Japan's Keio Innovation targets $109m for Fund III
Keio Innovation, a VC arm of Keio University, is aiming to raise JPY 15bn (USD 109.2m) for its third fund, more than its first two vintages combined.
Yuriko Gibo, Keio’s relationship manager, confirmed the plan in an interview with local media posted on the firm's website. She added that the formal fund launch – still pending – will coincide with a team build-out; the investment team currently includes nine professionals.
Keio was founded in 2015 and closed its first fund on JPY 4.5bn the following year with support from Mistletoe, Mitsubishi UFJ Capital, TBS Innovation Partners, and Gree, among other local corporations, banks, and universities. This includes Keio University and Nomura Holdings, a shareholder in the GP.
Fund II closed on JPY 10.3bn in 2021 with a similar mix of LPs. The two vehicles have invested in 19 and 26 companies, respectively. In terms of sector focus, the portfolio has a roughly even split between digital technology and healthcare.
The standout investee to date is APB, a next-generation lithium-ion battery developer incubated at Keio University that raised about USD 74m in March 2020 from Keio, JXTG Innovation Partners and a mix of strategic investors. The company, which sells batteries that are said to have unique heat-control properties, raised a follow-on round later the same year featuring Mitsubishi UFJ Capital.
Universities represent a relatively bureaucratic setting for start-up creation. Entrepreneurs seldom have control over their innovations, which raises concerns about alignment. There can be added layers of regulation, a lack of commercial skills, and the egos of scientists who are already peer-recognised as experts.
Much of the rationale for investing in university talent comes down to the idea that the intellectual property (IP) developed is more defensible. Entrepreneurs are often key opinion leaders in their industries, they have better access to resources for experimentation, and they receive much more government funding, which is non-dilutive and helps protect alignment.
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