Gen Tsuchikawa, the CEO and Chief Investment Officer at Sony Ventures Corporation, replied to our questions about the himself, the state of corporate, international, and Japanese venture capital industry, and shared with us some medium and long term predictions about the tech world.
VCWire: Hi Gen, can you please tell us a bit about you? What’s your background?
I currently hold the position of CEO and Chief Investment Officer at Sony Ventures Corporation, overseeing the venture investment arm of Sony Group Corporation, known as the Sony Innovation Fund. With nearly two decades of experience at Sony, I also hold the role of Corporate Vice President. Established in 2016 by Sony Group Corporation, the Sony Innovation Fund is dedicated to investing in groundbreaking technologies that are reshaping the future of business, entertainment, and society on a global scale. Under my guidance, the fund has significantly broadened its focus to include early- to growth-stage startups in the fields of entertainment, healthtech, fintech, deeptech, and environmental sectors. As of 2023, the fund’s assets under management have grown to exceed $600 million.
VCWire: What are your thoughts on the state of corporate venture capital?
Trends in corporate venture funding closely mirror broader venture funding patterns. Despite recent market challenges affecting deal activity, corporate venture capital funds continue to make strategic investments, driven by companies aiming to innovate and stay competitive. Noteworthy investment trends include a heightened emphasis on AI, sustainability, social impact, and diversity, equity, and inclusion (DEI).
A significant shift is observed in the form of increased collaboration between startups and funding corporations, moving beyond straightforward financial support. This aspect aligns with our strong commitment, underscored by our physical presence in key investment regions. Our local teams on the ground facilitate connections between portfolio companies and Sony’s expansive global ecosystem, offering access to resources, technical expertise, and industry insights. This approach enables us to provide hands-on support, expertise, and guidance at the local level. We leverage our global resources to assist portfolio companies in diverse ways, fostering rapid scalability and positioning them as global market leaders.
VCWire: What about the current international venture capital landscape?
The international venture capital landscape is evolving with a globalized focus, marked by increased interest in emerging technology hubs and strategic partnerships. Key sectors include FinTech, HealthTech, Entertainment, DeepTech and AI, accelerated by the pandemic’s impact on digital transformation. Sustainability and ESG considerations are shaping investment decisions, while regulatory changes are influencing exit strategies. Overall, the landscape is dynamic, presenting a mix of opportunities and challenges as investors adapt to the changing global economy.
VCWire: What do you think about the Japanese venture capital landscape in particular?
The startup market in Japan remains relatively small in comparison to its GDP, impacting valuations. However, there is ongoing robust investment activity, with 2022 maintaining a level similar to that of 2021. Interestingly, unlike other markets experiencing weakness, Japan demonstrates notable resilience on the downside.
VCWire: Which sector/s would you bet 2 cents on in the next five years?
When we think about the next five years, I would look back at the winners of the last five years. In our experience the highest performers are category creators, those companies which can create new experiences with technology. Since these are new categories/experiences it actually takes a few years before it catches on or is accepted by the big companies, followed by a steady rapid increase in business volume year after year. Those companies give us confidence to hold on to such a stake for a very long time and provide us with significant returns.
At the same time filling your portfolios with only such companies could cause more volatility than you want and I suggest filling a portion of your portfolio with regional winners who do not have extreme potential but will surely deliver results in limited markets.