Japan FinTech Observer #160

Welcome to the one hundred sixtieth edition of the Japan FinTech Observer. This week, we are excited to have new subscribers join us from Rothschild & Co, France's Ministère de l'Intérieur, the Indian Institute of Technology Jammu, the International Islamic University, Islamabad, and the Asian Development Bank (ADB), among others 🙏

Over-achievers and under-achievers.

Morningstar takes the measure of NISA after the Q1 inflows, and projects that the AUM are well on track to come in double the government's projections by the end of 2027, making the investment scheme the success story of "Asset Management Nation Japan." For those old enough to remember, we will ignore that initial iterations of such scheme were discussed as part of the "Big Bang" capital market reforms in the late 90s - things take a little longer in Japan, right?

Keidanren - yes, Keidanren! - is taking a shot at the "Five-Year Startup Plan" and has published a policy statement on what a second five-year plan should look like. Published despite the math not making any sense at all when considering empirical startup data, the first plan has pretty much missed all targets. Please keep that in mind when visiting the USD 20m "SushiTech" production next week - good use of money or innovation theatre?

Here is what we are going to cover this week:

• Venture Capital & Private Markets: BALLAS has raised a 2.4 billion yen Series B; Sony Ventures launches ‘Innovation Fund 4’ with JPY 20bn target; Across Ventures partners with SBI Holdings to launch USD 100m U.S. Micro VC Fund-of-Funds; Plug and Play Japan hits final close on inaugural fund at over JPY 6bn; Mori Building has launched a 10 billion yen CVC fund
• Banking: Money Forward swings to first quarter operating profit with record EBITDA performance; regional lenders Shiga Bank and Senshu Ikeda HD agree to mutual shareholding tie-up
• Payments: Digital Garage expands FinTech suite with integrated digital wallet for “Cloud Pay Business”
• Capital Markets: Tokyo’s king of ‘death spiral’ financing profits from a wave of demand; Mizuho, J-POWER, and Scalar complete successful trial of 24/7 hourly-matched Corporate PPA; FSA issues 2025 benchmark for corporate transparency and sustainability disclosure
• Asset Management: FOLIO Holdings surpasses 1 Trillion Yen in Assets Under Management; Invesco expands Japanese footprint with launch of US and European ETF access; Japan’s NISA program ignites record 6 Trillion Yen inflow in Q1 2026 as cumulative purchases eye 100 Trillion Yen milestone
• Digital Assets: Mitsui & Co. Digital Commodities to expand Zipangcoin series to public blockchains via new multi-chain infrastructure
• The Last Word: A Strategic Roadmap for Japan’s Next-Generation Startup Ecosystem

Venture Capital & Private Markets

• BALLAS, a leading developer of online procurement platforms for construction materials, has successfully raised 2.4 billion yen (approx. $15.5 million USD) in a Series B funding round; the capital injection consists of 2.1 billion yen in equity and 300 million yen in debt, bringing the company’s cumulative funding to approximately 4.3 billion yen; the equity round was co-led by SMBC Edge and Z Venture Capital; other participants included a robust mix of corporate venture capital and financial institutions, such as JGC MIRAI Innovation Fund, Sankyu-SBI Innovation Fund, Daiwa House Ventures, Persol Venture Partners, SBI Investment, Kyoto Capital Partners, and Mitsui Sumitomo Insurance Venture Capital; the debt portion was provided by The Shoko Chukin Bank

New Funds

• Sony Ventures launches ‘Innovation Fund 4’ with JPY 20bn target: Sony Ventures Corporation (SVC), the wholly-owned venture capital arm of Sony Group, has officially commenced operations of its latest investment vehicle, Sony Innovation Fund 4 L.P.; the firm confirmed that it has completed the first closing of the fund and began active investment operations as of April 2026; this fourth iteration of Sony’s flagship innovation fund has attracted significant institutional backing; limited partners participating in the first closing include major Japanese financial institutions MUFG Bank, the Development Bank of Japan (DBJ), Sumitomo Mitsui Banking Corporation (SMBC), and Sony Bank, alongside Sony Group itself
• Across Ventures partners with SBI Holdings to launch USD 100m U.S. Micro VC Fund-of-Funds: Across Ventures, a Silicon Valley-based venture capital firm, has announced a strategic alliance with Japanese financial services giant SBI Holdings to launch a new investment vehicle aimed at bridging the gap between U.S. innovation and Japanese industry; the new fund, Across Ventures Fund I, L.P., is targeting a total of $100 million (approximately JPY 16bn); operating as a fund-of-funds, the vehicle will focus on "specialized micro VCs"—a niche the firm identifies as increasingly vital within a "barbell" venture capital landscape where mega-funds have shifted toward later-stage, larger-scale investments
• Plug and Play Japan hits final close on inaugural fund at over JPY 6bn: Plug and Play Japan, the regional arm of the global innovation platform and venture capital firm, has successfully completed the final closing of its debut investment vehicle, "Plug and Play Japan Fund I"; total capital commitments for the fund surpassed its initial targets, reaching over 6 billion yen; the fund, which launched its first close in March 2025, is designed to serve as a strategic bridge between the Japanese startup ecosystem and the global market; operating under the mission "The fund that connects Japan to the world," the vehicle targets seed and early-stage startups across both domestic and international landscapes
• Mori Building, Japan’s prominent urban landscape developer, has announced the launch of a 10 billion yen ($65 million) corporate venture capital (CVC) fund, signaling a strategic shift toward integrating high-tech innovation with large-scale real estate development

