JIC makes LP investment in DNX Partners Japan IV, LP and DNX Partners Annex Japan III, LP

・Driving thecreation of new businesses in the fusion of deep tech and SaaS for Society 5.0

・Supportingoverseas expansion of Japanese startups and providing risk capital during growth/laterstages to create unicorns

・Promoting riskcapital procurement from domestic and foreign institutional investors

 

 

Tokyo, October 12, 2022 – Japan Investment Corporation (“JIC”)has announced its decision to make LP investment in DNX Partners Japan IV, LP (“DNX4”)and DNX Partners Annex Japan III, LP (“DNXA3”). Both funds are managed by DNXVentures, an entity located in Tokyo and Silicon Valley which invests instartups.

 

JIC aims to stimulate a virtuous cycle ofrisk capital to support next-generation industries in Japan. To achieve this vision, JICpromotes open innovation as a means of supporting growth and enhancing the internationalcompetitiveness of businesses. JIC approaches these challenges by stimulating privatesector investments in open innovation together with JIC’s own investment, whilefostering investment professionals.

 

About LP investment in DNX4 and DNXA3

JIC makes LP investments to private funds based on its investmentstrategies. JIC has signed an LP investment agreement committing to invest JPY6billion in DNX4 and JPY3 billion in DNXA3 respectively.

 

1.    Background

InJIC’s investment criteria*, “Driving the creation of new businesses for Society5.0” and “Creating unicorn startups” are listed as investment focus areas.

※https://www.j-ic.co.jp/en/investment/criteria/

 

With regard to Driving the creation of new businesses for Society 5.0,Japan faces the challenges of limited R&D, which leads to discontinuousinnovation, and a lack of collaboration among external organizations and institutions,including startups. Under these circumstances, support for deep tech startups isan important way to facilitate discontinuous innovation toward the realizationof Society 5.0.

 

Similarly, when looking to create unicorn startups, it is important fordomestic startups to expand their businesses overseas, as part of which it isnecessary to address issues such as regulations, business practices, culture,and language that differ from country to country and region to region. Inaddition, it is important to raise large amounts of capital to fully growbusinesses during growth/later stages, but the supply of such risk capital islimited in Japan.

 

2.    AboutDNX4 and DNXA3　　　　　　　　　

DNX4 and DNXA3are funds whose management company is DNX, located in Japan and US to invest instartups.

DNX has a trackrecord of investing in promising startups in SaaS (Software as a Service) businessin Japan, and provides strategic support for deep tech startups to introduceSaaS business models. DNX also supports Japanese startups in their overseasexpansion by leveraging its advanced knowledge of SaaS and deep tech in the USmarket.

In addition tothe SaaS field, DNX4 plans to allocate a certain share of the total fund amountto investments in startups in areas where deep tech and SaaS converge.

DNXA3 will alsomake follow-on investments in promising startups among DNX's existing fundportfolio companies that are raising significant funding to accelerate furthergrowth.

JIC expects thatLP investment in DNX4 and DNXA3 will lead to the creation of new businesses inthe fusion of deep tech and SaaS for Society 5.0 , support the global expansionof domestic startups to create unicorn startups, and stimulate the supply ofrisk capital in the growth/later stages.

In addition, JIC will support DNX in developing itsability to respond to the needs of institutional investors in order to increasethe supply of risk capital raised from domestic and foreign institutionalinvestors.

 

Overview of DNX4

Name:                               DNX Partners Japan IV, LP　

Established:                      2022

Duration:                           10 years (with a possibleextension of 2 years)

GP:                                     DNX Ventures Partners IV JP, LP

Overview of DNXA3

Name:                               DNX Partners Annex Japan III, LP　

Established:                      2022

Duration:                           10 years (with a possible extensionof 2 years)

GP:                                     DNX Venture Partners Annex Japan III, LP

 

Overview of management company

Name:                               DNX Ventures

Established:                      2011

Address:                            Tokyo, Japan / California, US

Managing Partner:             MitchKitamura, Quaeed Motiwala, Akira Kurabayashi, Hiro Rio Maeda

‍

(For reference)

JIC’s fund investment strategy

(For reference)

Objectives of JIC’s LPinvestments

 

1. Stimulate the supply of risk capital to helpcompanies grow and to enhance their competitiveness

JIC intends to provide capital to areas that areessential from the perspective of strengthening industrial competitiveness butlack private investment capital (investment strategies, sectors, stages,regions, etc.) with the aim of stimulating private investment capital in theshort term and medium-long term.

 

2. Create diverse investment teams, professionals, andstrategies to support a virtuous cycle of risk capital

1) Investmentteams

JIC promotes growth of the investee fundsas a leader in the intermediary of risk capital provided by institutionalinvestors (pension funds, foreign investors, etc.) towards the establishment offuture funds. This will be achieved by expanding experience and track recordsamong its fund investment team (management company) and by further improvingits ability to respond to institutional investors.

 

2) Investmentprofessionals

With the cooperation of industryorganizations such as JVCA, institutional investors, and investee managers, JICsupports the research and introduction of best practices of managers and thedevelopment of human resources serving as investment professionals.

 

3) Investmentstrategy

JIC will add diversity and depth to themarket by making an LP investment in funds even for those with strategies thatare not common in Japan yet, in response to their fund raising, including atthe time of its establishment.

 

About Japan Investment Corporation (JIC)

Japan InvestmentCorporation (“JIC”) was established on September 25, 2018 under the IndustrialCompetitiveness Enhancement Act. JIC’s investment focus areas are driving thecreation of new businesses for Society 5.0, creating "unicorn startups",leveraging promising untapped regional technologies and promoting businessconsolidation across industries and organizations. JIC provides risk capital tothese areas through funds independently established by JIC and LP investment inprivate funds to promote open innovation and contribute to strengthening thecompetitiveness of Japanese industries and expanding the investment ecosystem.

‍