Deal focus: Fujitsu Ventures updates ancient grains

Japanese IT giant Fujitsu has been experimenting with corporate venture capital since 2006, having raised three funds and launched a prolific accelerator program. But it wasn’t until last March that the company set up a standalone unit capable of engaging directly in tie-ups and making independent investment decisions.

In September 2020, Fujitsu committed JPY500 billion ($4.6 billion) to an internal technology buildout across the next five years, with much of that to be channeled into the acquisition and creation of new businesses. Fujitsu Ventures was duly set up with a JPY10 billion debut fund, and Hideaki Yajima, formerly a managing director at NTT Docomo Ventures, was brought in as president and CEO.

“For operating companies, corporate VC plays an important role in connecting with external advanced technologies and superior knowledge and functions for future business discovery in accordance with business strategies. For start-ups, it provides various opportunities for collaboration that offer direct growth potential,” says Yajima. “We believe that corporate VC offers added value as an entity bridging between the two that differs from financial VCs.”

Fujitsu Ventures’ first investment, Singapore-based Rice Exchange, touches on a number of strategic priorities. These include the shift to data-driven business models, enterprise software and cloud integration, and hybrid IT services such as cloud security. It marks the culmination of a two-year technology development partnership with the start-up, which claims to be the world’s first digital global rice trading platform.

Rice Exchange, or Ricex, leverages blockchain technology to inject immutability, auditability, and transparency into a massive, traditional, and fragmented industry. The largest operators in the roughly $250 billion global rice industry hold only about a 10% market share, with the rest represented by countless smaller players.

Ricex uses smart contracts for each action in the rice trading value chain, with a view to offering market participants secure connections with reputable suppliers. This allows shippers, insurers, and inspection companies to book all the relevant services online, saving time and reducing cost. The platform also includes automatic notifications to partners, safeguarding against copy-and-paste manipulations, reducing mistakes, and improving efficiency.

“The trade is paper-based, which results in human error and can lead to situations of fraud as it is hard to judge the veracity of the documents, who provided them, and whether or not the documents were manipulated prior to reaching the final destination. There are often problems related to the provenance and quality of the goods shipped,” says Christian Schmitz, CMO and head of Asia at Ricex.

“Moreover, it is a very analog market in which phone calls, emails, faxes, and WhatsApp messages have been used to enable communication between market participants. It is said that one trade could trigger up to 10,000 email messages between the participants.”

The investment coincides with the formation of Digital Commodity Exchange (DCX) as a holding company for Ricex and sister platform Fertilizer Exchange. Fujitsu Ventures will help DCX branch into other agriculture areas, as well as manufacturing and international trading businesses, while continuing to support R&D and improvements in operational sustainability.

Sustainability is a key theme in this space. Many of the food supply problems Ricex aims to solve are connected to climate change, and counterparties in these transactions rely on verifiable trade data to assess the environmental and social impact of their supply chain decisions.

Schmitz notes that Ricex’s tender function makes it easier and quicker to manage product procurement and increase purchases in times of poor harvest or natural disasters. This makes it possible to track every step of the trade, with the improved visibility said to lead to cleaner markets.

“Blockchain can help in providing an audit trail to secure that buyers who contracted sustainable rice will actually also receive sustainable rice,” he says. “Sustainable grown rice guarantees better income to the farmers, while using fewer natural resources and reducing greenhouse gas emissions.”

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• Topics
• Southeast Asia
• North Asia
• Technology
• Early-stage
• Singapore
• Japan
• Agriculture
• Financial Services
• blockchain
• corporate-venture-capital