In 2019, B Cryptos will do what it was created to do – help make crypto dreams a reality, and make a little coin in the process.
Japan’s first crypto fund, B Cryptos has been one of ICON’s important international relationships since the companies entered into a strategic partnership in May of last year. Leveraging its own knowledge of Japan’s blockchain space and the vast network of its partner, Japanese venture capital giant B Dash Ventures, B Cryptos is helping ICON establish itself in one of the world’s biggest crypto markets. ICON, meanwhile, provides B Cryptos with blockchain-related talent, resources and technical expertise unmatched by any homegrown Japanese project.
Getting in at the right time
B Cryptos was founded in 2017 as Japan’s first FSA-licensed fund to invest in tokens and cryptocurrencies, as well as private equity in blockchain. This was a dramatic period in Japan’s blockchain space. At the time, Japan was one of the world’s most crypto-friendly nations, with Tokyo operating a regulatory regime widely praised as ahead of the curve. The USD 530 million hack of Japanese cryptocurrency exchange Coincheck in January 2018, however, soured local authorities on cryptocurrency, at least for a time. This, and the troublesome valuation levels of some blockchain projects despite the bear market, encouraged B Cryptos to deploy their capital sparingly.
It turned out to be a wise move. With regulations in Japan set to change once again and project valuations returning to reality, the nascent blockchain fund is set to start making money by spending it. “We’re about to close our first financial year. We were pretty fortunate in that the deployment of our capital was delayed due to regulatory items we needed to sort out, which let us start investing at what we believe was the right timing,” says Ken Kitahara, B Crypto’s VP of Investment. “Looking forward to this coming financial year, it’s about deploying our capital to where it’s needed and getting good returns back to our investors, including ICON.”
“A lot of people in the market are here to stay, and valuations have come back to where we think they are reasonable,” says Kitahara. “We’ve made a few investments already, but we’re really thinking about ramping up our capital deployment in the coming financial year. That’s it for us.”
True win-win partnerships
B Dash Ventures isn’t just a partner – it’s B Crypto’s sister fund, an early-stage VC. Kitahara explains, “They do everything traditional equity, and we do everything crypto, everything blockchain.”
B Dash Ventures’ clout in Japan could not be overstated. The venture capital firm counts among its limited partners some of Japan’s largest technology companies and financial institutions including NTT Docomo, Mitsubishi UFJ Capital, GREE, NEC BIGLOBE, Fuji Television and the Japanese government itself.
Liquid is one of Japan’s leading cryptocurrency exchanges, and one that managed to become only the second tech startup to “unicorn” in Japan. It’s cultivated a reputation for being very pro-regulation, of “playing by the rules,” and has recently announced plans for a US expansion. Liquid also shares a long-standing relationship with B Dash Ventures.
Then there’s ICON.
One of B Crypto’s limited partners, the Korean blockchain stalwart works very closely with the fund. The relationship sprang – at least in part – from the Japanese fund’s pivot away from a purely domestic focus as Japan’s crypto environment took a turn for the worse in the wake of the Checkone hack. Broadly speaking, B Crypto helps ICON do what it wants to do in Japan, while ICON helps B Cryptos do what it wants to do outside of Japan.
The two sides are pushing common initiatives such as co-hosted hackathons, demo days, and conferences. Most recently, B Cryptos has become a partner in the soon-to-be-launched Tokyo Launchpad of ICX Station, ICON’s global acceleration program. Kitahara thinks Japan’s improving regulatory environment could mean good things for the fund. “Lots of people on the sidelines are waiting to jump more actively into this space,” he says. “I think this is what ICX Station Tokyo will be focusing on, and we’ll be working together in terms of incubation and follow-on investment.”
ICON brings unrivaled resources and technical expertise to the partnership. Kitahara says, “As an investment fund, when we look at certain projects, it’s always great to have a reference check we can do with ICON or get their insight from a technological perspective.”
Big in Japan?
Japan can be a tricky place in which to operate for multinational firms. “Japan is an island country,” says Kitahara. “As Japanese folks, we tend to value a lot of the things that worked in the past and work better with people who are similar to us. Japan or not Japan.”
Still, compared to some other international firms, ICON has a lot going for it. Korea’s geographical proximity is a plus, and similarities between Korean and Japanese business cultures could help ICON adapt to the local market. ICON’s “stellar” track record in Korea helps in Japan, too, as does its relationship with LINE, a household name in the island nation.
ICON’s biggest strengths in Japan, however, are its size and skills.
“If you look at the size of ICON’s team and the talent that they have, you don’t have that kind of level in Japan right now,” says Kitahara. “With Japanese enterprises, interest has been growing over these last couple of months. They probably would want someone to consult, somebody to hold their hand through whatever they are trying to do. If you look at the enterprise blockchain space, you don’t have huge players the size of ICON right now.”
“No one has that in Japan right now. Let’s just put it that way.”