Despite a general decline in worldwide investment in moonshots, a Japanese fund focusing on early-stage Asian deep-tech businesses is doubling down on the potential. Beyond Next Ventures, based in Tokyo, said today that it completed a first close of $10 billion (roughly $67.7 million), or up to $25 billion (about $168 million), for BNV Fund 3, its third fund. This money will be used to invest in deep-tech startups in industries like robotics and biotech.
According to Tsuyoshi Ito, CEO of Beyond Next Ventures, the company intends to conclude the fund by March 2024 and will utilize the funds for seed, Series A, and later-stage rounds in about 25 startups. Its checks range from $670,000 to $2 million, or up to $13 million across several rounds for each firm. Compared to the prior funds, it is about trebling the upper limit.
The Japanese VC thinks the country’s shortage of later-stage capital prevents firms from expanding worldwide and lowers overall valuations.
The number of later-stage investments in Japan lags below that of Europe, North America, and other nations, according to a 2021 World Bank assessment. Ito said to TechCrunch that limited partners, such as institutional investors, have just lately engaged in active participation in VC companies, which is one of the reasons why there is a lack of later-stage funding in Japan.
Due to the country’s relatively limited VC fund size, many VCs were forced to concentrate on seed and early-stage entrepreneurs. According to Ito, another factor is that the Tokyo Stock Exchange Growth Market accepts firms with a market value of several billion yen, encouraging many entrepreneurs to obtain money through early initial public offerings (IPOs).
Ito remarked that while funding for middle- to late-stage businesses grows, entrepreneurs aren’t as eager to go public as they once were.
Beyond Next plans to boost later-stage investments, such as Series C and Series D, and further follow-on investments through the newest fund to provide ongoing financial assistance for businesses on a global scale. Additionally, it will increase the operating time of the fund to 11 years, which is one year longer than the operational period of the last fund, and add an extension of up to three years with the approval of the limited partners.
To market their cutting-edge technological and scientific ideas, Beyond Next seeks deep-tech businesses emerging from universities and research organizations. The VC firm matches research teams with more than 3,000 industry professionals in business and management.
After adding this most recent fund, it will handle more than $316 million in assets.
The Organization for Small and Medium Enterprises and Regional Innovation, MUFG Bank, Dai-ichi Life Holdings, and Tokyo Century are among the fund’s limited partners. Additionally, new investors SMBC Nikko Securities, Mitsubishi UFJ Trust and Banking, and FFG Venture Business Partners contributed funds to the round.
The VC established its regional office in India in 2020. According to the company, India’s startup sector is “growing remarkably, which makes it an attractive medium- to long-term business expansion destination for Japanese portfolios,” Ito said.
Beyond Next was established in 2015 and launched a first fund worth $37 million in 2015 and a second fund worth $111 million in 2019. It invested in more than 80 deep tech, agri-food, and healthcare businesses in India and Japan. Through initial public offerings (Susmed and QD Laser) and mergers and acquisitions (Repertoire Genesis and GigIndia), the Japan-based venture capital firm has sold off some of its portfolios from Fund 1 and Fund 2.
“Digital Therapeutics (DTx) is now gaining momentum in Japan,” claims Ito. One of its portfolio companies, CureApp, produced a therapeutics app that enables users to get insurance reimbursement and around $7 billion ($47 million at today’s currency rate) from Carlyle. Ito pointed out that Susmed is the first Japanese initial public offering (IPO) in digital healthcare. Susmed has created a therapy app for insomniac patients.
Aside from Regional Fish Institute, another food tech firm using genome editing to grow fish more quickly than normal, Beyond Next also invested in Elephantech, which makes environmentally friendly printed circuit boards, and iCare, a Japanese company that manages healthcare.