Rakuten just launched a $100M fund for startups. Here’s why the company is more than just ‘Japan’s Amazon’

Saemin Ahn, managing partner at Rakuten Ventures, speaks at a Tech in Asia meetup in Singapore

As Alibaba prepares for its IPO and Tencent aggressively pushes its WeChat messenger all over the world, it’s easy for folks in the west to forget that there’s another Asian internet giant gunning for a broader global presence – Japan’s Rakuten. Founded in 1997, the Tokyo-based firm earned a name for itself domestically with Rakuten Ichiba, a marketplace that sells virtual store space for vendors looking to reach online customers. Rakuten Ichiba’s success helped it gain the reputation as “Japan’s Amazon,” the firm quickly proved to be about more than ecommerce – it successfully branched into the banking, securities, and travel industries. It even created a juggernaut baseball team in northern Japan.

As for its international operations, Rakuten runs ecommerce stores in South America, Europe, Southeast Asia, and the US – some of which it built from the ground up, others which it obtained through acquisitions. Also, over the past two years it’s made a stream of acquisitions in some high-profile consumer tech firms – Spanish video streaming site Wuakai.tv, e-reader Kobo, chat app Viber, and “Hulu for the world” Viki.

Now, the company is betting on startups with a new US$100 million fund under its Rakuten Ventures investment branch. Launched in 2013, Rakuten Ventures started small – opening with a US$10 million fund focusing on startups in southeast Asia. Under the leadership of Saemin Ahn, who joined the company after five years at Google, Rakuten Ventures led seed and series A rounds in a wide range of startups including peer-to-peer marketplace Carousell, payments facilitator Coda Payments, image recognition startup ViSenze, and the awesome file transfer service Send Anywhere.

Rakuten Ventures states that its new fund will assist firms not only in Southeast Asia, but in the US and Israel, and greater APAC as well. In other words, if you’ve got a startup, Rakuten might be coming to your neighborhood.

In an effort to understand the Rakuten Ventures and its relationship to its domestic parent company, Tech in Asia sat down with Ahn to discuss Rakuten’s legacy in Japan, it’s global ambitions, and why an ecommerce firm might invest in a messaging app. Below is an edited transcript of the conversation.

Rakuten is best known to internationals as a Japanese ecommerce firm and not much else. It’s not a company that is well-known in living rooms outside of Japan – even startup savvy living rooms. Why does Rakuten need US$100 global-facing investment fund?

That’s a very good question. For me, I wouldn’t brand Rakuten as an ecommerce company, but as a Japanese ecommerce conglomerate. If you can see what Rakuten has done in Japan over the past four years, it’s been nothing but disruption – not just in ecommerce, but in online banking for credit card businesses, to online brokerage business, to insurance. It’s been very very aggressive in terms of how it has seen the marketplace and how it can move into certain subsectors.

In that way, when Mikitani-san [Hiroshi Mikitani, chairman and CEO of Rakuten] and I look at overseas business, we think together – what kind of units do we want to actually push out overseas, and how can we challenge ourselves in terms of our ability to perform? One thing that we saw as a really big opportunity and a challenge is: “How can we do venture capital well?” In Japan there might not be such a big need for it because we have such a strong base. But if we can execute venture capital correctly, this not only provides a huge financial upside for the corporation, but overall, if we can do this in a democratic and judicial way, there’s huge branding effects for the company itself.

Whenever an ecommerce firm like Rakuten or Alibaba invests in or acquires a smaller company, it’s easy for one to assume that the end goal of the purchase is to tie the product or service back to ecommerce. For example, tech media outlets will write things like “Rakuten purchased Viber, which is kind of like Line and WeChat… Line and WeChat both sell stuff.. so in a year Viber will probably start selling stuff from a Rakuten partner.” To what extent must a Rakuten Ventures investment tie back to ecommerce?

Rakuten in Japan has an amazing moat and castle strategy. We have a castle that’s named ecommerce, and we have multitudes of moats that enable us to acquire and aggregate customers at a very low cost, while giving them the benefits that they need and desire. In many ways, we’re looking at how we can create a moat strategy outside of Japan. For a lot of the businesses we have, the actual transferral costs might provide high internal barriers and high costs. So we’re always looking at the next step for how we can touch new customers for new growth. In many ways the Viber acquisition and the Viki acquisition were kind of an organic step towards that.

What about Send Anywhere, which you invested US$1 million in? That’s a startup that doesn’t really have an obvious link back to ecommerce.

Well, I’m very thankful that Rakuten has given me a lot of horizontal movement and also vertical movement. For example, Send Anywhere has a lot of parallels in terms of content transfer. If you look at that, if you have a critical mass of Send Anywhere users, you can think of it as a giant content solution platform, not unlike Bittorrent. Bittorent has more users than Twitter, and even though their monetization could be better, they deliver tremendous value to their users.

To be very direct here, we don’t expect all of these partners to work with us as Rakuten all the time. If it makes sense, great, you can work together with us. If it doesn’t, then we’ll help you as much as possible with product development. Business decisions aren’t always black and white, often they’re a very desirable shade of grey.