VC invests in 'non-listed' BMSG, which started with 100 million yen in private capital and has 6.5 billion yen in retained earnings. The new entertainment company model SKY-HI is challenging

Hello! This is Entaro.

In this article, I will cover the news that BMSG has received investment from a venture capital (VC) firm.

First, let me briefly introduce the business of venture capital. It involves buying shares of companies that have not yet gone public—ventures and startups—at a low price, and selling them at a high price once the company goes public. The exit strategy is either an IPO or an M&A.

However, BMSG has officially declared, 'We will not go public. We have no plans to do so in the future.'

Moreover, far from being in need of funds, their net profit for the most recent fiscal year was approximately 2.3 billion yen, and their accumulated retained earnings are about 6.5 billion yen. This is their financial standing after just five years of operation. They have plenty of money and are not aiming for an IPO.

Normally, this deal shouldn't happen. What does the VC intend to recover? What did BMSG want that made them hand over shares?

In this article, I will first grasp the company BMSG three-dimensionally from the figures in their public notice of financial results, organize where SKY-HI is trying to take the company and the music industry, and then look at the contents of this release and the 'points of concern.'

After that, in the paid section, I will decipher the true nature of BMSG's choice by analyzing the VC's recovery logic, the identity of the two investors, the reason for this timing, and comparisons with three precedents: A24, MrBeast, and Yoshimoto Kogyo.

BMSG is a trinity company

BMSG is a management/label company established in September 2020 by Mitsuhiro Hidaka, also known as SKY-HI. Its mission is 'To not kill talent.'

They have launched BE:FIRST from the audition 'THE FIRST,' MAZZEL from 'MISSION x2,' and HANA from 'No No Girls,' and artists such as Novel Core, Aile The Shota, edhiii boi, and STARGLOW are signed to the label.

I love BMSG's auditions and artists, especially 'No No Girls' (commonly known as Nonoga) and HANA, and I was so moved that I cried my eyes out when I attended the Nonoga final in person.

I not only love BMSG's artists but also respect SKY-HI as a business owner, and of course, I have purchased all of his books.

As someone like that, if I were to introduce BMSG from the perspective of its business structure, one of the company's characteristics is that it possesses a trinity of management, label, and creative in-house.

In the Japanese music business, it is customary for these three functions to be divided into separate companies, with revenue distributed among them. These include talent agencies (productions) that manage artists, record companies that handle the planning, production, promotion, manufacturing, and sales of music content, and production companies that create programs and videos.

BMSG handles all of this in-house.

Management: Turning the 'discovery' stage into in-house IP

Traditional agency management involves promoting existing talent to generate revenue. BMSG has turned the process of

discovery and development itself into content.

The audition programs that follow, such as 'THE FIRST,' 'MISSION x2,' 'No No Girls,' and 'THE LAST PIECE,' are not just artist recruitment activities; they are in-house IP that are watched, discussed, and form a fandom even before debut.

IP as talent, IP as content, and IP as music—IP in various aspects is created during the process of the audition program.

For example, 'MISSION x2' is distributed in-house on the official BMSG YouTube channel, creating a structure that intentionally does not rely on television stations.

By the moment a group debuts, they already have fans who have shared in their story. In fact, I watched the story of Nonoga and am supporting them as one of HANA's HONEYs (fan name).

By using an audition program as the entry point for management, it becomes in-house IP, a method that compresses promotion costs after debut.

In terms of development, they also have a TRAINEE system and keep them in-house from the pre-debut stage. Furthermore, as a contractual philosophy, SKY-HI has advocated for 'equal contracts' and 'a path to being able to make a living, and a path after becoming successful' since the company's founding.

The asset formation support system 'Unseen Life Plan' announced this time is an extension of this.

Label: In-house control of planning, leveraging major power for distribution

BMSG actually has three labels. B-ME (to which SKY-HI, Novel Core, BE:FIRST, etc., belong), co-founded with avex; BE-U (MAZZEL, REIKO), co-founded with Universal Music; and the fully in-house independent label Bullmoose Records.

HANA made her major debut from Sony Music Records, and they change the partner they work with for each group among the three major companies: avex, Universal, and Sony.

In other words, BMSG takes a structure where they borrow the distribution functions of the major music industry—distribution and promotion—while keeping the initiative for label planning and production on their side in the form of joint labels.

This is a method where they are involved as a party to label operations, rather than the conventional relationship where 'the agency entrusts talent to a record company.'