Banking

• Money Forward swings to first quarter operating profit with record EBITDA performance: Money Forward (TSE: 3994), a leading Japanese provider of back-office SaaS and financial management solutions, has delivered a surprisingly positive first-quarter performance for the fiscal year ending November 2026; the company achieved a positive operating profit of JPY 170 million, defying initial expectations of a loss; the results, underpinned by a 42% year-on-year (YoY) surge in consolidated net sales (excluding divestiture impacts), demonstrate that the firm's aggressive AI adoption and its burgeoning FinTech business are beginning to translate into sustainable margin expansion
• Regional lenders Shiga Bank and Senshu Ikeda HD agree to mutual shareholding tie-up: The Shiga Bank and Senshu Ikeda Holdings have entered into a capital and business alliance aimed at strengthening their regional financial capabilities and driving sustainable local growth; under the terms of the agreement, resolved by Shiga Bank’s board of directors, the two institutions will mutually acquire shares in one another to cement a long-term cooperative relationship; based on current market valuations, both parties anticipate the mutual acquisition to represent between 0.5% and 1.0% of their respective outstanding shares; the specific number of shares and transaction methods will be finalized at a later date, pending market conditions

Payments

• Digital Garage expands FinTech suite with integrated digital wallet for “Cloud Pay Business”: Digital Garage and its subsidiary, DG Financial Technology (DGFT), have launched new digital wallet functionality integrated into their "Cloud Pay Business" DX solution; developed in collaboration with group company Pocket Change, the platform aims to unify payments, loyalty programs, and customer management to drive digital transformation (DX) for brick-and-mortar retailers; the solution leverages DGFT’s "Cloud Pay" QR code payment infrastructure alongside Pocket Change’s "Pokepay" platform, which specializes in proprietary electronic money issuance

Publications

Bank of Japan

• The Bank of Japan Review has published "Verifiable Credentials for Identity Assurance in the Digital Society: An Overview and Trends in Standards Development"
• Conference on the Economics of Payments XV: Call for Papers - The Bank of Japan is hosting the Economics of Payments XV conference; the event will take place on November 9-10, 2026, at the Bank of Japan Head Office in Tokyo

Financial Services Agency

• The FSA published the English version of "FSA Analytical Notes (2026.2)": Analysis of Human Resource Support by Regional Banks and Shortages of Managerial Talent at Firms
• The FSA published the English version of "FSA Analytical Notes (2026.3)": An Empirical Examination toward a Multi-faceted Understanding of the OTC Derivatives Market

Other

• GSMA, alongside its conference in Tokyo last week, published a call to action with "Digital Nations 2026: Accelerating the Digital Leap in Japan"

Capital Markets

• Tokyo’s king of ‘death spiral’ financing profits from a wave of demand: Bloomberg's Alice French provides a rare look at how Michael Lerch became the financier of choice for Japan’s struggling small-caps
• Mizuho, J-POWER, and Scalar complete successful trial of 24/7 hourly-matched Corporate PPA: a consortium of Japanese financial institutions, energy providers, and technology startups have successfully demonstrated a "24/7 Corporate Power Purchase Agreement" (C-PPA); the trial, led by Mizuho Bank, Mizuho Securities, Mizuho Leasing, Electric Power Development (J-POWER), and the DeepTech startup Scalar, is a step toward real-time carbon-free energy (CFE) accounting in Japan
• FSA issues 2025 benchmark for corporate transparency and sustainability disclosure: the Financial Services Agency (FSA) has released its "2025 Collection of Good Practices in Descriptive Information Disclosure"; this document serves as a strategic playbook for listed companies, moving toward a model of "narrative reporting" that bridges the gap between ESG initiatives and financial value creation; as the Japanese market continues to attract record levels of foreign capital, the demand for "decision-useful" information has never been higher; the FSA’s 2025 report makes it clear: investors are now demanding quantified financial impacts, clear linkages between human capital and profit, and granular roadmaps for the dissolution of cross-shareholdings

