Infinity Ventures closes in on new fund, eyes IPOs

The Tokyo-based venture fund is raising its fourth fund, aiming for $120 million for investment in early-stage internet-related companies in Japan, Taiwan and developed Asia.

Japan's Infinity Ventures is on track to close its fourth fund in the new year and has plans for a later-stage fund as it works towards exiting some of the startups on its books.

In an interview with FinanceAsia, co-founder and managing director Akio Tanaka said the company is likely to close Infinity Venture Fund 4 by early next year, targeting $120 million in total, with a potential investment of up to $30 million from Taiwan’s National Development Fund. 

When pressed, Tanaka did not reveal the investors that have signed up to date but investors in previous rounds include SEGA Group, Line Corporation and Japanese internet giant Recruit Holdings.
The raising comes against a backdrop of record venture capital spending by large Japanese corporations looking to keep pace with digital innovation. A survey by Japan Venture Research found privately owned Japanese startups raised a record ¥271.7 billion ($2.38 billion) in 2017, compared with ¥63.3 billion in 2012. 
And earlier this year, Panasonic announced a tie-up with San Francisco-based Scrum Ventures to invest in technologies for connected home appliances. It joined Toyota and Sony, which have also rolled out corporate venture capital funds in recent years.

Meanwhile, Taiwan's ubiquitous contract manufacturer Foxconn, which listed in Shanghai in June, joined with four companies with operations in Wisconsin in August to launch a $100 million venture capital fund headed in that city. 

Tanaka told FinanceAsia that Infinity, which has offices in Tokyo, Beijing and Taipei, is also planning to launch a later-stage fund, with the means to invest in the growing number of startups on its books that are slowly growing ripe for a listing.

Among them is Tokyo-based robo-advisory startup WealthNavi. Tanaka said he “would not be surprised” if it listed publicly in the next 18 to 24 months.


Two Taiwanese companies in the Infinity portfolio, M17 Entertainment and KKBox, are also in the running to be initial public offerings, he added.

M17 runs a popular live-streaming app and an online dating company. The company was on the verge of listing on the New York Stock Exchange in July in an IPO set to raise $60 million, but it was called off at the last minute in a drama that culminated with founder and rapper Jeffrey Huang posting an expletive-ridden tweet that appeared to blame Citibank and Deutsche Bank for the fallout. 

Tanaka said investor concerns about the company, including that about half its revenue came from a small number of users, had been addressed in recent months and that the firm’s Japanese arm had also grown in popularity.

“They are the largest mobile live-streaming company in Asia and especially popular in Taiwan, Japan, Hong Kong and Singapore,” Tanaka said. “Now the Japan business which our fund helped to build is number one in Japan as well.”

M17 allows users to share instant photos and short videos while KKBox focuses mainly on on-demand music streaming.

A future IPO is still on the cards, Tanaka said, with the Japan and Taiwan platforms either listed as one entity or separately.

Akio Tanaka eyes Taiwan

The IPO environment in Taiwan has been relatively subdued in recent years. Only 110 companies went public in Taiwan in 2017, which was a nine-year low and 20 fewer than in 2016, according to research firm Dealogic. Only 21 listed on Taiwan’s main securities market, four fewer than in 2016.

That is in contrast to the global trend with around 1,700 IPOs coming to market last year, 45% more than in 2016 and the highest in a decade

KKBox is another “IPOable company” but Tanaka would not reveal the details of Infinity’s investment in the company, saying more information would be disclosed later this year. KKBox has 45 million legal tracks and over 10 million users spread across Taiwan, Hong Kong, Japan, Singapore and Malaysia.


Tanaka also played up the prospect of two other Taiwanese startups in the Infinity portfolio: Cobinhood and Gliacloud.

Cobinhood runs a zero-fee cryptocurrency exchange and has a blockchain engineering team of close to 80, which is a scale he has not heard of in Japan.

And Gliacloud produces videos edited by artificial intelligence that in August generated over 7 million views for Japanese news and current affairs app Topbuzz.

“They often outperform human-edited videos in terms of click-through and advertising conversion,” Tanaka said. “And what is scary is none of the people at Gliacloud speak Japanese but they can still create these videos.”

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