Sony Ventures Corporation was established in 2016 to manage all of Sony’s venture investment activities through Sony Innovation Fund (SIF), Sony Innovation Fund by IGV, a joint venture with Daiwa Capital Holdings, Sony Innovation Fund: Environment, and SIF3.
We interviewed Austin Noronha, Managing Director-US and Gen Tsuchikawa, CEO of Sony Ventures Corporation.
FinSMEs: Can you speak a bit about you?
Gen Tsuchikawa
I am the sitting CEO and Chief Investment Officer at Sony Ventures Corporation, where I direct the venture investment arm of Sony Group Corporation known as Sony Innovation Fund. I have spent nearly 20 years with Sony and currently also serve as a Corporate Vice President. Sony Innovation Fund was founded on behalf of Sony in 2016, and directs investments in transformational technologies shaping the future of business, entertainment, and society around the world. Under my leadership, Sony Innovation Fund has greatly expanded its focus on early- to growth-stage emerging technology startups in the entertainment, healthtech, fintech, deeptech and environmental sectors, and has increased the fund’s assets under management to more than $600 million in 2023.
Austin Noronha
As the Managing Director at Sony Ventures based in the San Francisco Bay Area, I am part of a global team that manages Sony Innovation Fund. Before my time at Sony, I was founder and CEO of TrueScope Technologies, an immersive video product and services start-up. I also previously headed up Sony’s Growth Ventures & Innovation team in the US – a role I held for 14 years. My investment focus includes early- to growth-stage emerging technology startups in the healthtech, fintech, deeptech, environmental and other sectors of relevance to Sony.
FinSMEs: What do you think about the current tech ecosystem? Big issues or stunning opportunities?
The tech ecosystem continues to be a great place for innovation, with startups developing groundbreaking technologies and solutions in various domains. In spaces like healthtech and fintech to entertainment and gaming, and beyond, there are ample opportunities for venture capital investments that transform the ways we live and work. We are also seeing rapid growth, fueled by changing consumer behaviors and the adoption of digital solutions. This growth creates significant opportunities for startups to capture market share and generate substantial returns for investors.
This being said, there are some challenges within the current ecosystem relating to competition and regulatory uncertainty. The tech space is inherently competitive, making it difficult for startups to establish themselves as viable players in the market. Tech companies are also facing increasing regulatory scrutiny, which can create uncertainty for investors, particularly in areas such as healthtech and fintech.
FinSMEs: Let’s speak about Sony Ventures. Can you tell us a bit about the firm?
Sony Ventures is the venture investment arm of Sony. We focus on transformational technologies that shape the future of multiple industries, including entertainment, healthtech, fintech and deep tech.
The fund has invested in more than 150 diverse companies of all stages and all with the potential to redefine their industries. We also have offices around the world in the U.S., Japan, EU, India and Israel, and our global team connects innovators from around the world with resources to grow and accelerate their operations.
As part of Sony, one of the most innovative and successful entertainment and technology companies in the world, we bring to the table a long history of innovation and creativity. We also bring deep expertise in the technology industry as well as the vast resources of Sony’s global network to help our portfolio companies scale and succeed.
FinSMEs: Which trends do you follow with particular attention?
One key trend in the overall venture capital space is the growing importance of collaboration between funding corporations and startups. This trend is becoming increasingly important to us, and it is why we prioritize our engagement in the communities where we invest. We believe in local teams on the ground that can connect with our portfolio companies and provide them with Sony’s extensive global ecosystem of resources, technical expertise, and industry insights, and hands-on support and guidance.
In terms of FinTech, some key trends we see and are actively investing in include AI/ML for trust & safety, web3, embedded finance and financial inclusion. With FinTech being one of Sony Innovation Fund’s major focus areas with other 25 active portfolio companies to-date, our global team is closely tracking the latest developments in this sector, so as to identify promising investment opportunities and drive growth in our portfolio companies.
- AI/ML for trust & safety: bringing a safe and trustworthy experience is an essential foundation for online services, whether they are directly offering financial products or indirectly enabling transactions.
