SBI Investment sets up AI & Blockchain Fund

Maria Nikolova

The fund operation period will be approximately 10 years and its target commitment amount is JPY50 billion.

Amid the advent of novel financial technologies, SBI Investment Co., Ltd., a subsidiary of SBI Holdings Inc (TYO:8473), has just announced the establishment of SBI AI & Blockchain Fund. As its name suggests, the fund will invest in promising venture companies in AI and blockchain fields.

The launch of the new fund, with a target commitment amount is JPY50 billion, follows the success of the FinTech Fund (total commitment amount: JPY 30 billion) which SBI Investment established in December 2015, endeavoring to make investments in promising venture FinTech companies. Since then, the FinTech Fund has steadily conducted investment activities in response to the rising expectations for the future of blockchain and other FinTech-related businesses, as well as the emergence of many more promising venture companies than anticipated in Japan and overseas, and the know-how and knowledge of FinTech businesses cultivated by the SBI Group.

The SBI Group, as a whole, currently invests in 61 companies (approximately JPY 32 billion) including investments by SBI Holdings, etc.

The company notes that new technologies such as AI and blockchain are attracting global attention mostly in the financial sector, but they are also expected to be used in various other sectors, such as the medical, real estate and public sectors. As a result, SBI Investment has decided to set up this new fund as a successor to the FinTech Fund, aiming to make investments in promising venture companies conducting a broad range of AI and blockchain businesses, including that of FinTech companies along with IoT, robotics and the sharing economy, which are closely related to AI and blockchain technologies.

SBI Investment has been considering the launch of this new fund since around October 2017 and decided to start making investments reaching about JPY 20 billion in January 2018 in order to respond to strong demand from the existing FinTech Fund investors, domestic and overseas financial institutions, corporations, and institutional investors.

SBI Investment also aims to solicit additional investments from regional financial institutions (like regional banks and credit associations) and institutional investors (like life and non-life insurers, pension funds), and to increase the fund size to the JPY 50 billion level soon. In particular, regional financial institutions have already expressed their intentions to make investments. The number of those financial institutions is expected to significantly exceed 28 – the number of regional financial institutions that have invested in the FinTech Fund.

Like the FinTech Fund, the new Fund will support open innovation between investors and investee companies, and will seek to increase the value of investee companies, as well as actively help investors implement and use new technologies.

Recent data on fund flows for investment trust management companies shows that individual investors in Japan are being lured to trusts that focus on AI and other cutting-edge technologies.

Daiwa Asset Management, for instance, registered a net inflow of JPY 370.1 billion in 2017, the largest among investment trust management companies. A fund for investment in robotics-related stocks, introduced by Daiwa at the end of 2015, continues to lure investors. Goldman Sachs Asset Management also recorded strong sales of a fund for global stock investments utilizing big data.

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