JIC makes LP investment in Vertex Ventures (SG) SEA V LP

・  Developing opportunities for collaborationbetween overseas and domestic VCs to create global startups, and utilizing knowledgeof overseas VCs

・   Promotingnew business creation through collaboration with startups in Southeast Asia andIndia

・   Introducingglobal standards and practices to the domestic market

 

Tokyo, April 21, 2023 – Japan Investment Corporation (“JIC”) has announcedits decision to make an LP investment of USD30 million in Vertex Ventures (SG)SEA V LP (“VVSEA V”), which invests mainly in early stage startups in SoutheastAsia and India.

 

JIC aims to stimulatea virtuous cycle of risk capital to support next-generation industries in Japan. To achieve thisvision, JIC promotes open innovation as a means for supporting growth and enhancingthe international competitiveness of businesses. JIC approaches these challenges bystimulating private sector investments in open innovation together with JIC’sown investment, while fostering investment professionals.

 

To achieve itsmission, JIC invests in policy-relevant strategic business areas through LP investmentsin funds under JIC’s umbrella and in private funds.

 

 

About LP investment in VVSEA V

 

(1)   JIC investment criteria

JIC’s investment criteria* identifies“Creating unicorn startups” as a focus area. A long-term, large-scale supply of risk capital is required forthe creation of unicorns—defined as privately held companies with an enterprisevalue of USD1 billion or more—that can grow their business sustainably withcompetitive global economic strength.

 

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

 

(2)  Current status of investment market

With the size of the domestic market shrinking amid a decliningbirthrate and aging population, it has become important to enter global marketsto grow startups with the corporate value of unicorns or greater. Successfulbusiness expansion in the global market can be facilitated by receiving supportfrom VCs who make investments globally, based on the knowledge and experiencethey have gained addressing regulations, business practices, and other issuesthat differ by country and region. Global unicorns also benefit from consistentVC support throughout the growth stages, including support for the developmentof multimarket business models, capital policy, global standard organizationalstructures, investment contract terms, and growth financing.

Digital transformation in Southeast Asia and India isprogressing rapidly, and Japanese companies are expected to create newbusinesses for Society 5.0 by utilizing the cutting-edge digital technologiesand business models of startups in the region, applying them to business areas wherethey can be internationally competitive. As such, it is important for Japanesecompanies to promote open innovation through alliances with promising startupsthat will be driving digitalization in their markets.

 

(3)  About VVSEA V　　　　　　　

Vertex Group operates six strategic investment venture funds – Southeast Asia/India, China, Israel, US, GlobalGrowth, and Healthcare – in 14 locations worldwide. One of these funds, VertexVentures SEA & India ("VVSEA"), which invests in Southeast Asiaand India, has a strong presence in the region, and to date has created sixunicorns.

 

While VVSEA's strategy is to primarily invest in early-stage startups withthe potential for future overseas expansion, Vertex Holdings also has astrategy that enables it to provide growth capital, and the group as a whole hasa platform to support the continued growth of the startups in which it invests.

 

VVSEA has achieved business alliances withJapanese operating companies in approximately 30% of the projects in which ithas invested to date. VVSEA V will focus on Consumer Internet, Enterprise &SME, Fintech, Digital Health, Agri Tech & Sustainability, and Mobility asits main areas of investment, and plans activities with an eye on the Japanesemarket, both in terms of considering potential investment targets and also supportingstartups in these areas.

 

Vertex Group  sees potential in thedevelopment of the Japanese startup ecosystem and is looking to createinvestment opportunities at a wide range of stages to help domestic startupsbecome more competitive internationally. It has also established an office inJapan for the purpose of investing in Japanese startups and supporting businessdevelopment in Japan for its portfolio companies.

 

"Go Global" is listed as one of the JIC’s priority investmentareas, and the organization is committed to investing in overseas VCs tostrengthen ties between domestic VCs/startups and overseas VCs.

Through the LP investment in VVSEA V, JICwill also work with domestic VCs to introduce opportunities to invest indomestic startups and create other opportunities for collaboration betweenVVSEA and domestic VCs in order to create global unicorns. JIC also expects topromote open innovation through business alliances between VVSEA's portfoliostartups in Southeast Asia and India and Japanese enterprises.

 

 

Overview of VVSEA V

Name:                               VertexVentures (SG) SEA V LP

Established:                      2022

Duration:                           10years (with a possible extension of 2 years)

GP:                                    VertexVentures (SG) SEA GP III Pte. Ltd.

 

Overview of management company

Name:                               Vertex Ventures SEA Management Pte. Ltd.　

Established:                      2016

Address:                            Singapore

Representative:           　  Kee Lock Chua, Joo HockChua, Ben Mathias

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(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 "unicornstartups", leveraging promising untapped regional technologies andpromoting business consolidation across industries and organizations. JICprovides risk capital to these areas through funds independently established byJIC and LP investment in private funds to promote open innovation andcontribute to strengthening the competitiveness of Japanese industries andexpanding the investment ecosystem.

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