While the detailed contract terms regarding which functions are incorporated in-house to what extent are not public, since they have called themselves a 'management & label company' since their founding, it is clear that the design involves the agency in revenue from the master recordings.

And Bullmoose Records revamped its structure in April 2025, signing contracts with external artists such as SALU and BANVOX.

Introducing 'FlexDeal,' which provides made-to-order support from management to master recording production and distribution, it is becoming an infrastructure that provides label functions themselves to the outside, going beyond just being a receptacle for in-house artists.

Also, as a writer and music producer, Sunny, a writer who has worked on songs for BTS and BLACKPINK, has been appointed as General Producer.

Creative: Turning production costs from 'outsourcing costs' into 'in-house assets'

The third is the internalization of production functions. BMSG has launched the production organization 'BMSG Creative Lab', establishing a system to create creative works such as music, videos, and programs in-house.

JIN (SIX), who has won numerous international awards, including a Gold Lion at the world's largest advertising festival, Cannes Lions, for the music video for the US band OK Go's 'Obsession,' and was selected for 'Abbey Road Red,' Europe's premier music technology incubation program, with 'Lyric Speaker,' has been appointed as Executive Creative Director.

While there is such a production organization, it is also significant that SKY-HI himself is a producer and creator while being a manager.

For example, MAZZEL's pre-debut song 'MISSION' was provided by SKY-HI.

The planning and production of audition programs, as well as the 'BMSG FES' festival, are all handled in-house.

What would have disappeared as expenses if outsourced to external production companies instead becomes assets that accumulate within the company in the form of production know-how, video archives, and music catalogs.

Since creative decision-making is completed internally, it is also a system that allows the 'creative-first' philosophy to be executed without compromising to external convenience.

In summary, BMSG's trinity is not a 'do everything yourself' policy.

The sources of profit and where IP is born (planning, production, management, and label control) are kept in-house, while equipment-intensive functions (distribution, promotion) leverage the power of major players—a vertical integration that is highly selective.

When a hit is produced, the profits that would have flowed out under a traditional division-of-labor structure instead accumulate within the company. The financial figures you will see next are the result of this structure.

Another important point is that SKY-HI has publicly stated that he invested over 100 million yen of his own personal funds to hold 'THE FIRST'.

In other words, this company was launched by the founder, SKY-HI, taking the risk himself from the start, without relying on external investors. This will become relevant later.

Incidentally, the company building was also purchased by SKY-HI personally.

The profitability shown in financial statements that proves 'there is no need for fundraising'

Even as a private company, corporations have an obligation to publish financial statements. You can track the profit trends from BMSG's official gazette financial announcements (all are approximate figures based on the official gazette).

• 3rd Fiscal Year: Net profit approx. 1.25 billion yen / Retained earnings approx. 2.28 billion yen / Total assets approx. 3.39 billion yen

• 4th Fiscal Year: Net profit approx. 1.99 billion yen / Retained earnings approx. 4.26 billion yen / Total assets approx. 6.87 billion yen

• 5th Fiscal Year (Fiscal year ending June 2025): Net profit approx. 2.35 billion yen / Retained earnings approx. 6.59 billion yen / Total assets approx. 10.89 billion yen

For three consecutive years, net profit has been in the double-digit billions, and it is increasing every year. Retained earnings have exceeded 6.5 billion yen, and total assets have reached the 10 billion yen range.

Many of you likely remember the net profit of approximately 2 billion yen in the 4th fiscal year, as SKY-HI himself made it public and it became a hot topic.

This figure means only one thing. The purpose of this capital alliance cannot be fundraising. A company that generates over 2 billion yen in cash on its own every year and has abundant internal reserves has no reason to give away shares for money.

It should also be able to secure bank loans on favorable terms. Even so, they dared to go with equity, meaning they gave a part of the company to an outside party.

What was it that SKY-HI wanted to achieve so badly that he invested 100 million yen of his own money, even personally purchasing his own office building, and eventually giving away shares to outside parties?

Where does SKY-HI want to take his company and the industry?

This partnership must be understood within the context of the vision that SKY-HI has built up until now.

If you follow SKY-HI's statements, you will notice that he speaks about 'company matters,' 'industry matters,' and 'going global' almost without distinction.

Company: Trying to make BMSG an organization that runs on systems

SKY-HI has clearly positioned himself as a 'business manager,' and the media has called BMSG an 'entertainment agency startup.'

