Japan's Coral Capital raises $127m for latest VC fund
Japan’s Coral Capital has confirmed a first and final close of JPY14 billion ($127.4 million) for its third venture capital fund. The vehicle is more than twice the size of its predecessor.
LPs include Mizuho Bank, Mitsubishi Estate, Shinsei Bank, Pavilion Capital, Founders Fund, Dai-ichi Life Insurance, Gree, and undisclosed domestic and international institutional investors. About 30% came from global investors across the US, Asia, and Europe. It brings total assets under management to about JPY30 billion.
Coral rebranded from 500 Startups Japan in March 2019, retaining all members of the team in an amicable split. Its debut fund – styled as Coral Capital II – raised JPY6 billion a few months later. A growth fund of JPY2.7 billion was raised last year to help top-performing portfolio companies navigate COVID-19.
The new fund will have a 14-year life, which Coral says will take exit-related pressure off portfolio companies during long scale-up periods. It will also write larger checks than its predecessor, with deployments set to range up to $5 million per deal. There will also be a significant allocation to follow-on rounds.
Coral points to its investment in enterprise software supplier SmartHR as a showcase of its philosophy on patience and top-up funding. In 2018, 500 Startups Japan raised a special purposed vehicle to provide an entire JPY1.5 billion Series B round for the company.
Earlier this year, SmartHR received a JPY15.6 billion Series D at a valuation of $1.6 billion, although Coral was not listed among the disclosed investors. James Riney, founding partner and CEO of Coral, described the round as a symbolic inflection point for the broader Japanese start-up industry.
Coral says ecosystem building is a large part of its agenda and has positioned its go-forward plan under the new fund as a three-pronged strategy with this in mind.
Areas of focus include information sharing through media engagement, talent creation through networking initiatives, and expansion of capital resources through reaching out to global investors.
The formalization of this program has entailed a significant team expansion. To drive media engagement, Coral has hired Satoru Masuda, formerly of Buzzfeed and TechCrunch Japan, as another editor to work under chief editor Ken Nishimura, hired in 2019.
To drive talent building efforts, the firm has hired Yohei Shirata, formerly of SBI Holdings, as lead recruiting executive, and Ryo Tsuda, formerly of Gree, to head various talent management initiatives.
"With more ambition, more talent, and more capital coming into the Japan ecosystem, we firmly believe that Japan has the potential to produce not only more unicorns, but decacorns," Riney said in a statement.
"The entire economy is undergoing widespread digital transformation, and start-ups are the best positioned to ride this wave. Japan is also home to brilliant technologists and scientists that, given the right conditions, have the potential to build global enterprises."
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