Japan's Abies Ventures seeks $69m for Fund II, courts foreign LPs

The firm - which closed Fund I closed on JPY 4bn in 2018 - is in advanced discussions with potential anchor investors, according to a source close to the situation. Japanese government support is expected to be significant given deep-tech has become a national mandate.

Fuyuki Yamaguchi, Abies’ managing partner (pictured), observed a shift in global capital to Japan, reflected by the Tokyo Stock Exchange trading at record levels, as well as geopolitical and national security issues changing investor behaviour.

As a result, Abies hopes to secure commitments from overseas LPs. To date, the firm has fielded interest from investors in the Middle East, Southeast Asia, the US, and Europe, including both strategic and financial players.

“Corporations and major banks have been the major investors of Japanese VCs. Now, corporations are starting their own CVCs [corporate venture capital firms] in addition to investing in third-party funds,” Yamaguchi said.

“We’re seeing the appetite for VC is changing with Japanese financial institutional investors such as pensions, and we’ve spoken with some of them. VC is being recognized more as an asset class among these investors – that’s a changing tide.”

The observations are in line with recent evidence that Japan’s VC industry is deprovincializing as it scales, both in terms of inbound investment and ecosystem outreach. Last month, Dimension, a spinout of Japan’s Dream Incubator, closed its second fund on JPY 10.1bn with its first international LP, a Singaporean fund-of-funds.

Abies’ second fund aims to invest 15-20 start-ups; no deals have been agreed upon so far. It will differ from its predecessor in that more than 90% will be allocated to domestic start-ups. About one-third of Fund I was committed in the US and Singapore. The shift is rationalised by the increasing maturity of the local start-up scene.

“The availability of grants, subsidies, and bank loans for start-ups has increased, and start-up valuations are more attractive compared to the rest of the world,” said Sota Nagano, a general partner at Abies.

“Japanese start-ups are also becoming more internationally minded. Historically, everything in the market was so closed in, but now, especially when it comes to deep tech, the solutions are exportable.”

Abies was founded in 2017 with a view to collaborating with conglomerates, accelerators, government agencies, and research institutes globally to solve social problems through investment in deep-tech start-ups. Core areas include robotics, space, materials, biotech, and artificial intelligence.

There is also a strong focus on advanced computing, including quantum computing, which the firm expects to contribute to material development, drug discovery, and financial engineering in the mid to long term. Abies has invested in at least three quantum start-ups to date, including Singapore's Horizon Quantum Computing, which raised a USD 18.1m round in April.

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• Topics
• North Asia
• Venture
• Fundraising
• GPs
• Technology
• Japan
• Abies Venture
• deep-tech
• artificial intelligence
• quantum computing
• robotics
• space