Japanese E-Commerce Rakuten Establishes $100M Fintech Investment Fund: Initially Targets US and Europe

rakutenJapanese e-commerce giant Rakuten (TOKYO:4755) officially initiated a new $100 million fintech investment fund, according to a release.  The Rakuten FinTech Fund, a new US$100 million global investment fund focuses on investments in disruptive early to mid-stage fintech startups aims to offer attractive return potential with strategic relevance.

Global Fintech MoneyThe fund initially targets investments in startups and growth companies primarily in the U.S. and Europe, building on the success of previous fintech investments made by Rakuten, including Currency Cloud, WePay and Bitnet. Rakuten FinTech Fund expects gradual global expansion. The Rakuten FinTech Fund, with Managing Partner Oskar Mielczarek de la Miel acting as the fund advisor, is part of a natural evolution for Rakuten’s collection of fintech businesses: Rakuten Card, Rakuten Securities, Rakuten Bank, Rakuten Life Insurance, as these business units have grown in scale within Rakuten’s ecosystem, and become leading industry players.

Hiroshi Mikitani“Rakuten is committed to empowering great entrepreneurs around the world and Rakuten’s new FinTech Fund represents another milestone in our global expansion of the financial services business,” Hiroshi Mikitani, CEO of Rakuten commented.

The ability to invest in fintech start-ups allows Rakuten both lead innovation and empower fintech companies and Internet financial services globally. Rakuten Fintech Fund will support entrepreneurs through Rakuten’s expertise in financial services, including access to its growing divisions in on-line banking, credit cards, insurance, securities and asset management in Japan and internationally.

“If you just look at the last couple of years, companies like Currency Cloud, WePay or Bitnet are great examples of disruption changing the landscape in payments and providing innovative solutions that address fundamental needs of global customers,” de la Miel noted.”The Rakuten FinTech Fund is dedicated to helping these businesses accelerate disruption and innovation in historically more traditional and conservative markets.”

While the fund’s immediate focus will be on companies based in fintech centers such as London, San Francisco, New York and Berlin, Rakuten FinTech Fund plans to gradually expand operations around the globe. Why not in Japan? Makoto Fukuhara, founder of London-based fintech startup Skwile specified three reasons why he opted toast up shop in the UK as opposed to the UK in City A.M.:

  1. Makoto FukuharaUK’s fintech scene is open, more fairer and equal; there are many opportunities to network and engage with the community in London. All of these factors contribute to greater competition, creating more synergy and more dynamism across the sector.
  2. Lobbying activities do not have enough influence in Japan over the policy makers and there has been too much discussion on changing financial services. The Japanese fintech sector is experiencing a far less dynamic environment as a result…There are many things to consider and change along the way: the development of legal systems, government support and grants to the sector are just some. We have work to reform these things but it’s definitely possible. To make it happen, the policy makers and fintech players should learn from the UK example and follow suit.
  3. The Japanese cultural foundation makes it challenging to develop a fintech sector because the Japanese tend to avoid taking risks. As innovators we are excellent at improving quality but not at inventing things. Our Japanese mindset is influenced by our cultural values and our virtue system, makeing it difficult to develop innovations from nothing.

skwileThat stated, Fukuhara expects that with increased stimulus and inspiration, more sustainable developments in the Japanese financial market will be seen, such as Rakutan’s new FinTech Fund.  Fukuhara also cited a new trade mission to Japan by UKTI and the introduction of “many UK talents to Japan” by some of the UK’s biggest fintech startups.  The trade mission runs until today, and  includes briefings with Mitsubishi Estate, The Bank of Tokyo and NTT.  Among the FinTech startups selected for the trip are Innovate Finance members Azimo, City Falcon, FundApps, Money Mover, Prophis, World Remit and Yoyo Wallet, reported TechCityNews.

Lawrence Wintermeyer“The trade mission to Japan will showcase the UK talent that is helping to reform banking and hopefully inspire the Japanese financial markets to do more to change their financial systems and support more fintech innovation,” opined Innovate Finance CEO Lawrence Wintermeyer.

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