Asset Management

• FOLIO Holdings surpasses 1 Trillion Yen in Assets Under Management: FOLIO Holdings, a core FinTech subsidiary of the SBI Group, has surpassed the 1 trillion yen assets under management milestone on April 13, 2026; this achievement marks a period of hyper-growth for the Tokyo-based firm; in just one year, the company’s asset base grew by approximately 660.4 billion yen—a 3.5-fold increase from the 263.2 billion yen reported at the end of March 2025
• Invesco expands Japanese footprint with launch of US and European ETF access: Invesco Asset Management (Japan) has begun offering its suite of US and European-listed Exchange-Traded Funds (ETFs) and related services to the Japanese market; the move follows the firm’s registration as a Type 1 Financial Instruments Business Operator, which became effective April 1, 2026; the expansion allows Invesco to distribute its overseas ETF products to a broad range of Japanese clients, including institutional investors such as domestic financial institutions and pension funds, as well as individual investors through local brokerage partners
• Japan’s NISA program ignites record 6 Trillion Yen inflow in Q1 2026 as cumulative purchases eye 100 Trillion Yen milestone: Japan’s retail investment landscape is aiming for a notable milestone; according to the latest Morningstar NISA Overview Report for the first quarter of 2026, net inflows into the public investment trust market have surged past 6 trillion yen for the first time, driven by the continued expansion of the "New NISA" (Nippon Individual Savings Account) program; now entering its third year, the revamped tax-exempt system is showing immense scale; annual purchases in 2025 topped 18 trillion yen, bringing cumulative NISA purchases to 71 trillion yen by year-end; Morningstar analysts project that if this 18-trillion-yen annual pace holds, the program will blow past the 100-trillion-yen milestone by the end of 2027—nearly double the government’s original target of 56 trillion yen

Digital Assets

• Mitsui & Co. Digital Commodities to expand Zipangcoin series to public blockchains via new multi-chain infrastructure: Digital Asset Markets and Intertrade (TSE: 3747) have developed a new token issuance and distribution infrastructure designed to facilitate the multi-chain expansion of the "Zipangcoin" series; the Zipangcoin series, issued by Mitsui & Co. Digital Commodities, consists of three commodity-linked crypto assets: Zipangcoin (ZPG), Zipangcoin Silver (ZPGAG), and Zipangcoin Platinum (ZPGPT); these assets are designed to track the market prices of gold, silver, and platinum, respectively; the new technical foundation was built upon Intertrade’s "Spider Digital Transfer," a total solution platform for financial instruments, integrated with infrastructure provided by Fireblocks; this development marks a significant shift for the Zipangcoin series, which has historically been managed on private blockchains; with this upgrade, the tokens are now capable of being deployed and traded across multiple public blockchains

The Last Word: A Strategic Roadmap for Japan’s Next-Generation Startup Ecosystem

In 2022, the "10X10X" vision was established as the structural North Star for Japan’s economic revitalization, aiming to increase both the "base" (startup volume) and the "height" (valuation and success level) tenfold by 2027. While the initial years of the "Startup Development Five-Year Plan" successfully expanded the ecosystem's footprint, the strategic landscape has evolved. Under the current Takaichi Administration and the guidance of the Japan Growth Strategy Council, a harsh reality must be acknowledged: volume without value is not a strategy for global leadership. As the Summer 2026 growth strategy deadline approaches, Japan must pivot from merely cultivating ventures to orchestrating a "Global Leap."

While the ecosystem achieved a respectable 1.7x growth in the number of startups, the "height" remains critically stagnant. The contraction in investment volume and the failure to produce a single decacorn have led to a decline in Japan's global standing. According to the Global Startup Ecosystem Report by Startup Genome, Tokyo fell from 10th place in 2024 to 11th in 2025, having been overtaken by Shanghai. This regional displacement confirms that matching global standards is insufficient; Japan is losing ground to rivals who are scaling faster. To arrest this decline, a "Second Five-Year Plan" must be institutionalized that prioritizes global market dominance over domestic headcount.

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