Japan's Coral launches $25m growth fund

Coral Growth is backed by the VC firm's existing institutional investors. Coral raised JPY6 billion last year for a seed fund from the likes of Mitsubishi Estate, J-Power, Mizhuo Bank, and Shinsei Bank. The new fund will function as an extension of this core vehicle, providing later-stage funding to 3-5 portfolio companies.

Much of the plan is based on expectations that later-stage fundraising in Japan will be curtailed by macro pressures related to COVID-19, especially given that many growth funds are dependent on corporations that may pull back on their VC budgets to focus on core operations. This, in turn, could create a capital supply shortfall for worthy late-stage companies at a time when they need extra support.

"The unicorn was the symbol of choice for start-ups in recent years, but perhaps the camel will be more symbolic over the next two," James Riney, a founding partner and CEO at Coral, said in a statement. "The COVID-19 menace is a tragic black swan that will surely impact the start-up ecosystem. However, there are strong companies that will survive this and emerge even stronger. We've raised the resources to help them endure."

This is not the first growth fund raised by the seed investor. In 2018, Coral raised a special purposed vehicle (SPV) to provide an entire JPY1.5 billion Series B round for enterprise software supplier SmartHR, an existing portfolio company. The SPV was reportedly backed by Tokio Marine & Nichido Fire Insurance and marketing services company Nissen. The idea was to allow SmartHR to benefit from the efficiencies of a consolidated Series B, which is typically difficult to achieve in Japan.

Coral rebranded from 500 Startups Japan last year, retaining all members of the team. The split was described as amicable, with Coral committing to collaborate with 500 Startups on future projects in the Japan ecosystem. US-based 500 Startups formally launched its Japan program in 2015 with a $30 million debut fund, although it was previously active in the country through a joint venture with local mobile carrier NTT Docomo. 

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• Topics
• North Asia
• Fundraising
• Growth
• Venture
• GPs
• Japan
• Coral Capital