to enhance operational efficiency is extremely important. However, while many existing software solutions come with a range of features, not all of these features are used by every company. Particularly, companies with ample financial resources can invest actively, but there are also companies with limited resources.
We focus on developing systems with essential core functions and advancing with a small development team to keep costs low while still delivering effective solutions. This approach is well-received by small businesses that manage their operations with paper or Excel. By digitizing data, we reduce the time spent searching for information and decrease file sizes, which alone contributes to improved efficiency. Additionally, by combining this with financial analysis, we believe we can further enhance overall operational efficiency.
Furthermore, we are actively engaged in the field of AI and have earned a silver medal in a Kaggle competition. By providing our clients with insights from big data analysis, we aim to leverage accumulated data to offer a wide range of recommendations, including strategies for maximizing revenue.
When time allows, I plan to participate in Kaggle competitions again, aiming for a gold medal and eventually challenging for the Master or the Grandmaster title.
In the 'Home Credit - Credit Risk Model Stability' competition, I participated in building a high-precision credit scoring model using big data exceeding several million records (totaling 33GB). By effectively leveraging the characteristics of the data and applying various statistical ensemble models, I was able to achieve notable results.
Our approach is to engage with our clients in an "Industry Agnostic" manner, meaning we do not limit ourselves to any particular industry. What becomes crucial in this process is the wide range of data provided by our clients, and among these, financial statements are the ones we encounter most frequently. Let’s use financial statements as an example to illustrate our approach.
When examining the income statement, a key point to focus on is the "revenue composition." Specifically, there is a target market, and by applying the market share, we can determine the number of target customers and sales transactions. Multiplying these sales transactions by the unit price gives us the total revenue. Of course, not all data is always available, but rather than disregarding such macro-level information, we begin by making assumptions based on the available data, supported by our extensive research efforts to estimate the necessary information, including the target market. Following this, we refine the accuracy of each parameter through discussions with management and dialogues with the actual market.
By analyzing the numbers based on these assumptions, we can start to see how the target market and sales methods are influenced by the industry. Rather than being confined to the belief that "this industry should be this way," we believe that by first understanding the core nature of a company, we can uncover new perspectives. We apply similar processes to all income statement items. As a result, we believe our firm continually gains fresh insights.
We take a similar approach when analyzing the balance sheet. For example, focusing on "tangible fixed assets," manufacturing companies often own a variety of machinery and equipment. Particularly in Japan, companies tend to carefully use equipment even beyond its depreciation period. We have observed that with proper maintenance, the lifespan of this equipment can be significantly extended.
Therefore, we meticulously examine the operational status and maintenance condition of each piece of equipment, considering when it might be necessary to update the equipment, and whether subsidies are being utilized or could be utilized during this process. This is how we carefully review each item on the BS.
By valuing and utilizing older equipment to generate profits, we see this as a wonderful aspect of Japanese culture. It’s essential to protect and preserve these assets while also considering the introduction of new equipment to enhance the capability to adapt to next-generation manufacturing technologies. At our firm, we adopt this mindset and provide comprehensive support, including financial analysis and funding assistance, to help foster the growth of our clients.