SBI Holdings to Launch Investment Fund for Emerging Companies like Web3, AI, and Metaverse Startups

SBI Commits to Bolstering Startups in Japan

SBI Holdings, a major financial conglomerate in Japan, has announced its plan to start operating an investment fund by the end of 2023, focusing on startups in sectors like Web3, artificial intelligence (AI), and the metaverse. As reported by Nikkei on November 8, 2023, this fund aims to bolster the burgeoning startup ecosystem in Japan.

The fund is expected to reach up to 100 billion yen, with individual investments ranging from several hundred million to a few billion yen. It aims to invest in 150 to 200 companies. SBI is drawing investment from major and regional banks in Japan, supporting the development of domestic startups.

Collaborative Funding from Major Financial Institutions

Significant financial players, including Sumitomo Mitsui Banking Corporation, Mizuho Bank, Nippon Life Insurance, and Daiwa Securities Group, have already committed over 50 billion yen. This level of venture capital (VC) funding is relatively rare in Japan, and an SBI representative emphasized to Nikkei the importance of having financially robust backers to nurture globally competitive startups.

Japan’s Current Landscape and Goals for Startups

Japan currently faces challenges in cultivating startups. In November 2022, under Prime Minister Kishida's administration, the "Startup Development 5-Year Plan" was established, addressing the lower rates of new business openings and unicorn companies (privately held startups valued at over 100 billion yen) compared to the US and Europe.

The administration aims to implement "New Capitalism," seeing startups as vital in transforming societal challenges into engines for sustainable economic growth. The 5-Year Plan sets a target to increase startup investment from 800 billion yen (as of 2022) to over 10 trillion yen by 2027. It also aims to establish Japan as Asia's leading startup hub by creating 100 unicorns and 100,000 new startup companies.

Enhancing the Ecosystem for Web3

For startups, particularly in emerging fields like Web3, both financial support and a conducive environment are essential. The Japanese government recognizes the need for tax reforms pertinent to Web3 companies in its "New Capitalism Grand Design and Implementation Plan 2023 Revised Version."

Corporate taxes for Web3 companies have been partially reformed in the fiscal year 2023, exempting self-issued cryptocurrencies from market value evaluation under certain conditions. Financial Services Agency and the Ministry of Economy, Trade and Industry are advocating for further reforms for third-party held cryptocurrencies in the fiscal year 2024 tax revisions. The final decision on these reforms by the Tax Commission is expected to be concluded by mid-December.

Understanding Web3

Web3, often termed as the "next generation of the internet," is a decentralized network built on blockchain technology, encompassing elements like NFTs and cryptocurrencies. It marks a shift from the one-way information flow of the initial Internet (Web1) and the current centralized Internet (Web2).