Japan FinTech Observer #37

Welcome to the thirty-seventh edition of the Japan FinTech Observer. We would like to take the opportunity to highlights two of our DeFi favorites, driven by Japanese founders. Cega announced V2 of its protocol, and Secured Finance is on track to launch its market at the end of the year.

The Linux Foundation with its Open Source Summit set an example of a successful international conference in Japan (unfortunately, we do not believe that the Nikkei took notice). We have extracted some of the relevant financial services context for you. And if you fancy cars, have a look at Automotive Grade Linux (AGL), you will see the future.

Back in Finance and FinTech, here is what we are going to cover this week:

• Venture Capital & Private Markets: Yoii, the operator of “Yoii Fuel”, a revenue-based financing (RBF) platform, has raised approximately JPY 800m; Sumitomo Life Insurance acquired 100% of the shares of PREVENT, a portfolio company of its CVC operated by SBI Investment; MS&AD Insurance Group | MS&AD Ventures portfolio company Mulberri raises Series A; WAmazing, a startup company developing a tourism platform service for overseas tourists to Japan, has raised a total of JPY 1.4 billion, with a significant participation by regional banks
• Banking: Selling the family silver (cont'd): Rakuten Group announced an overseas secondary offering of common stock of its banking subsidiary; Credit Saison launched a rent guarantee services for foreign nationals residing in Japan, as well as bank accounts in collaboration with Suruga Bank; AsiaMoney announced the best banks in Japan
• Capital Markets & Asset Management: Many of Asia's hedge fund managers who pivoted from China's languid markets to Japan's soaring stocks in 2023 have struggled to make money; Headline Asia surprised (us) with the first Special Purpose Acquisition Company (SPAC) deal in Singapore; Lion Global Investors (LGI) and Nomura Asset Management (NAM) Singapore have entered into an MoU to expand their asset management businesses in Asia; Sumitomo Mitsui Banking Corporation Pension Fund is poised to increase investments in illiquid alternatives
• Digital Assets: Cega unveiled their much-anticipated?Dual Currency strategy?as part of Cega V2; Secured Finance's mainnet launch nears, set to transform DeFi with orderbook-based fixed-rate lending & cutting-edge trading; Japan witnessed its biggest?digital corporate bond issuance with Hitachi issuing the five-year green bonds with a coupon rate of 0.598%; Nonagon Capital, a venture fund specializing in blockchain technologies, is collaborating with Hakuhodo Key3; gaming-focused blockchain ecosystem Oasys has announced a strategic collaboration with leading digital asset infrastructure provider Fireblocks
• The Last Word: Kishida Cleaning House

The JSCC's Hyperledger Financial Services Workshop

Alongside the Linux Foundation’s Open Source Summit (OSS), the Japan Securities Clearing Corporation (JSCC) hosted a “Hyperledger Financial Services Workshop” on the floor of the Tokyo Stock Exchange (TSE).

Senior Executive Officer Takeshi Hirano kicked off the event with a welcome address, setting the stage for an interactive afternoon, concluded with networking at a nearby venue. Additionally, three of the keynote speaches are available on the Tokyo FinTech YouTube channel.

There is also the "Blockchain and the Future of Financial Services" discussion from the Open Source Summit.

Venture Capital & Private Equity

• Preqin Territory Guide: "Private Equity and Venture Capital in Japan 2023"
• Pitchbook: "Private Capital Breakdown: Japan"
• Yoii, the operator of “Yoii Fuel”, a revenue-based financing (RBF) platform, has raised approximately JPY 800 million through a third-party allocation of new shares with Emellience Partners as the lead investor and participation from Itochu Technology Ventures, FFG Venture Business Partners, and 5 other existing investors; with this, the cumulative funds raised have reached approximately JPY 1.4 billion; by providing new fundraising methods that are neither debt nor equity, Yoii will continue to support the growth of startups
• Sumitomo Life Insurance acquired 100% of the shares of PREVENT, and PREVENT has become a consolidated subsidiary of the Sumitomo Life Group; this is the first case for Sumitomo Life of a startup company in which investment and business alliance from the CVC fund led to joining the group, and the group will continue to promote co-creation of businesses that contribute to expanding the WaaS (Wellness-as-a-service) ecosystem through investments in promising startup companies in the future
• MS&AD Insurance Group | MS&AD Ventures portfolio company Mulberri raises Series A; Mulberri,?an AI-driven embedded business insurance platform for small and medium enterprises, announced its $6.75 million Series A led by Eos Venture Partners, with participation from existing investors
• WAmazing, a startup company developing a tourism platform service for overseas tourists to Japan, has raised a total of JPY 1.4 billion through a private placement of new shares to several strategic investors and regional banks; WAmazing has raised a cumulative total of JPY 2.01 billion in the Series C funding, bringing the total amount raised since its establishment in July 2016 to JPY 4.53 billion
• "Why MoneyForward invested in Mekari", by Sandy Kimura

