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The state-backed VC fund shaping the future of Japanese tech
If you have never heard of the Innovation Network Corporation of Japan (INCJ) then you really haven't been paying attention to Japan’s tech industry.
INCJ made headlines again last week when shares in Sharp Corp. soared on the news that the state-backed fund was mulling a 200 billion yen ($1.7 billion) bailout for the ailing electronics giant.
Such deals are par for the course for INCJ which has spent the last six years spearheading the government’s efforts to restore Japan’s status as a leader in technology and innovation.
It has mostly made a name for itself through its private equity and venture capital investment activity. Backed by the biggest names in Japanese tech - including Canon, Panasonic, Hitachi, Sony, Sharp, and Toshiba - and with about 2 trillion yen of investable capital, it has some serious firepower.
Sharp is the most recent example of INCJ supporting the country’s embattled electronics giants. It is the largest shareholder of Japan Display, a firm it created out of the LCD divisions of Hitachi, Toshiba, and Sony. The fund also famously gazumped U.S. private equity major KKR in 2012 through its acquisition of chipmaker Renesas.
Unsurprisingly, INCJ has come in for a lot of flak from its critics for propping up, rather than revitalising, its distressed targets. That said, rescuing giants is only part of INCJ’s strategy. The fund is also a major player when it come to early stage investments. Around three-quarters of the 90 investments made by INCJ since its inception have involved early stage companies.
This is likely to be the real area of focus for Toshiyuki Shiga, Nissan’s former COO who took over as chair of INCJ in June, as the Japanese government looks to replicate some of Silicon Valley’s success in Japan rather just revive some of Japan's own past glories.
Photo: Curt Smith