Japan's YJ Capital, Line Ventures merge, launch $274m fund

The new fund is touted as one of the largest corporate venture capital vehicles in the country. It will invest globally with a focus on Japan, Korea, the US, China, and Southeast Asia, according to a statement.

Yahoo Japan, the parent of ZVC, and Line, the IT and telecom provider that controls Line Ventures, are both owned by Z Holdings, a SoftBank Group subsidiary. Z Holdings agreed to acquire Line from Korean internet conglomerate Naver in 2019 and announced the completion of business integration last month.

This established Z Holdings as Japan’s largest internet group and came with a commitment to invest JPY500 billion in technology over the next five years. Focus areas are retail, including social commerce and smart stores, financial technology, media, social services such as healthcare, and the digitization of the accommodation and restaurant industries.

ZVC’s mandate will support this agenda with a specific interest in areas such as artificial intelligence, cybersecurity, mobility, robotics, blockchain, and B2B software. The firm will target seed to late-stage start-ups with a view to maximizing portfolio synergies and leveraging ecosystem support related to the broader networks of Z Holdings and Line.

Last month, ZVC ended its participation as a co-GP in EV Growth, a joint venture alongside Singapore’s East Ventures and SMDV, the VC arm of Indonesian conglomerate Sinar Mas. EV Growth has invested in several leading start-ups in Southeast Asia such as Gojek, Grab, Traveloka, and Tokopedia, and had generated an IRR of 27% as of year-end 2020.

East Ventures has taken over as the sole manager of EV Growth, although ZVC will continue to support the portfolio and Shinichiro Hori, CEO of ZVC, will remain on the investment committee. The development has been interpreted in part as a reflection of inherent instability in corporate venture capital caused by the changing agendas of the parent companies involved.

“It is difficult for Japanese to execute corporate venture capital programs because they normally get moved after 3-5 years. Investments require 10-12 years, so you can’t get quick results,” Hori told AVCJ last year. “Normally, when a new CEO comes in, they check all the financial results and ask why the fund hasn’t delivered any profit in three years. Then they say it should stop.”

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• Topics
• North Asia
• Venture
• GPs
• Technology
• Japan
• YJ Capital
• Softbank
• M&A