JIC makes LP investment in Spiral Capital Japan Fund III

・   Drivingthe creation of new businesses in the field of deep tech for Society 5.0

・   Promotingopen innovation transcending the boundaries of traditional industries and organizations

・   Promotingrisk capital procurement from institutional investors

Tokyo, April 26, 2024 – Japan Investment Corporation (“JIC”)has announced its decision to make an LP investment of JPY3 billion in SpiralCapital Japan Fund III (“SCJ3”), which is managed by Spiral Capital (“SpiralCapital”) and invests primarily in early-stage deep tech, fintech, healthcare,smart infrastructure, AI, and other sectors.

JIC aims to stimulate a virtuous cycle of risk capital to supportnext-generation industries in Japan. To achieve this vision, JIC promotes open innovation as a means forsupporting growth and enhancing the international competitiveness of businesses. JICapproaches these challenges by stimulating private sector investments in openinnovation together with JIC’s own investment, while fostering investmentprofessionals.

To achieve its mission, JIC invests in policy-relevant strategic businessareas through LP investments in funds under JIC’s umbrella and in privatefunds.

 

About LP investment in SCJ3

(1) JIC investment Criteria

JIC’s investment criteria* identifies “Driving the creation of newbusinesses for Society 5.0” as one of its focus areas. The social implementation of Fourth IndustrialRevolution technologies—such as AI, IoT and robotics, as well as biotechnology, drugdiscovery, healthcare, mobility, space, materials, electronic devices and other areas that mightbecome internationally competitive—need a long-term and large-scale supply ofrisk capital.

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

(2) Current status of investment market

Regarding R&D and innovation in Japan,it has been pointed out that a high percentage of companies focus onincremental innovation, and that R&D in pursuit of discontinuous innovationis limited. From the perspective of creatingdiscontinuous innovation for the realization of Society 5.0, support forstartups working on deep tech is extremely important given its potentiallysignificant contribution to resolving social issues and its need for long-term,large-scale supply of risk capital from the research and development stage throughto commercialization.

Furthermore, domestic R&D and innovation tends to be self-focused, withinsufficient collaboration with external organizations/institutions, includingstartups. To respond quickly to rapid changes in industrial structure andinternational competition, and to create businesses that contribute to resolvingsocial issues, domestic companies and others will be expected to break awayfrom their self-focused approach and engage in open innovation.

(3) About SCJ3

As part of its ongoing efforts to fosterJapanese unicorns, Spiral Capital has a policy of investing in deep tech; itplans to allocate approximately 30% of its investment in SCJ3 to this domain.JIC expects that the LP investment in SCJ3 will provide risk capital todeep-tech startups and promote the creation of new businesses and industries inthis area toward the realization of Society 5.0.

Through SCJ3, Spiral Capital plans tosupport partnerships between its portfolio companies and domestic companies,utilizing its extensive network and database of large companies. JIC expectsthat the LP investment in SCJ3 will promote open innovation and the creation ofnew businesses through collaboration between domestic companies and portfoliocompany startups.

In addition, JIC intends to promotefundraising from institutional investors by providing SCJ3 with risk capital aswell as support for the development of its structure.

Overview of SCJ3

Name:                    SpiralCapital Japan Fund III

Established:           2024

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

GP:                         SpiralCapital LLP

Overview of managementcompany

Name:                    SpiralCapital

Established:          2017

Address:　         　Minato-ku,Tokyo

Representative:　TomokazuOkuno　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　

(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.