SoftBank incubator steps up investments in Japanese AI


TOKYO – A Japanese incubator belonging to the SoftBank group is stepping up its investments in the country’s artificial intelligence startups despite the verdict of the founder of its parent group that Japan is “underdeveloped” in advanced technology.

Deepcore has an investment fund with a portfolio of 18 early stage and early stage AI-focused startups, many of which are Japanese. The fund plans to increase the number to “a total of around 70 startups,” said CFO Kasumi Amemiya, who adds that there is a growing opportunity in Japan.

“We’re going to invest in some new startups,” Amemiya told the Nikkei Asian Review. “We will be making announcements very soon. “

Deepcore is so confident in the country’s investment prospects that it suggests it might launch a second investment fund, which could be larger than the first.

Existing investments include AI Vaak monitoring software as well as UsideU, a provider of a digital dispatch service called Collaboroid.

The investment offensive follows the damning assessment earlier this month of Japan’s AI track record by SoftBank Group CEO Masayoshi Son. Japan, once at the forefront of technological development, was so far behind India and Southeast Asia in technology that it is now an underdeveloped country, the world’s largest technology investor warned during of a technology conference in Tokyo.

Concern is growing in Japan about the potential of the country’s AI companies as Chinese and US startups take the lead in developing disruptive technologies.

Japanese government spending on AI is much lower than that of China and the United States, while spending on venture capital is also lagging behind. According to CB Insights, there are approximately 360 unicorns – private companies valued at $ 1 billion or more – around the world that collectively are worth nearly $ 1.1 trillion. The United States is the leader, leading unicorn shares, accounting for around 50%, followed by China, which represents almost 30%. Meanwhile, Japan only has one widely recognized unicorn: the AI ​​company Preferred Networks.

Amemiya remains optimistic, however, stressing that “Japan’s strength lies in its manufacturing skills and craftsmanship.” “New services have emerged from the collaboration between AI and the real world, such as robots and automation. Japan could be a big competitor in this area,” she explained. “I believe Japanese AI startups are lucky enough to become unicorns.”

However, Japanese startups face stiff competition from China’s determination to build global companies in high technology. Data from global technology market consultancy ABI Research indicates that Chinese AI startups raised $ 5 billion in venture capital in 2017, overtaking the United States which had just over $ 4 billion. funding. A Nikkei ranking found that China has overtaken the United States in AI patent applicants over the past three years. The country is already home to SenseTime, a leading AI facial recognition company estimated to be worth more than $ 4 billion.

“The vast amount of data and initiatives led by the GOC cannot compare to any other country. It is difficult to compete head-on with Chinese AI startups,” Amemiya noted.

The ongoing trade war between the United States and China, however, could offer a handful of opportunities.

Amemiya points out that “the trade war could be a good opportunity for Japanese AI startups. If security concerns continue to increase, it could cause hurdles for Chinese AI startups as companies will be reluctant to use their technology or services. This could become an advantage for Japanese AI startups. “

Deepcore stresses that their main goal is to feed Japanese entrepreneurs.

The incubator runs a community of 300 members called Kernel, 80% of whom are students, and hosts weekly meetings and events where young hopefuls exchange ideas and advice. Deepcore provides assistance and opportunities for members to collaborate with companies and research institutes on projects using cutting edge technology. The aim is to create an environment that encourages entrepreneurship in the field of AI. If they see potential in an AI startup within Kernel, Deepcore would consider funding it, although only one has received support so far.

Scheme verge, operator of the Horai travel app, uses AI to coordinate travel plans. The amount of the investment was not disclosed, but the startup plans to spend the money on further development and testing of services.

Amemiya reported that more Kernel startups will receive capital from the company in the near future.

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