Tokyo-based internet company Cocon, previously known as Panda Graphics, announced this week the acquisition of Ierae Security, a Japanese internet security diagnosis startup. Although the company has not yet disclosed the transaction value, Ierae Security became a wholly-owned Cocon subsidiary upon Cocon buying up the company’s total outstanding shares.

Ierae Security was founded in 2011 by Makoto Makita, a security engineer, who started up a security diagnosis team at SoftBank and CyberAgent. The company’s competitive edge is vulnerability assessment for web/smartphone apps and IoT (Internet of Things) among others, and they offer security consulting to security system vendors and leading companies in Japan. Their clients include Cybertrust JapanSammy Networks, CyberAgent and S&P (not Standard & Poor’s but a Japanese mobile gaming developer), in addition to Photosynth, which is behind smart lock solution Akerunas well as other firms.

See also: Japan’s Akerun smart lock to start shipping soon, expecting to reach 10,000 orders in a year

Meanwhile, as indicated by the company’s former name, Cocon is derived from Panda Graphics, an illustration-focused crowdsourcing platform. The company, established in February of 2013, secured 140 million yen from East Ventures and Opt in July of 2014 while also raising undisclosed-amount funds from China’s SIG Asia Investments and this company’s closely-related Japanese firm, MS Capital. After entering into a capital tie-up with Tokyo-based 3DCG production Mox Mortion in June of 2014, and with UI/UX design agency Ohako in January of 2015, they purchased  crowdsourcing platform Voip covering the voice-acting sector in May of 2015. Thus, they are active for tie-ups and acquisitions involving startups.

Ierae Security moved their headquarters to Cocon’s office in September 2015; therefore we can presume the process of this acquisition is based on their continued and close cooperative relationship.

When asked about the business synergies between two companies upon this acquisition, Yuya Kuratomi, CEO at Cocon, explained that the company is dealing with many game developers, and the demand for security solutions against cheating and such has increased. They aim to offer mobile app security solution and also expect mutual introductions among their clients.

This business expansion method, in which startups invest in or acquire another startups, has been recently seen in the case of Japan’s c2c (consumer to consumer) marketplace app Mercari or our neighbor South Korea’s Yello Mobile. How will Cocon develop their business? This is going to be very interesting.

Translated by Minako Ambiru via Mother First, edited by “Tex” Pomeroy