Japan’s Robofund gets $1M to help mutual fund brokerages better serve customers

From the left: Yusuke Murata (Managing Partner, Incubate Fund), Satoshi Noguchi (CEO, Robofund), Yudai Yamada (Associate, Incubate Fund)

See the original story in Japanese.

Tokyo-based FinTech startup Robofund unveiled on Monday that they have raised 100 million yen (nearly $1 million) from Japanese startup-focused VC firm Incubate Fund. The company has developed an IVRS (interactive voice response system) for call centers for mutual fund customers. By introducing the system to securities companies and banks, customers will be able to check percentage changes and dividends of invested funds by automated voice over the phone. This system can adopt caller ID to automatically authenticate customers and update them on the status of their funds. For those unfamiliar with the use of internet or smartphones such as elderly investors, checking updates through web services or apps is difficult, but this service seeks to improve support for them.

Satoshi Noguchi, previously having worked at SBI Veritrans, SBI Holdings, and Pictet Asset Management, established Robofund in May of 2016. Graduating from the first batch of Tokyo-based seed accelerator program Supernova (co-produced by Draper Nexus, Slogan, Coent Venture Partners, and Viling Venture Partners), Robofund then went on to win the program’s Demo Day back in July.

In addition to IVRS, the company is also in the process of developing a chatbot to make it possible to know fund distribution ratios and percentage changes. However, it appears the foundation for the business they are aiming for is elsewhere.

Noguchi explained:

Sales representatives of securities companies need to make the optimal choices from all 5,800 mutual funds available in Japan and propose them to the visiting customers over the counter on the spot. Without understanding those customer’s portfolios and investment strategies, it is difficult for these representatives to present the optimal options.

Robofund is developing, with these securities companies in mind, a service that by simply choosing conditions in line with the customers wishes, brings up combinations of the optimal mutual funds (see picture below).

Firstly, the company hopes to expand to securities companies looking to target customers seeking aggressive fund management (as opposed to customers concerned with saving), in addition to regional banks that carry out investment trust sales. Due to prolonged negative interest rates, for bankers from banks who have been selling financial products it is difficult to sell risky new goods. But with the use of Robofund’s services it will become easier for not only securities companies, but also banks to sell investment funds.

Click to enlarge: The dashboard for securities companies’ representatives (under development)

In contrast with robo-advisors, a renowned business in the FinTech startup space which typically makes a direct approach to individual investors, Robofund takes a B2B business model and works with securities companies. Eventually, Noguchi wants to develop a robo-advisor, but there is an intentional reason he started with the B2B (business-to-business) model.

Noguchi continued:

I want mass data. If we would start with a B2C model, it would be impossible to collect statistics enough to analyze because we would be forced to start with the small number of customers and small trading transactions. Furthermore, I assume it’s skeptical about if robo-advisors can give customers truly-appropriate choices of funds back only by answering just a few questions.

By communicating over and over with customers it is necessary to teach the engine “what answer should be returned for people with this sort of problem”. From my previous job experience I have knowledge of example answers like those found in a dictionary, but in order to make them more objective, I thought it was necessary to put the dictionary into a chatbot and train it.

In other words, he started as a B2B business and cultivate the intelligence and communication knowhow, and then he appears to be planning to continue to expand into the B2C space.In order to provide to sell mutual funds as an extension from advisory services in Japan, companies have to be registered as a financial instruments business by the Japanese financial services agency. The time and expense required for completion of this registration process becomes a heavy burden for startups dealing with these businesses. Even from such a point of view, we could say taking a B2B approach makes sense.

Robofund is currently looking for promising engineers from the machine learning field, UI/UX designers, and database engineers specializing in NoSQL and RDB to assist in the acceleration of its service development.

Translated by Amanda Imasaka
Edited by Masaru Ikeda