Japanese mobile gaming firm launches $30m fund for global crypto investments

Evercoin founder Miko Matsumura / Photo credit: Miko Matsumura

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Gumi, a Japan-based mobile game publisher and developer, is launching a US$30 million fund to invest in promising blockchain and cryptocurrency companies located anywhere on the globe.

In a statement yesterday, the Tokyo-listed company said the fund, called Gumi Cryptos, will give its investees “unique access” to Japan’s market.

Gumi Cryptos will be led by Hironao Kunimitsu, the company’s founder and CEO, and Miko Matsumura, founder of US-based virtual currency exchange Evercoin. Matsumura is also an investor in other crypto companies such as FileCoin, Polymath, and Basecoin.

With this fund, Gumi looks to back blockchain solutions in different sectors, Matsumura said in an email interview with Tech in Asia.

He’s also not ruling out partnerships with the parent firm if the solutions are a good fit.

A “dedicated fund” is necessary because a different set of expertise is required to analyze and judge cryptocurrency and blockchain investments. It will also provide post-investment monitoring and management, explained Matsumura.

Since cryptocurrencies are more liquid than traditional stocks, a focused fund is the way to go, he added.

Founded in 2007, Gumi creates and distributes strategy role-playing games for mobile such as Brave Frontier and The Alchemist. It has since expanded to several markets, including France, Korea, Singapore, Taiwan, and the US. It held a US$377 million IPO at the Tokyo Stock Exchange in 2014 and chalked up US$238.18 million in revenue and US$12.67 million in net income for its 2017 financial year.

Gumi Cryptos is its third fund. Its first one, Gumi Ventures, was set up in 2012 and has made nine investments and two successful exits to date in sectors such as new media. Its second, named Venture Reality Fund, is focused on early-stage virtual, augmented, and mixed reality startups. It has made 21 investments and two exits so far.

nGoing into Japan’s ‘difficult-to-enter’ crypto marketn

According to Matsumura, Japan presents a daunting challenge for foreign companies seeking to enter the country. Faced with cultural and language barriers, they often have to play catch-up with domestic firms, which are able to navigate the market well.

“I’ve come to realize that all of them struggle to break into Japan, the largest cryptocurrency market in the world,” he stated, drawing from his experience advising global cryptocurrency startups and investors.

He said Gumi’s investors and management team will provide the network startups need to operate in Japan.

As of January 15, the Japanese yen accounted for 56.2 percent of bitcoin trading volume worldwide. The yen is followed by the US dollar at 28.4 percent, then by other currencies at 15.4 percent.

This shows that investors and even ordinary people in Japan are getting more involved in the cryptocurrency market, contended Matsumura. They now “accept cryptocurrency as an asset and believe in its the future.”

Japan was the first country to legalize bitcoin, the first decentralized digital currency. It also has a friendly regulatory approach towards cryptocurrencies – in fact, the government has approved over a dozen cryptocurrency trading platforms to date.

Many established IT corporations in Japan, like ecommerce giant Rakuten and web hosting company GMO Internet, have announced business strategies in the space. They’re putting more energy into research, studying, and trying to utilize blockchain technology to bring their businesses to the next stage.

nAwash with fundingn

Gumi isn’t the only one trying to ride the blockchain wave. Last month, a whopping US$1.6 billion fund launched in China to invest in startups operating in this space. Thirty percent of the fund came from the Hangzhou City government.

VC firms are also plowing money into blockchain companies. Among them is Fenbushi Capital, which now has a global portfolio of more than 40 startups leveraging blockchain across industries.

But investing in this new tech isn’t a magic pill. Returns are not immediate nor are they guaranteed.

As blockchain is still in its nascent stage, companies in the space are facing challenges, from regulatory interference to security risks. It may also be harder for their products and services to gain mass market adoption.