TOKYO -- Japanese financial group SBI Holdings is setting up a new venture capital fund in Singapore with Asian partners to capitalize on the growth of Southeast Asia's booming digital economy.
With a target to raise $75 million by September next year, the group's Singapore venture company SBI Ven Capital will invest in early-stage startups in Asia, with a focus on industries like finance, health care, agriculture and education.
The new fund shows SBI's confidence in the growth of regional startups, even as tech companies are seeing a global sell-off and postponements of public offerings amid market volatility.
SBI will partner with Singapore's NTUitive, a unit of Nanyang Technological University, and Korean Kyobo Life Insurance Group to leverage their regional network and technological expertise.
"As a venture capital investing in early-stage startups, we are in it for the long haul," Zach Tan, senior vice president of SBI Ven Capital, told Nikkei Asia. The fund will initially invest in around five to six startups a year, with several million dollars allocated to each.
"Without a doubt, the road is going through some headwinds," Tan noted. "But [seeing] some of the best companies globally today, a lot of them emerged during crisis times."
SBI was originally the financial service division of SoftBank Group, when Chairman and CEO Masayoshi Son scouted Yoshitaka Kitao, a businessman with a long career in Nomura Securities, for chief financial officer. Kitao set up SBI in 1999 and spun it off from SoftBank in 2006.
SBI grew into Japan's largest online stock trading company, entering online banking and insurance, and eventually emerged as a notable force in the country's venture capital ecosystem. In December 2021, the financial group acquired Japan's Shinsei Bank in a controversial takeover.
Following two major fintech funds, SBI last year set up a 100 billion yen ($770 million) fund -- one of Japan's biggest active investment vehicles focused on startups. Over 100 institutions, from regional banks to Japanese companies like SoftBank, invested in the fund.
Over the years, SBI has become one of the most active venture companies in Asia, with assets under management of over $5.69 billion as of December 2021. Past investments and exits include Indonesian e-commerce operator Tokopedia, Japanese fintech company Paidy and China's Ping An Insurance Group.
"These past 10 years have shown that many globally competitive companies can be built in Southeast Asia," said Tan, pointing to startups like Singapore's Grab and Indonesia's Gojek, both of which have grown into global tech companies.
The size of Southeast Asia's digital economy is expected to double to $363 billion by 2025 and could reach $1 trillion by the end of this decade, research by Google, Singapore's Temasek Holdings and Bain & Co. show.
To ride the wave, many Japanese venture capitalists have been investing more in Southeast Asia. While most venture companies manage the funds in Japan and allocate money abroad, SBI says it has an edge over others because of its local branches and partnerships.
"Startup investments need to be bottom-up and on the ground with a strong local team and expertise," said Ryosuke Hayashi, managing director and CEO at SBI Ven Capital.
SBI will also utilize its network of local teams on the ground in over 10 countries in South and Southeast Asia.