DNX Ventures launches $300m Japan-US VC fund
DNX Ventures, formerly known as Draper Nexus Ventures, has launched its third Japan-US cross-border VC fund with a target of $300 million.
The firm has confirmed the completion of a first close of undisclosed size and an unspecified number of initial investments across both the US and Japan. Fundraising is expected to continue for the next six months.
Fund III will follow a similar strategy as its predecessors but with larger check sizes, backing about 60 early-stage companies, mostly in B2B categories, with deployments of $5-7 million in Japan and $7-10 million in the US. While DNX’s first two vehicles were allocated two-thirds to the US and one-third to Japan, Fund III will be split evenly between the two markets. Fund I raised $50 million in 2011, while Fund II closed at $185 million in 2016.
“Our fund sizes are really synchronized with the Japanese VC market, growing 5x since 2011, when Japan was a $750 million VC market, compared to the $3.5 billion market today,” Tetsu Nakagaki, a managing director at DNX, told AVCJ. “The environment has totally changed, so our target is to get 50% of the new fund from institutional investors, including fund-of-funds, life insurance companies, and sovereign funds. We’re talking to domestic pension funds, but they might not be ready for Japan VC yet.”
According to TechCrunch, LPs committed to the new fund include Hitachi, which also backed Fund II, Tokio Marine Holdings, Mizuho Bank, Kyocera Communication Systems, and financial advisory and asset management firm First Brothers. Growing institutional support for Japanese VC is expected to come on the back of a $1.2 billion IPO last year by local online marketplace operator Mercari as well as a surge in domestic corporate VC fund creation and M&A activity.
Founded in 2011, DNX aims to connect US and Japan start-ups through collaborations with the Draper Venture Network, a group of 20 member funds across five continents with $2.2 billion in assets under management. Focus segments include cybersecurity, artificial intelligence, financial technology and enterprise software. Significant portfolio companies include Folio, a stock trading services provider that raised about $63 million last year.
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