Sony breaks with tradition, ties up with Daiwa Securities to launch VC fund

July 3, 2019 | Venture Capital

Other institutions that have had it with low Japanese interest rates, may also invest

In the tech world, sectors such as robotics, AI, and fintech are growing at a blistering pace.

How does a manufacturer, such as Sony, keep tabs on these emerging technologies? At stake is the risk of disruption and survival of its own current businesses, as well as the prospect of huge gains from backing the ‘next thing’ at the right time.

Sony found a way – find a deep-pocketed financial partner such as Daiwa Securities and create a venture capital (VC) fund.

Never mind that this is radical thinking, given that Japanese manufacturing conglomerates almost never set up investment vehicles such as this one.

Innovation Growth Ventures Co., Ltd. (“IGV”)

The new fund is dubbed Innovation Growth Ventures Co., Ltd. and its specific brief is to invest in high growth startups.

Sony has some serious experience in the field, having run its own in-house corporate venture fund, the Sony Innovation Fund, since 2016. But clearly, the technological stakes are now getting bigger, faster. Hence the need to expand its investment activities in the startup arena.

“We believe that the integration of Sony’s insight of cutting-edge technologies and Daiwa Securities Group’s expertise in finance will lead to the creation of a new kind of venture capital business while providing the spark for new trends in the venture capital ecosystem,” said Yoshihisa Kaneko, Executive Managing Director, Daiwa Securities Co. Ltd.

‘Alternative’ investment opportunity for Japanese institutions

Japanese institutions have long been battling low interest rates, and alternative investments such as in venture capital offer better returns.

No surprises then that Sumitomo Mitsui Banking Corporation, Osaka Shoko Shinkin Bank, and Mitsubishi UFJ Lease & Finance Company Limited have already signed on as limited partners in the new fund, expected to ultimately touch 20 billion yen in size.

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