The company plans to invest in early-stage companies based in Asia, the United States and Israel.
Like many successful Japanese companies, Rakuten Inc. has taken profits from its operations in Japan to expand globally. That continued today with the Tokyo-based company announcing plans to create a $100 million fund to invest in young technology companies that have a focus on improving user experience.
Rakuten Ventures, the investment are of Rakuten Inc., said today the new fund will focus on investing in technology start-ups in Israel, the Asia-Pacific region and the United States. It will be based in Singapore and run by Saemin Ahn, managing partner of Rakuten Ventures. Rakuten Ventures set up a similar fund last year to invest in companies in Southeast Asia.
Rakuten, whose Rakuten Ichiba marketplace is the leading e-commerce site in Japan, has invested billions in recent years in e-commerce and online marketing companies in North and South America, Asia and Europe. The company’s global e-retail sites and shopping portals accounted for $18 billion in sales in 2013, while the company reported revenue grew 29.5% to $4.9 billion and net income more than doubled to $412.6 million.
In a statement announcing the new fund, Saemin Ahn, pointed to two companies with roots in Israel as examples of the kind of start-ups that have rapidly won consumer loyalty: Waze, a mobile travel app developer that Google Inc. acquired last year, and messaging service provider Viber Media Inc., which Rakuten acquired in February for $900 million.
“More Asia-based VCs are venturing out into different regions to look at investment as long-term growth vehicles,” he said. “Since 2013, Rakuten Ventures has been one of such VCs to aggressively invest larger amounts into younger companies, to enable them to focus on product and service development.”
Rakuten chairman and CEO Hiroshi Mikitani has made clear his global ambitions: He said last year aims to operate marketplaces in 27 countries and process $125 billion in transactions by 2020. By contrast, eBay Inc. reported the total value of transactions on its shopping portals in 2013 was $77 billion, and Internet Retailer estimates Amazon.com Inc.’s sales on its worldwide sites last year amounted to $100 billion.
To achieve that growth, Rakuten has been on a buying spree in recent years.
The company in 2010 acquired U.S. e-retailer Buy.com for $250 million, renaming it Rakuten Shopping and turning it into a marketplace that hosts other merchant’s products but does not sell on its own behalf. Other investments include purchasing a stake in image-based social network Pinterest in 2012, buying e-reader company Kobo in 2011 for $315 million, and taking a stake in U.S. e-retailer The Grommet Inc., No. 415 in the 2014 Internet Retailer Top 500 Guide. In 2005, Rakuten acquired affiliate marketing network Linkshare for $425 million.
Rakuten’s European investments include: acquiring French online shopping mall Price Minister in 2010 for $248 million; taking an 80% stake in 2011 in Germany web marketplace operator Tradoria GmbH; buying U.K. e-retailer Play.com in 2011 for $39 million and participating in a $100 million investment round in 2011 in Russian online retailer Ozon.ru. Play.com is No. 28 in the 2014 Internet Retailer Europe 500 and Ozon.ru is No. 89.