Sony, Daiwa set up VC fund to invest in startups in US, Japan, Israel, Europe

Joint Innovation Growth Ventures firm closes its first fund, which will target mid-stage startups in AI, robotics, fintech

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

In this April 28, 2017, file photo, people walk out of the headquarters of Sony Corp. in Tokyo (AP Photo/Shuji Kajiyama, File)
In this April 28, 2017, file photo, people walk out of the headquarters of Sony Corp. in Tokyo (AP Photo/Shuji Kajiyama, File)

Japanese giant Sony Corporation and Daiwa Capital Holdings Co., Ltd. said Wednesday they have set up a joint venture capital firm that will raise funds to invest in mid- to-late-stage startup companies based in Japan, the US, Europe and Israel.

The new VC firm, called Innovation Growth Ventures Co., Ltd., has already received commitments for its first fund, the Innovation Growth Fund, which will focus on investing in firms in the fields of artificial intelligence, fintech and robotics, as well as other “fast growing tech startups in other market segments,” the firms said in a statement.

Daiwa Capital Holdings is a subsidiary of Daiwa Securities Group Inc., a Japanese investment bank.

The new fund seeks to raise $140 million-$185 million in total. Besides Sony and Daiwa, other investors in the Innovation Growth Fund are financial institutions such as Sumitomo Mitsui Banking Corporation and Osaka Shoko Shinkin Bank, along with entities such as Mitsubishi UFJ Lease & Finance Company Limited, who will be limited partners of the IGV fund.

The IGV fund is not supplanting the $100 million Sony Innovation Fund, a corporate venture arm that Sony set up in 2016 and has to date invested in 43 seed and early stage startups in Japan, the US, Europe and Israel in the fields of AI and robotics, among others, Sony said.

“Through its corporate venture capital activities to date, Sony has incubated the next generation of technologies and startups while promoting open innovation,” Toshimoto Mitomo, executive vice president at Sony, said in the statement. “Sony will support IGV’s efforts to maximize the performance of this fund, based on the experience it has cultivated through its corporate venture capital activities.”

“Through this fund, we hope to contribute and provide various forms of support to our investment targets, including sourcing, support with stock market listing, and matching support with other listed firms,” said Yoshihisa Kaneko, executive managing director at Daiwa. “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.”

Japan is the third-largest economy in the world and is home to some of the largest manufacturing and automotive companies. As the world moves toward digitalization and software, however, these firms are now scouting overseas for technologies for solutions that will enable them to maintain their edge over global competitors.

Japanese investments in Israel have surged over the past 20 years, with total investments reaching some $6.35 billion from 2001 to the end of 2018 in 180 deals, a report by Harel-Hertz Investment House Ltd., a Herzliya Pituah-based investment house and consultancy, published in April showed.

In 2018, Japanese firms’ investments and acquisitions relating to Israeli startups and tech firms totaled some $791 million in 28 deals, and as of April 2019 there were 13 announced investments for a total of $38 million.

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