It might seem a paradox that the world’s third-largest economy struggles to attract the world’s largest venture investor to its shores, especially when SoftBank is a Japan-based investor. But while SoftBank’s near-$100bn first Vision Fund has avoided backing homegrown entrepreneurs, hope is growing things will be different for the second, which is already targeting at least $108bn.
SoftBank plans to contribute $38bn of the capital, with support from insurer Dai-ichi Life, financial services firms Mizuho Bank, Sumitomo Mitsui Banking Corporation, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Trust Bank and brokerage group Daiwa Securities.
Effectively, almost all of Japan’s institutional investors are behind SoftBank and, adding in the $270m raised in the summer for the earlier stage SoftBank Ventures Asia fund, rebranded from SoftBank Ventures Korea in January to reflect an expanded mandate across Asia, Europe and the US, if a startup is promising enough it will find its way to the Vision Fund. Whether any will do so depends in part on the entrepreneurs.
Japan itself can point to its openness to capital and technology but the business culture remains a hierarchical one based on seniority and local connections and relatively few entrepreneurs willing or able to expand internationally. But perhaps only a few role models, such as Masayoshi Son, founder and CEO of SoftBank, or Hiroki Yamagishi, co-founder of games group Gree and more recently of business university Keio’s Innovation Initiative, are needed. The younger students are increasingly attracted to entrepreneurialism as the fast-track to success through joining an established corporation and having a job for life is (or perhaps already has) broken down.
There are increasing numbers of corporate and venture capitalists willing to back these startups and Japan rose to second in the global ranking of deals in the first half of 2019, according to GCV Analytics. More importantly, given Japan Inc’s prior efforts into corporate venturing were often case studies in designed-to-fail through rotation of staff, small funds, a focus on financial-only results and a lack of understanding in the C-suite, this time the lessons are being learned. Listening to the leaders of new programs that have been set up or managed for DeNA, Omron, MS&AD and others and the desire for global best practices remains strong.
GCV’s annual survey with the Japan Venture Capital Association has already been analysed for local and international differences and formed the basis of a report for the Ministry of Economy, Trade and Investment. This year’s GCV Asia Congress, therefore, has moved from China to Tokyo to build and deepen the links between Japan and the international corporate venturing community.
It is a great honour to partner with the JVCA, Sony, DLA Piper and the Japan Research Institute, among others, to bring you the four-day program of site visits, conference and GCV Academy.
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