Banking

• Selling the family silver (cont'd): Rakuten Group announced an overseas secondary offering of common stock of its banking subsidiary, raising further capital to address the company’s liquidity position that has been drained by investments into its struggling mobile business; the offering price is JPY 2,470, around the level of mid-November, compared to a JPY 2,000 notation after first quarter earnings, as well as a JPY 1,400 IPO price
• Credit Saison launched “Credit Saison’s Rent Guarantee — Foreign National Plan”, the company’s first rent guarantee service exclusively for foreign nationals living in Japan, in order to meet the needs of increasing numbers of foreign students and workers; in addition, as part of the capital and business alliance with The Suruga Bank announced in May of this year, Credit Saison will introduce Suruga Bank’s ordinary savings accounts to subscribers of this service to support the lives of foreign nationals
• AsiaMoney has announced the Best Banks in Japan in 2023

Capital Markets & Asset Management

• Many of Asia's hedge fund managers who pivoted from China's languid markets to Japan's soaring stocks in 2023 have struggled to make money, hamstrung by a lack of local insight and having no playbook to unlock the world's third-largest economy; fund managers reduced exposure to China and swerved to Japan as the Tokyo stock market?surprised with a 28% rally this year; Japan-focused funds launched in 2023 surpassed China ones for the first time in 17 years, with 18 aimed at Japan and 13 at China
• Headline Asia surprised (us) with the first Special Purpose Acquisition Company (SPAC) deal in Singapore; with the US SPAC market closed, forcing companies like Coincheck to extend their agreement letters for another year (to August 2024), Headline brought its portfolio company 17LIVE public in a transaction with Vertex Technology Acquisition Corporation (VTAC)
• Lion Global Investors (LGI) and Nomura Asset Management (NAM) Singapore have entered into a Memorandum of Understanding (MoU) to cooperate and expand collaboration among their asset management businesses in Asia; one of the primary goals of the MoU is to collaborate on business initiatives and marketing, including development of investment products to meet evolving investor needs in Singapore and Japan
• Japan’s Sumitomo Mitsui Banking Corporation Pension Fund, managing assets worth 1 trillion yen ($6.6 billion), is poised to increase investments in illiquid alternatives, including infrastructure private equity and debt aimed at maximizing returns

Digital Assets

• Cega unveiled their much-anticipated?Dual Currency strategy?as part of Cega V2; as the market leader in launching innovative DeFi structured investments, Cega is proud to be the first to bring Dual Currency products onchain; this new rollout comes with 5 new high-yielding investment product vaults, a sleek new interface, and enhanced security through upgraded contracts
• Secured Finance's mainnet launch nears, set to transform DeFi with orderbook-based fixed-rate lending & cutting-edge trading; Global Itayose will be released December 15, 2023, and the market pens on December 29, 2023; the Global Itayose is a unique matching process essential for kickstarting trading operations; as we edge closer to launch, this process unveils the inaugural set of four pre-open order books covering 1 year duration on each asset (total 4 assets and 16 pre-open order books) to be available at launch, ensuring a fair and orderly market initiation and paving the way for a seamless trading adventure
• Driven by high demand, Japan witnessed its biggest?digital corporate bond issuance; Hitachi issued the five-year green bonds with a coupon rate of 0.598%; Nippon Life Insurance revealed that it purchased half of the $68 million offering; the proceeds from the issuance of the digital green bond will be used to refinance expenditures of the construction and refurbishment of Kyōsō-to of the Central Research Laboratory (an energy saving building)
• Nonagon Capital, a venture fund specializing in blockchain technologies, is collaborating with Hakuhodo Key3 to enhance the expansion of global web3 projects; this partnership offers expertise in local market trends and a broad network for international collaboration; HAKUHODO KEY3 is a web3 business production venture established in December 2022 by Hakuhodo and Sota Watanabe, CEO of Startale Labs Japan, a provider of consulting and development support using its knowledge from developing the Astar Network
• Gaming-focused blockchain ecosystem Oasys has announced a strategic collaboration with leading digital asset infrastructure provider Fireblocks; the integration is set to significantly enhance the web3 game development landscape by helping developers address key challenges in digital asset management and security
• DeSpread Research covered Astar Network's zkEVM implementation

200th Tokyo FinTech Meetup

We are closing out the year with our 199th and 200th Tokyo FinTech Meetup, featuring Benjamin Sch?nfeld from NovoServe on Wednesday, December 13, and Jed N. from Angel School on Monday, December 18, both at 9pm JST. Please register on the Tokyo FinTech Meetup page.

The Last Word: Kishida Cleaning House

Embattled Japanese premier Fumio Kishida pledged to restore trust in his government amid reports he is planning to purge ministers embroiled in a fundraising scandal that has dealt a fresh blow to his sagging public support.

The allegations that some lawmakers received thousands of dollars in unreported funds pose one of the biggest challenges in decades for the ruling Liberal Democratic Party (LDP), which has held power for almost all of Japan's post-war history.

We highly recommend Tobias Harris' blog, "Observing Japan", for those interested in Japanese politics.

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.