The number of employees has reached the 80-person scale, and in April 2024, a CxO structure was introduced, placing a chief officer in charge of each organization.

In November of the same year, he brought in Hidehiko Ishizuka, who has experience preparing for an IPO, as Executive Officer and CMO.

His management stance of 'leaving things to others and enjoying the differences' is also something he frequently talks about; in short, he has been steadily moving toward the direction of making it an organization that runs on systems rather than a one-man management style by a charismatic leader.

Industry: Consistently 'wanting to change the Japanese music industry'

SKY-HI has said that 'if we don't change the Japanese music industry now, it will be too late.'

In 2024, he announced 'Proposals for making the music industry sustainable' and expressed his discomfort with the industry structure of setting promotion budgets by calculating backward from projected CD sales.

Not just as a proposal but as an embodiment, he changed BE:FIRST's works to paper jackets, reducing plastic usage by approximately 10 tons.

While the number of CDs shipped itself decreased by about 70,000, he reported that merchandise sold in place of bonuses grew, and the total sales of the entire work, including CDs and merchandise, expanded to about twice that of the previous work.

It is a way of demonstrating that business can still be established even if you step down from the model of making people buy multiple copies of the same CD for bonuses.

Rather than maximizing short-term sales by increasing dependence on fans' wallets, building a structure where fans can continue to support comfortably for a long time is ultimately stronger as a business.

The 'sustainability' that SKY-HI speaks of is not just about the environment, but also about the sustainability of the fan business.

World: 'Creating a shelf for J-POP in the world'

And, SKY-HI has a vision to 'create a shelf for J-POP in the world'.

He is moving from the stage of accumulating overseas performances for his own artists to the stage of taking the entire Japanese entertainment industry into the global market.

He has set a 'public pledge' to hold 'BMSG FES' overseas for the first time by 2030, the 10th anniversary of the company's founding.

SKY-HI has not spoken directly about the pros and cons of going public until now, but at this conference, he officially stated for the first time that there are no plans to go public in the future.

Institutionalizing the organization, changing the industry, going global. One might think he would aim for a public listing at this point, but he clearly denied it. This asymmetry is the entry point to deciphering this partnership.

Organizing what was announced at the business conference

I have already introduced some of the content of the business conference, but here I will organize the facts again.

On June 29, 2026, BMSG held a conference for stakeholders called 'Greeting & Gathering '26' and announced the following in a release the next day, the 30th.

First, a declaration of the second founding period. With the slogan 'BEYOND THE FIRST FIVE YEARS. BMSG enters its second founding period,' they state that they will accelerate investment in three areas toward 2030: 'Music First,' 'Sustainable Entertainment Structure,' and 'Global Expansion.'

Second, a new management structure. It was reaffirmed that Yu Shimizu was appointed as Director COO, Koichi Kitagawa as Outside Director, and Kayoko Yamato as Auditor on March 11, 2026, and that a 'Risk Compliance Office' directly under the COO was newly established.

Third, the main topic, capital alliance. As partners for global expansion and strengthening the digital foundation, they announced a capital alliance with Incubate Fund Co., Ltd. and Akatsuki Ventures Inc..

Fourth, the establishment of 'Unseen Life Plan,' an asset formation support system where the company adds the same amount (up to 100%, with a cap) to the savings of affiliated artists. It is a system where the company supports the life planning of artists, including their 'post-retirement' life.

Furthermore, the investing side, Akatsuki Ventures, also stated in its own release on the same day that 'this capital alliance is not based on a future stock listing.' Both the recipient and the investor are saying in unison that they 'will not go public.'

There are 4 points that catch my attention

When you line up the facts so far, there are 4 points that cannot be explained neatly.

1. If the goal is not money, then what is it? As the financial results announcement shows, the explanation of fundraising does not hold up. So, what was obtained in exchange for equity?

2. Why these two companies? Incubate Fund and Akatsuki Ventures. In fact, these two firms have completely different characteristics as investors. One is an independent fund, and the other is under the umbrella of an entertainment business corporation. Is this combination a coincidence?

3. Why did both sides write that they 'will not go public'? There is no inherent need to explicitly deny an IPO in a capital alliance press release. Even the VC firm making the investment wrote the same sentence. The VC is declaring that the exit is not an IPO, so where will they recoup their investment?

4. Why this timing? The reports and internal investigation in December 2025, the management restructuring in March 2026 (outside directors, auditors, risk compliance office), and the introduction of external capital in June. Doesn't it look like these movements over the past six months are connected by a single thread?