JIC decides to set up JIC Venture Growth Fund No.2 Investment Limited Partnership

・JIC sets up second VGIfund (fund size: JPY200 billion)

・Will support growth/later stage startups to createunicorns

・Will targetearly stage and beyond deep tech and life science startups to promote Society5.0

 

 

Tokyo, December 16, 2022 – Japan Investment Corporation (JIC) hasannounced its decision to set up JIC Venture Growth Fund No.2 InvestmentLimited Partnership (VGF2) for JPY200 billion yen with JIC Venture GrowthInvestments Co., Ltd. (VGI) as its fund management company.

 

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 for 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.

 

VGI has been investing in startups throughJIC Venture Growth Fund No.1 Investment Limited Partnership (VGF1), which was formedin September 2020. VGI will leverage the establishment of VGF2 to expand thedomestic startup market and further engage in investment activities thatcontribute to solving market issues – one of the JIC initiatives included inthe government's “Startup Development Five-year Plan” released on November 28,2022.

 

 

About establishing VGF2

 

（１）  JICinvestment criteria

JIC’s investment criteria* identifies“Driving the creation of new businesses for Society 5.0,” “Creating unicornstartups” and “Leveraging promising untapped regional technologies” as focus areas.

 

“Creating unicorn startups” requires thesupply of long-term, large-scale risk capital to unicorns (unlisted ventureswith an enterprise value of USD1 billion or higher) that aim to growcompetitively and sustainably in the global economy.

 

“Driving the creation of newbusinesses for Society 5.0” refers to the social implementation of Fourth Industrial Revolutiontechnologies, such as AI, IoT and robotics, as well as biotechnology, drugdiscovery, healthcare, mobility, space, materials, electronic devices and otherareas that might become internationally competitive and where a long-term andlarge-scale supply of risk money is needed.

 

As for “Leveraging promising untappedregional technologies,” local university-launched

startups are developing technologiesthat can be expected to generate significant profits

when commercialized, but many havenot yet had sufficient opportunities to grow as a business, lacking thenecessary supply of risk capital to meet their capital requirements.

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

 

（２）   Currentstatus of investment area

When it comes tocreating unicorns, one of the challenges that the domestic market faces is aninadequate supply of the risk capital that growth/later stage startups rely onto fully grow their businesses.

 

Moreover, recenttrends in international affairs and changes in the economic environment suggestthat Japan’s emerging equity markets will witness increasing demand for supplementaryfinancing prior to initial public offering.

 

When it comes tocreating new businesses for Society 5.0, two important sectors – deep tech andlife science – often find it difficult to secure sufficient private-sector riskcapital due to the long period of time and large-scale funding required from initialresearch and development through to social implementation. As such, a need existsfor players who can continue to support the growth of startups, including localuniversity-launched ventures, through consistent support from the early stage.

 

（３）   About VGF2　

VGF2 is an investment fund established with VGI, an authorized fund underJIC’s umbrella, as its fund management company.

 

VGI’s mission is to promote innovation in Japan, improve internationalcompetitiveness, and solve Japan’s industrial and social issues through venturegrowth investment activities. The main strategy of VGF1 (fund size: 120 billionyen) is to use investment in promising growth/later stage startups to supporttheir further growth prior to initial public offering.

　

VGF2 willcontinue to support the transformation of domestic startups into unicorns witha policy of investing in Series B and beyond expansion, growth and later stagestartups in need of growth capital. Notably, VGF2 plans to allocate JPY30billion for investment in early-stage and beyond startups in the deep tech andlife science sectors, including startups originating from local universities,strengthening support for startups in these important sectors with the aim ofrealizing Society 5.0.

 

 

 

Outline of VGF2

（１）   Name

　　　  JIC Venture GrowthFund No.2 Investment Limited Partnership

 

（２）  Size offund

　 　　JPY200 billion

 

（３）Overview of VGF2

　　　・Unlimited liability partner (GP):

　　　　JIC Venture Growth Investments Co., Ltd.

 

・Limited liability partners (LP)：

　　　  Japan Investment Corporation (JIC)

　　　  VGF2 Officer and Employee Investment LimitedPartnership (VGF2 OEILP)

 

（４）Duration

 　　　10 years (extension possible)

 

（５）Investment areas

　　　  To support the creation of new industriesin Japan, VGF2 identifies industrial sectors where the supply of risk capitalis insufficient and then selects areas for investment.

 

　　　  Priority investment areas are as follows:

Overview of management company

Name:                               JIC Venture GrowthInvestments Co., Ltd.

Established:                      July 2020

Address:                            Minato-ku,Tokyo

President and CEO:          HidekiYarimizu

 

(For reference)

JIC’s fund investment strategy

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(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.

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