SBI Holdings has revealed its plans to initiate the operation of a fund investing in startups involved in Web3, AI, and the Metaverse by the end of 2023.
Each investment is expected to range from hundreds of millions to tens of billions of yen, with an estimated total of 150 to 200 companies as investment targets.
The fund is set to reach a maximum scale of 100 billion yen.
SBI aims to garner support from prominent domestic and regional banks to aid Japanese startup ventures.
Already, significant contributors to this fund include Sumitomo Mitsui Banking Corporation, Mizuho Bank, Nippon Life Insurance, and the Daiwa Securities Group, committing a total investment exceeding 50 billion yen.
Considering the scarcity of venture capital funds of this magnitude domestically, an SBI representative emphasised the necessity of formidable financial support to foster startups capable of global competition.
Japan is currently grappling with the challenge of nurturing startup enterprises.
In November 2022, the Kishida administration outlined the “5-Year Startup Cultivation Plan,” acknowledging the need for diverse challengers while highlighting the lower startup rate and the count of unicorns (unlisted companies with a market capitalisation exceeding 100 billion yen) compared to the U.S. and Europe.
The Kishida government actively pursues initiatives toward realising what they call “New Capitalism.”
According to the administration, startup enterprises embody the concept by transforming societal challenges into growth engines, paving the way for a sustainable economic society.
The 5-Year Plan establishes investment goals in startup enterprises.
While the scale stood at 800 billion yen in 2022, the objective, through the implementation of the plan, is to surpass tenfold, reaching a scale exceeding 10 trillion yen by the fiscal year 2027.
The administration expresses its commitment to a collaborative effort between the public and private sectors.
Furthermore, the administration aims to create 100 unicorns and generate 100,000 startup companies, positioning Japan as the largest startup hub in Asia and among the world’s top startup clusters.
Supporting startup creation requires not only economic aid but also infrastructure development. Web3, being a nascent field, is still in the process of rule formulation.
A significant challenge for Web3 businesses in Japan is taxation.
The government explicitly states in the “Grand Design and Execution Plan for New Capitalism 2023 Revised Edition” the necessity to revise taxation related to Web3 companies.
Regarding corporate taxes for Web3 companies, the tax reform for the fiscal year 5 Reiwa exempted “self-issued” cryptographic assets (virtual currencies) from fair value assessment, provided certain conditions are met.
Presently, the Financial Services Agency and the Ministry of Economy, Trade, and Industry are urging a reconsideration of year 6 Reiwa tax reforms concerning “third-party-held virtual currencies,” specifically proposing revisions to year-end fair value assessment taxation.
The Cabinet decision on the tax reform outline, as compiled by the Tax Commission, is scheduled for mid-December.
SBI Digital Asset Holdings, headquartered in Singapore, continues to participate in the Monetary Authority of Singapore’s Project Guardian.
The company appears to be committed to Web3 development both within Japan and internationally.