Japan FinTech Observer #25

Welcome to the twenty-fifth edition of the Japan FinTech Observer. Last week saw Token 2049 in Singapore with a raft of announcements, but we have the crowds back in Tokyo for the Game Show this week.

Prime Minister Kishida filled all 54 junior ministerial positions with men following his recent Cabinet reshuffle, in sharp contrast to the senior ministers’ lineup and its record-tying five women. The administration selected 26 senior vice ministers and 28 parliamentary secretaries. This is the first time not a single woman was appointed to one of these positions since the posts were introduced in 2001. And some still wonder why Japan ranks 125th out of 146 in the World Economic Forum's Global Gender Gap report (although Politics is only one of the four dimensions measured, alongside Health, Education, and the Economy).

Here is what we are going to cover this week:

• Venture Capital & Private Equity: Japan plans to let startups raise money from venture capital firms by selling such digital assets as cryptocurrency; Monicle, a holding company comprising an asset management service with financial advisors gaining more than 4,000 members per month, and financial media with 12m monthly readers, raised JPY 1.3bn; PIVOT, a Web3 creator platform, has raised JPY 1.3bn Series A funding; pafin Inc., focused on the development of infrastructure and services related to Web3, has successfully completed a third-party allotment Series B capital increase; NordicNinja VC, the largest Japanese venture capital firm in Europe, has recently announced the successful raising of a new fund worth EUR 200m; Mitsui & Co., Ltd. participates as Hong Kong-based Bowtie Life Insurance Company secures USD 34.9m Series B2 funding to fuel expansion and innovation; Asia Growth Investment participates in Series C funding for ELSA, Corp's English teaching AI; Japan Investment Corporation participates with USD 30m in Vertex Ventures SE Asia & India's (“VVSEAI”) a fifth and newest fund with commitments of USD 541m; Sumitomo Corporation Group has invested in DocDoc Pte. Ltd., which operates a service that introduces patients to the most suitable doctors; gumi Cryptos Capital invested in Parallax
• Banking: SMBC and Zerobond signed a basic agreement to collaborate on the interoperability of CO2 emissions data; SMBC and Atrae, Inc. confirmed the date for the establishment of a joint venture company to help companies improve their organizational capabilities and corporate value
• Insurance: Nippon Life will inject an additional JPY 40bn into its digital subsidairy Hanasaku Life to strengthen the subsidiary’s financial base and further improving customer service; Aviva has agreed to sell its 25.9% stake in Singlife to Sumitomo Life, which is currently a 23.2% shareholder
• Capital Markets & Asset Management: KKR has joined forces with SBI Holdings to establish a groundbreaking joint venture aimed at providing?investment trusts?to?retail investors?in Japan; retail investors in Japan are continuing to increase their use of ETFs
• Digital Assets: Progmat has been established as a jointly owned entity across several key market participants, and will be positioned as National Digital Asset Market Infrastructure; Sony Network Communications and Startale Labs have entered into a joint venture agreement dedicated to developing a blockchain that can become the backbone of global web3 infrastructure; Astar Foundation and Polygon Labs will work together to deliver Astar zkEVM: the Ethereum Layer 2 scaling solution powered by Polygon's CDK; Komainu announced that?Hidden Road, the global credit network for institutions, has joined its collateral management platform; Startbahn provided its Startrail API at Toyota Motor Corporation's GAZOO Racing's metaverse event, with NFT rewards distributed to event visitors
• The Last Word: The "Fearless 100"

eXponential Finance Live

In our eXponential Finance Live conversation on LinkedIn Audio this week Thursday at 9pm JST, 8pm SGT, or 12pm UTC, we are pleased to host Deep Singh , Founder of CrediLinq.Ai , for a discussion of the Future of Business eCommerce. Please join us right here on the platform.

