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Japan's SBI plans $920m venture capital fund

Led by ex-SoftBank exec, group seeks investors with focus on 5G, robotics and IoT

SBI Holdings owns Japan's largest online brokerage.

TOKYO -- Japanese financial group SBI Holdings on Friday said it planned to raise up to 100 billion yen ($920 million) for a new venture capital fund, in what will be the biggest active investment vehicle in Japan focused on startups.

SBI, which owns Japan's largest online brokerage, has emerged as a powerful force in Japan's venture capital industry, launching funds in 2015 and 2018 mainly targeting fintech startups.

Dubbed the "4+5 fund" -- after the so-called fourth industrial revolution, industry 4.0, and Japan's blueprint for a super-smart society, Society 5.0 -- the new vehicle will invest both domestically and overseas across a wide range of sectors including 5G, the internet of things, robotics and health care, CEO Yoshitaka Kitao said in a news conference.

The move is a signal of Kitao's confidence in emerging technologies despite growing concerns about inflated tech valuations and cash-burning business models.

SBI aims to complete its first close by March and then begin investing, before spending another few months fundraising to meet its 100 billion yen target.

Kitao, a former SoftBank executive, has vowed to shake up Japan's banking industry by creating a network of regional banks and upgrading them with cutting-edge technology. On Friday, the company announced a $20 million investment in OpenLegacy, an Israel-based developer of software for application programming interface integration.

Kitao said he expected the strong performance of existing funds to lure more investors. Twenty of the group's portfolio companies went public in the fiscal year ended March 2019 and it expects another 28 to do so by March this year.

If completed according to plan, the fund will be nearly 70% larger than SBI's 60 billion yen AI and Blockchain fund, which was launched in 2018 and is already one of the biggest venture capital funds in Japan.

Kitao had a long career in Nomura Securities and joined SoftBank in 1995, where he was instrumental in CEO Masayoshi Son's early fundraising efforts. The conglomerate is now known for its massive Vision Fund which has invested heavily in tech. Kitao set up SBI in 1999.

SBI's portfolio also includes consumer internet startups -- in November, it led a $61 million funding round for Vietnamese e-commerce startup Sendo.

"For us, it has become easier to negotiate with startups asking for a high valuation," said Katsuya Kawashima, SBI's COO. He added that it expects about 200 investors to participate in the 4+5 fund, ranging from banks, companies and pension funds.

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