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VCs’ funding capacity for Japan startups soars to record USD 9.7 billion

Written by Nikkei Asia Published on   2 mins read

The year-end total of ‘dry powder’ cash reserves has risen by seven times over the past decade.

Venture capital available for investment in startups in Japan reached USD 9.7 billion at the end of 2023, up about 10% from a year earlier and the largest year-end amount ever, according to British research firm Preqin.

The increase could help accelerate technological innovations by Japanese startups for fields such as artificial intelligence and decarbonization.

Preqin examined “dry powder” cash reserves—raised but not yet invested—for investment in Japan at venture capitalists around the world. The survey included funds designed to invest less than 50% of their capital in non-Japanese businesses.

Dry powder totaled USD 1.33 billion at the end of 2013—an amount that has increased more than sevenfold over the past decade. This will contribute to the creation of unicorns, or privately held billion-dollar companies.

Venture capitalists’ Japan funds have long been said to be smaller than those earmarked for US startups. Recently, however, big funds with more than JPY 50 billion (USD 337 million) are being established because promising startups have been fostered in Japan. Low interest rates and expectations of favorable effects from policy measures have also contributed to the formation of big Japan funds.

A fund formed by Globis Capital Partners in 2022 raised JPY 72.7 billion (USD 489.8 million). Planning to invest up to JPY 10 billion (USD 67.3 million) per company, this year the fund will primarily focus on emerging companies seeking to achieve decarbonization and other technological innovations.

JAFCO Group completed the formation of a JPY 97.8 billion (USD 658.9 million) fund last September. For this year, the fund will focus on the development of AI and other technologies.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.


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