Analyzing the data surrounding Rakuten's investments and acquisitions as the company looks to build a worldwide eCommerce juggernaut.
When Pinterest raised $100 million in 2012, the round was led by Rakuten, a firm that recently created a new $100M global venture fund to follow up its $10M Asia-focused fund, and which based on recent history is going to become an even bigger player in technology circles as both an investor and acquirer.
For those unfamiliar, Rakuten is the largest eCommerce site in Japan with over $4B in annual sales and a market cap that currently sits at over $17B. Rakuten has already been an active acquirer and with new VC funds at its disposal, we wanted to take a look at the firm’s historical acquisition and investment activity to understand where it’s been and where it may be going.
Specifically, this Rakuten teardown will cover:
- Investment Pace on the Rise
- Investment by Sub-Industry – Sticking To What They Know
- International Ambitions Drive Investments Outside of Japan
- Doll Capital Management is Top Syndicate Partner
- Headed For Most Acquisitive Year Yet
- Acquisitions by Sub-Industry – Building an Amazon Competitor
- Acquisitions Highlight Global Ambitions
Rakuten Investment Pace on the Rise
Since 2009 Rakuten & Rakuten Ventures have participated in 12 investments totaling over $290M. While Rakuten is a well-known name in Japan, the firm’s participation in Pinterest’s $100M Series C round in May 2012 is what drew the most attention from the investing community stateside. Since 2011, the company has steadily increased investment volume, and is on pace in 2014 to match 2013, with 2 investments already announced this year. Of course, as the new global fund builds out its team stateside, it wouldn’t be a surprise to see deal volume increase significantly in the remainder of 2014 and the coming years.
Rakuten Invests in What They Know – eCommerce
Rakuten’s investment history clearly shows a focus on their core industry, eCommerce. Since 2009 the company’s investments have been dominated by eCommerce companies, with a combined 58% deal share for eCommerce and Mobile Commerce. Of all sub-industries, multi-product eCommerce led with a 34% deal share, with Rakuten participating in the international luxury product commerce site AHAlife’s cumulative $13.75M Series C, Russian Amazon clone Ozon.ru’s $100M venture financing, and consumer product discovery and commerce site The Grommet’s Series B.
With a new $100M fund in tow, more eCommerce investments would not be surprising as Rakuten Ventures managing partner Saemin Ahn was quoted as saying the investments will be in companies with “strategic significance”.
International Ambitions Drive Investments Outside of Japan
While their investment focus spans multiple sub-industries related to eCommerce, notably none of Rakuten’s investments since 2009 have been within Japan, a sign of a company with clear international ambitions.
International investments have spanned countries including China (La Miu, Tuniu), Russia (Ozon.ru), Singapore (ViSenze, Coda Payments, Carousell), South Korea (ESTmob), and the US (Slice Technologies, Pinterest, The Grommet, AHAlife). The United States has garnered the most deals with investments in California, New York, and Massachusetts. Due to the new global fund’s focus on the US and Israel, you can expect this trend to increase.
Doll Capital Management is Top Syndicate Partner
Using CB Insights Investment Syndicate Dashboard in Investor Analytics, we can observe that Rakuten likes to syndicate deals with Doll Capital Management, the early-stage VC firm with offices in the US, China, and Rakuten’s home country, Japan. DCM shares investments with Rakuten in Slice Technologies, Tuniu, AHAlife, La Miu, and Pinterest. See the visualization taken directly from the CB Insights platform for more information around Rakuten’s investment syndicate.
Rakuten Headed For Most Acquisitive Year Yet
Rakuten has been a fairly active acquirer over the years, with 17 acquisitions since 2009. Their most recent acquisition came when the Japanese firm acquired internet messaging and calling service, Viber, for a reported $900M. While at first glance Viber does not seem to have much in common with Rakuten’s eCommerce focus, many have speculated that the app could be used to sell products and digital content to Viber’s over 300 million users worldwide. Other notable acquisitions include the Q2’10 purchase of eCommerce site Buy.com for $250M, the $270M Q2’10 purchase of PriceMinister, the $315M Q4’11 purchase of eBook retailer Kobo, as well as the $200M Q3’13 acquisition of ViKi, an international video site based in Singapore who’s backers included Andreessen Horowitz, Charles River Ventures, and Greylock Partners.
Rakuten has already completed 3 acquisitions through the first half of 2014 and so should eclipse its pace of the last several years if it continues to be an active acquirer through the remainder of 2014.
Building an Amazon Competitor
Although Rakuten’s investments have been mostly in eCommerce, some of its acquisitions which have veered outside of eCommerce have resulted in some industry experts comparing Rakuten to Amazon.
Since 2009, over 50% of all acquisitions have been within the eCommerce space, however the firm has been pushing into other areas. Acquisitions not directly in the eCommerce industry taxonomy include sub-industries such as Supply Chain & Logistics, where Rakuten purchased Alpha Direct Services, an eCommerce logistics business, in Q4’12. They also acquired Webgistix, a cloud-based fulfillment technology company which also owns a network of fulfillment centers in the US, in Q2’13. These acquisitions gave Rakuten the ability to rival Amazon’s 2-day shipping service, Prime, while Rakuten’s acquisitions of Wuaki.tv (Q2’12) and the previously-mentioned ViKi (Q3’13), both digital video companies offering streaming content internationally, have been compared to the Amazon Instant Video service that Amazon rebranded and launched in 2011.
The chart below shows the total number of deals broken down by each sub-industry. All eCommerce sub-industries are highlighted orange and those outside of the eCommerce domain (primarily internet software & services companies) are blue. Of course, those that were not directly eCommerce largely revolved around commerce in some way.
Rakuten Acquisitions Highlight Global Ambitions
Rakuten’s acquisitions by geography have been diverse as the Japanese company attempts to globally expand its empire. The nine eCommerce/Mobile Commerce acquisitions since 2009 have come across eight different countries, with two deals in the US (California-based Buy.com and Washington-based PopShops). With acquisitions of Tarad.com, one of the largest eCommerce sites in Thailand, Play.com, a UK-based online retailer, and the previously mentioned PriceMinister, a French online marketplace, the proof is in the data that Rakuten has global aspirations.
- All of the data underlying this Rakuten teardown comes directly from CB Insights
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