Japan's Drone Fund closes third vintage on $85m

The vehicle launched in May 2020 and reached a first close of undisclosed size three months later anchored by SMBC Nikko Securities and NTT Docomo. There are 20 LPs in total, including SoftBank, Logistics Innovation Fund, Canal Ventures, Proto Ventures, and various machinery and logistics-oriented corporations.

Additional contributions came from Japan Investment Corporation (JIC), a government entity focused on professionalising local fund managers that have demonstrated traction but remain largely overlooked. JIC effectively replaced the Innovation Network Corporation of Japan (INCJ) in 2018 and is winding down INCJ’s legacy portfolio.

Drone Fund closed its first two funds at JPY1.6 billion and JPY5.2 billion, respectively, in 2018 and 2019. Both vehicles were raised in close partnership with local incubator Chiba Dojo. Fund III aims to create a global industrial ecosystem and solve critical social issues by investing in and supporting start-ups in drone and air mobility related fields.

“While there was some scepticism towards a dedicated drone and air mobility fund at its inception, we have now established ourselves as the world’s leading venture capital firm in the drone and air mobility industry,” Kotaro Chiba, a general partner at Drone Fund, said in a statement.

“As a result, we have been blessed with a large number of friends, investors, LPs, government agencies, municipalities, and educational institutions; all of whom are working to realise a society based on the premise of drone and air mobility.”

Focus areas will include sensors and data analysis tools, as well as transportation, logistics, and industrial-use drones. There will be a strong focus on leveraging developments in 5G connectivity, vehicle electrification, and automated mobility in both rural and urban areas to advance social acceptance and practical implementation of drone systems.

Fund III has made nine investments to date, five of which are in Japan. The local contingent features Eight Knot, an autonomous navigation systems developer, FullDepth, an underwater drone maker, and CuboRex, which makes small crawler robots suitable for agricultural applications. International investments include Germany’s Wingcopter, a vertical take-off and landing specialist.

Drone Fund will also continue targeting flying cars, marine robots, and unmanned aerial vehicles, which are collectively seen as an area where Japan is emerging as a global leader. Investments in this area include SkyDrive, which raised a JPY 3.9bn Series B round in 2020 and partnered with Suzuki Motor Corporation earlier this year to commercialise flying cars.

Drone Fund has stressed its environmental, social, and governance (ESG) credentials with the latest fund, claiming alignment with the UN sustainable development goals. The idea is that challenges related to demographic shifts, climate change, ageing infrastructure, large-scale natural disasters, and new infectious outbreaks can be solved in part by implementing drone technologies.

“The drone and air mobility industry has finally entered the phase of social implementation,” Soki Ohmae, a general partner at Drone Fund, added.

“The world as a whole has been going through a period of great challenges in the past few years, and the global situation is becoming more and more unstable, but for the sake of world peace and prosperity, we will continue to provide strong support to start-ups for the realisation of a drone and air mobility-based society.”

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• Topics
• North Asia
• Technology
• Fundraising
• Venture
• Japan
• Softbank
• Japan Investment Corporation (JIC)
• Transportation
• Logistics
• manufacturing