Venture Capital & Private Equity

• Japan plans to let startups raise money from venture capital firms by selling such digital assets as cryptocurrency instead of stock, providing more funding avenues for up-and-coming companies involved in blockchain technology
• Monicle, a holding company comprising an asset management service with financial advisors gaining more than 4,000 members per month, and financial media with 12m monthly readers, raised JPY 1.3bn from existing investors JAFCO and Mizuho Capital, as well as new investors Lotte Ventures Japan, Chugoku Electric Power Co Inc/The (9504) , and GlobeAdvisors Ventures, with additional debt financing by Shizuoka Bank Ltd , Resona Bank , Mizuho Bank and Shoko Chukin Bank
• PIVOT, a Web3 creator platform, has raised JPY 1.3bn Series A funding with JAFCO as the lead investor, and participation from One Capital , DIMENSION, and Fukuoka Financial Group Inc (4FK) Venture, as well as Mitsubishi UFJ Capital Co.,Ltd. , Resona Capital, and Mizuho Capital; this funding round brings the total amount raised to approximately JPY 2.1bn
• pafin Inc. , focused on the development of infrastructure and services related to Web3, has successfully completed a third-party allotment Series B capital increase with DG Daiwa Ventures（DGDV） , Sony Innovation Fund and MZ Web3 fund as underwriters
• NordicNinja VC , the largest Japanese venture capital firm in Europe, has recently announced the successful raising of a new fund worth EUR 200m; the fund aims to support early-stage startups specializing in climate and deep tech, with a strong focus on the intersection between sustainability and digitalization
• Mitsui & Co., Ltd. participates as Bowtie Life Insurance Company secures USD 34.9m Series B2 funding to fuel expansion and innovation
• Asia Growth Investment, a joint venture between Aozora Bank and the Development Bank of Japan Inc. (DBJ), founded in July 2021 with an equal contribution of JPY 1bn by each of the partners, participates in Series C funding for ELSA, Corp 's English teaching AI
• Vertex Ventures SE Asia & India (“VVSEAI”) announced that it has completed the fund raising for its fifth and newest fund with commitments of USD 541m; VVSEAI Fund V is 80% larger than VVSEAI Fund IV which was raised in 2019; Japan Investment Corporation (JIC) , an entity that "aims to stimulate a virtuous cycle of risk capital to support next-generation industries in Japan", has participated with USD 30m as a new Limited Partner (LP)
• Sumitomo Corporation Group has invested in DocDoc Pte. Ltd. , which operates a service that introduces patients to the most suitable doctors and medical providers by utilizing the largest databases of doctors in Southeast Asia; through this investment, Sumitomo Corporation will be working to establish a model for optimizing medical costs in Southeast Asia and expand its healthcare business
• gumi Cryptos Capital invested in Parallax (withparallax.com) 's USD 4.5m round for a cross-border payments blockchain protocol

Banking

• 三井住友银行 and Zeroboard announced that they have signed a basic agreement to collaborate on the interoperability of CO2 emissions data; SMBC provides "Sustana" and Zeroboard provides "Zeroboard" as services for visualizing corporate greenhouse gas emissions
• In July, Sumitomo Mitsui Financial Group and Atrae, Inc. signed a basic agreement with the aim of establishing a joint venture company to help companies improve their organizational capabilities and corporate value; this week, the companies confirmed that "SMBC Wevox" will be established on October 2, 2023, with #SMFG holding 55% of the entity

Insurance

• Nippon Life established Hanasaku Life in 2019 as a 100% owned subsidiary to respond flexibly to varied customer demand in the independent retail agency market; Hanasaku Life is developing products through agile product development and the use of digital technology, aiming to steadily expand the business in the shared agency and direct market by improving convenience for customers; in order to support further growth, Nippon Life will inject an additional JPY 40bn by March 31, 2024 into Hanasaku Life to strengthen the subsidiary’s financial base and further improving customer service
• Aviva has agreed to sell its 25.9% stake in Singlife , together with two debt instruments, to Sumitomo Life Insurance Company for a total consideration of ￡0.8 billion (SGD 1.4 billion) payable in cash at closing; Sumitomo Life is currently a 23.2% shareholder in Singlife and sees Singapore as a key market within its overall Southeast Asia strategy

