TOKYO -- Sony Group, Suzuki Motor and other big Japanese companies are set to back a fund focused on investing in new companies that are developing technologies related to digital transformation and decarbonization, Nikkei has learned.
The companies will participate in a startup investment fund to be launched by California-based venture capital firm WiL in June with a maximum fund size of 100 billion yen ($911 million).
As of the end of May, 18 Japanese companies had decided to invest in the fund, including Mizuho Bank, Osaka Gas, confectionery maker Ezaki Glico, and Daiwa Securities Group.
The venture fund, which is expected to be the largest in which Japanese companies are the main backers, will give large companies the opportunity to team up with startups that have unique technologies. Their goal is to develop solutions to business and societal challenges, including the rapid shift toward digitalization in the wake of the COVID-19 pandemic.
WiL, which has offices in Japan and the U.S., will be responsible for finding investment targets in Japan, Europe, and the U.S.
The fund will have a life span of 10 years. In the first three to five years, the fund plans to invest between 100 million and 3 billion yen per company in 50 to 60 startups.
The fund aims to support the creation of new businesses and accelerate the growth of startups through collaboration, and to foster acquisitions by large Japanese corporations.
One area the fund will prioritize is digital transformation, which is altering the way people work in response to the pandemic. The fund will invest heavily in companies with digital technology, such as software and data analysis tools that can help streamline the operations of large companies.
The fund will also focus on the environmental sector, seeking out foreign companies that are developing advanced technologies to tackle global problems such as water shortages, development of plastics-free products, renewable energy and food waste reduction.
Through its investments, the fund will also encourage startups to enter the Japanese market to spur the decarbonization of the economy and a more sustainable approach to the environment. The fund will look at investment opportunities in "carve-outs" -- in which technologies and human resources lying dormant in large companies are extracted to establish new companies.
WiL's track record includes co-founding startups in areas like smart keys and artificial intelligence with Sony, and in the new materials industry with Osaka Gas. The venture fund will allocate about 10% of its capital to carve-outs.
Digitalization and decarbonization have become global trends in recent years. Japan's large companies, although known for their excellent basic technology, are often faulted for a lack of entrepreneurial verve. This has put them behind overseas competitors when it comes to commercializing new products and services. The participants hope to change that through partnerships with entrepreneurs and venture capitalists with know-how in this area.
WiL was established in 2013. Its co-founder and CEO, Gen Isayama, is a former Partner at DCM Ventures, where he specialized in online media, mobile technology and consumer services.
WiL's first fund, which was launched in 2014, managed about 40 billion yen in assets while its second fund, begun in 2017, managed just under 60 billion yen. Its past investments in Japanese startups include flea market app Mercari and online printing company Raksul.
