Japan’s Rakuten launches $100m fintech-focussed global investment fund

Visual of Rakuten website. November 2015.

Tokyo-based Rakuten Inc. has launched a a new $100-million global investment fund, which will be focusing on investments in disruptive early to mid-stage financial technology (fintech) startups.

An Internet services major founded in 1997, the Rakuten conglomerate focuses on business operations in e-commerce, finance, and digital content.

According to a release, since 2012, Rakuten has been ranked among the world’s ‘Top 20 Most Innovative Companies’ in Forbes magazine’s annual list and maintains a global workforce of 12,000.

The fund will primarily target startup ventures and growth-stage firms in the US and Europe. It will also conduct follow-on funding and build on the success of previous fintech investments made by Rakuten. Examples of such investments are ventures like Currency Cloud, WePay and Bitnet.

Its immediate focus will be on ventures based in fintech centres like London, San Francisco, New York and Berlin. However, the Rakuten FinTech Fund plans to gradually expand operations worldwide. The development is notable coming from the Japanese private sector that deviates from the country’s traditional parochialism.

The Rakuten FinTech Fund is part of a natural evolution for Rakuten’s collection of fintech businesses; Rakuten Card, Rakuten Securities, Rakuten Bank, Rakuten Life Insurance are business units that have scaled within Rakuten’s ecosystem and emerged as strong players in the space.

The Rakuten Fintech Fund will support entrepreneurs through Rakuten’s expertise in financial services. This includes bridging and facilitating access to its rapidly growing divisions in online banking, credit cards, insurance, securities and asset management in Japan and internationally. Fund operations will be overseen by managing partner Oskar Mielczarek de la Miel, who will also act as the fund advisor.

Hiroshi Mikitani, CEO of Rakuten, commented, “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.”

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The launch of this new fund comes amidst a push to increase the adoption and literacy of the English language within Rakuten’s corporate entities. From being launched as a small online marketplace with 13 shops and six staff, the firm has expanded to become a network of 42,000 shops and annual sales of $5 billion.

The past five years has seen Rakuten expand its international footprint beyond its home market of Japan, where it holds 26.8 per cent of the e-commerce market, ahead of Amazon.

This has been via an acquisitive growth strategy with the firm snapping up e-commerce sites such as Buy.com of the US and PriceMinister of France, US shopping site Ebates Inc. for $1 billion, messaging app Viber for $900 million, and minority stakes in transport service app Lyft and online scrapbooking site Pinterest.

This has been propelled by market pressures in Japan, as the shrinking market and limited growth prospects force Rakuten to translate domestic success into international growth.

In an interaction with the Wall Street Journalˆ, Hitoshi Sato, a senior analyst of Infocom Research shared: “Rakuten is facing increasing competition domestically and finding it difficult to differentiate its services from rivals. But, so far, it has been unable to optimise its acquisitions due to its weak overseas brand recognition.”

Whether this will apply to their fintech investments is yet to be seen. According to CB Insights, fintech funding has witnessed a significant increase this year while North American banking majors are seeing overlapping investments in the fintech space.

Commenting on the emergence of fintech startups offering innovative solutions to old problems, de la Miel said, “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.”

He added, “The Rakuten FinTech Fund is dedicated to helping these businesses accelerate disruption and innovation in historically more traditional and conservative markets.”

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.