Capital Markets & Asset Management

• KKR has reportedly joined forces with SBI Holdings, a Japanese financial group, to establish a groundbreaking joint venture aimed at providing?investment trusts?to?retail investors?in Japan; this collaboration will pave the way for the creation and distribution of investment trusts in the Japanese market, utilizing the funds that KKR offers to affluent individuals abroad
• Retail investors in Japan are continuing to increase their use of ETFs; retail investors are trading and investing in ETFs listed in the United States via on-line brokers platforms in Japan; the ETFs that are being used have been registered for sale in Japan by the US ETFs issuers; once registered for sale online broker platforms can decide to make the ETFs available on their platforms; these US listed ETFs that are registered for sale in Japan do not have a listing on an exchange in Japan

Digital Assets

• MUFG Trust and Banking, 瑞穗实业银行 Trust & Banking, Sumitomo Mitsui Trust Bank , Sumitomo Mitsui Financial Group , SBI PTS Holdings, JPX Market Innovation & Research , NTT DATA Japan, and 株式会社Datachain have reached agreement on the shareholder agreement for the establishment of Progmat as a jointly owned entity, with the goal of positioning Progmat as National Digital Asset Market Infrastructure
• Sony Network Communications Inc. and Startale have entered into a joint venture agreement dedicated to developing a blockchain that can become the backbone of global web3 infrastructure by combining their expertise, skillset, and network of partners; the joint venture company will be established in September, as “Sony Network Communications Labs”, capitalized with SGD 1m, and owned 90% by Sony Network Communications, and 10% by Startale Labs
• Astar Foundation and Polygon Labs will work together to deliver Astar zkEVM: the Ethereum Layer 2 scaling solution powered by Polygon's CDK
• Komainu , a regulated digital asset custody service provider built by institutions for institutions, announced that?Hidden Road, the global credit network for institutions, has joined its collateral management platform -- Komainu Connect; Hidden Road marks the first provider offering digital prime brokerage services to join this ecosystem, enabling the leverage of digital assets in collateralization scenarios whilst assets remain in secure, regulated custody
• Startbahn, Inc. provided its Startrail API at Toyota Motor Corporation 's GAZOO Racing's metaverse event, with NFT rewards distributed to event visitors; Startbahn previously provided its NFT technology to Toyota in January and February this year at the Toyota Automobile Museum through a web-based app called FUN FAN NFT, allowing visitors to easily collect NFTs through QR codes

Other Media

• Bank of Japan, "Retail FX Margin Trading in Japan"
• Bank of Japan, Financial System Report, "Financial Results for Japan's Banks for Fiscal 2022"
• JPX Working Paper, "Origins of the Tokyo Stock Exchange"
• Keiko Tashiro , Deputy President at Daiwa Capital Markets America Inc. , believes that "Japan's exit from ultra-easy policy may not come as early"
• Fujitsu open sources AI technology with the Linux Foundation

The Last Word - The "Fearless 100"

JETRO Startup , the Ministry of Economy, Trade and Industry and the Cabinet Office have picked 100 startups across industries for overseas expansion, organized across six programs run by Alchemist X, Berkeley SkyDeck, CIC, Blue Startups, Draper University, as well as Plug and Play.

The program covers Enterprise Business (B2B), Deep Tech (Internet-of-Things, Robotics, Mobility, etc.), Healthcare, Cleantech, and Web3 (FinTech, Metaverse, Marketplaces, etc.).

Should you be interested in following the Japanese startup system more broadly, i.e. outside of FinTech, we invite you to join our "Japan Startup Observer" LinkedIn group.

If you would like to see more of our content, please head over to the?Tokyo FinTech YouTube Channel?or check out the?eXponential Finance Podcast.

We have also created two LinkedIn groups, the "Japan Startup Observer" if your interest in Japan goes beyond FinTech, and the "FinTechs of India" to capture the developments on the subcontinent. We invite you to join both these groups.

Have an awesome week ahead.