Government-backed Cool Japan invests in 500 Startups fund

According to a statement, the LP stake will allow Cool Japan to make seed-level investments, which involve a risk profile and development support requirements beyond the scope of the fund. The investment marks Cool Japan’s first investment in a US firm and is said to be the first time the Japanese government has backed any foreign VC.

The commitment will see Cool Japan become the largest LP in 500 Startups Japan, which was launched in 2015 and reached its first close in February last year at $15 million. According to a filing, the fund has achieved a corpus of $35.3 million to date, surpassing its target of $30 million. Other backers include Mitsubishi Estate and Mizuho Bank.

500 Startups Japan is expected to support Cool Japan’s cultural export agenda through a network of some 300 entrepreneurs and mentors that spans 20 countries. 500 Startups has invested in 35 companies in Japan so far, with recent activity including participation in rounds for IT players Authlete and Taci Knowledge.

The government launched Cool Japan in late 2013 with an aim to invest JPY90 billion ($821 million) in the globalization of small to medium-sized domestic businesses operating in fashion, food, media, leisure, education, and tourism. Bloomberg reported the fund’s current size at JPY69.3 billion, 85% of which has been provided by the government.

The Cool Japan initiative is driven by a number of cultural export bottlenecks including a lack of communication with overseas markets, limited international business experience among local companies and poor access to venture capital. Recent investments include a JPY1.4 billion round alongside AID Partners for Hyakusenrenma, an online vacation rentals platform hoping to leverage a government push for more inbound foreign tourism.

Last month, Future Venture Capital agreed to acquire All Nippon Entertainment Works, a company seen as benefiting from Cool Japan momentum by introducing copyrighted Japanese content to foreign audiences. It partners with Hollywood studios, publishers, and game companies to adapt existing domestic media productions into new versions that are more internationally marketable.

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• Topics
• North Asia
• Consumer
• Media
• Technology
• Fundraising
• Growth
• Japan
• USA
• 500 Startups
• seed
• TMT