- With the increased sophistication and pace of cyberattacks, AI can bring a much needed automation and increased accuracy in filtering out traffic. This has been a key thesis for us to invest in Arkose Labs, whose bot-detection and account takeover protection platform is being used by major financial services, e-commerce and entertainment services, including Sony’s own PlayStation Network.
- The rapid emergence & expansion of Generative AI is creating new challenges in terms of how to distinguish “real” content from synthetically-generated one, which can have a long-lasting impact on information trustworthiness and consumer safety. That is why we see tremendous opportunity in the provenance certification technology that our portfolio company Truepic has been developing & fine-tuning for several years. Since growing its initial market footprint in financial services (such as for lending/mortgage onboarding verification & insurance claims fraud detection), Truepic is since this year actively entering the digital content authentication space.
- Looking ahead, we see a strong need for next-generation privacy tools (notably in the use-case of LLM/AI model training with Personal Information) as well as broader governance & cybersecurity layers for Generative AI.
- web3: over the past 10 years, blockchain has gone through a number of technology maturation cycles, and we see this ripe for broader enterprise adoption, especially in the context of bridging “legacy” web2 infrastructure with (some level of) decentralization. That is why we are particularly keen to engage with start-ups that harness the potential of distributed ledger technology to enhance transparency, security, and efficiency across various financial processes.
- Whether in the form of innovative web3 wallet architectures, Zero Knowledge (ZK) proof systems, data analytics or automation layers and broader developer-facing tools.
- For instance, we have recently invested in an early-stage crypto tax automation start-up in Japan called pafin.
- Embedded finance: virtually every single consumer (or business)-facing service touches directly or indirectly financial services.Thereby creating concrete opportunities for start-ups to abstract their technological, regulatory and compliance complexities through ready-to-deploy white-label packages or easily-integrable APIs.
- We see this especially meaningful in the insurance space, as a powerful method to cross-sell insurance products within a familiar brand and user experience. This has been a driving force to drive our investments in Covr (white-label life insurance) and Waffle (embeddable P&C insurance) for instance.
- Financial inclusion: Fintech has emerged as a powerful force in democratizing access to financial services. Startups that are leveraging technology to address the underserved segments of the population, such as unbanked individuals and micro/small businesses, or that are focused on simplifying financial processes or access to financial services, are gaining the attention of VCs.
- For instance, our US-based portfolio company MagicCube is leveraging on deep payment security to enable small & mid-sized merchants to use any off-the-shelf smartphone or tablet as a payment acquisition device, thereby removing the capital cost and operational complexity of handling dedicated Point-of-Sale hardware.
- We have in parallel been actively investing in the Indian market, where there is a clear leapfrog of a large sector of the underbanked population towards mobile-first digital finance. Our growing Indian FinTech portfolio reflects this, for instance through Slice (which has grown to become a major neo-bank in the country) and GetVantage (digitization of the lending process for SMBs).
FinSMEs: Can you tell us a bit more about your approach to investing?
At Sony Innovation Fund, we have a unique investment approach, which is a hybrid model of traditional venture firms and strategic investors. We have an institutional mindset, but we are invested in the company’s overall success.
Our central strategy is to be selective and take ample time when evaluating a potential investment. We always prioritize the notion of scalability, ensuring that each portfolio company has the ability to grow under a range of circumstances.
FinSMEs: Personally, what do you like to see in entrepreneurs you partner with?
In our quest for investment opportunities, we actively seek out companies across all development stages that possess the potential to revolutionize their respective industries. Our focus areas range widely, including entertainment, gaming, healthtech, fintech, and deeptech.
For entrepreneurs gearing up for discussions with Sony Innovation Fund, we encourage you to present a comprehensive plan outlining your strategy for scaling your product or service. This plan should not only emphasize the capacity for scalability but also establish its resilience under various circumstances. We highly value a clear and focused vision from founders, not only for the growth of their company but also for how that company will benefit society.
FinSMEs
09/10/2023