Q&A: Jafco Asia’s Shahan Sud

Q: How does Jafco Asia describe its interest in India to LPs?

A: India is not just the fastest growing economy in the world or the economy where medium-term growth is clearly visible, but it also has a favourable geostrategic position and unique talent base that makes it an important geography in the roadmap of Jafco Asia’s growth in South Asia. India’s ability to innovate, grow and create tangible value in times of global macroeconomic turmoil are among the many reasons why we are extremely long on India and Indians. Moreover, while the friendship between India and Japan dates to 752 CE, and in contemporary times, it has been associated with leaders like [philosopher and teacher] Swami Vivekananda, [Tata Group chairman] J.R.D. Tata, [former Japanese Prime Minister Shinzo Abe], and [Japanese Prime Minister Fumio Kishida]. Jafco Asia’s increasing momentum in India over the last eight quarters highlights our commitment to, belief in, and support for not just the founders building in India but also for the strategic Indo-Japanese partnership that has developed over the years between the two nations and their respective prime ministers.

Q: How have Jafco Asia’s activities in India developed in recent years?

A: Jafco Asia has been investing in Asia Pacific for over 30 years. Our assets under management stand at around USD 500m. Over the last 10 years, we have invested in Indian companies like MediBuddy [health-tech], Pazcare, and Roadzen [insurance-tech], while doing multiple follow-on rounds and actively scouting for investment opportunities in the region. Between September 2021 and March 2023, we closed six fresh investments in India. Now that I’ve been onboarded as the first investment manager physically based in India, we can work with the founder community more closely, work on the foundations that were built over the last 10 years by [Jafco Asia CEO Yoshiyuki Shibusawa] and [Jafco Asia’s head of South Asia] Supriya Singh and nurture an ecosystem of founders.

[The six India deals executed since September 2021 are logistics network Prozo, youth-focused neobank Akudo, insurance platform Pazcare, payments app TwidPay, gaming marketplace Driffle, and industrial B2B services provider Venwiz.]

Q: What are the key considerations for expanding a Japan-heritage VC institution into India?

A: Jafco Asia’s growth in India is largely attributable to our strong foundations in the region, a clear investment thesis, a strategic moat that adds value in addition to capital, a diverse set of portfolio companies across geographies that helps in developing synergies, and an ability to establish a balanced local team. We also need to work on the shared traditions of Japan and India while simultaneously learning from the diversity which both nations offer.

Q: To what extent can Jafco Asia’s investments in India and Southeast Asia benefit from access to Jafco Japan’s portfolio and resources?

A: We have an existing portfolio that covers India, Southeast Asia, Japan, and Taiwan, and we look to help businesses grow across these jurisdictions. It isn’t easy for start-ups to enter Japan, but supported by our business development team, they can reduce time to market significantly. We also help companies to raise follow-on funds from our LPs and other strategic partners in Japan.

Q: What about exits?

A: We play a role when founders assess which is the most appropriate stock market for an IPO. Jafco has helped a lot of companies list on the Tokyo Stock Exchange and on other exchanges. Insights into the IPO journey are among the most valuable supports we offer because many founders in India and neighbouring countries have very little experience in taking their companies public. Jafco has been around for 50 years, so it is one of the longest-standing and largest VC firms in Japan. We have invested in more than 4,000 companies and taken 1,000 of them to IPO. Our strong network and connections in Japan – from a go-to-market or a fundraising perspective – are critical differentiators for us.

Q: It appears that several Japanese VC firms have made moves into India through various partnerships in recent years. What is the attraction of the Japan-India bridge for start-ups and investors?

A: Government initiatives and policy reforms have been pivotal over the last 10 years. Global capital being earmarked for India, the ability of high-quality talent to command a premium from early-stage start-ups, and a behavioural shift in the Indian middle class towards start-ups – by accepting start-ups and making them part of popular culture in India – are all signs that the start-up ecosystem is maturing. We have doubled down on India ourselves rather than entering through a partnership with a local firm. We are certain that Jafco Asia’s Japanese roots as well as being a MAS-regulated [Monetary Authority of Singapore] institution will bode well for the regulatory concerns that we might see in many VC-funded start-ups. Furthermore, given the fact that we are a multi-stage, seed to Series A investor, there is little room for valuation mismatch because we are long-term partners. This allows us to work with the founders, support them in rewiring and streamlining their business operations, and eventually increase the value for all stakeholders of the company.

Q: What are your expectations for the Japan-India bridge?

A: We are certain it will flourish as medium to long-term growth is clearly visible in India and Indian talent is building unique solutions, not just for India but also for the world

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• Topics
• North Asia
• South Asia
• Early-stage
• Technology
• GPs
• Japan
• India
• JAFCO