Japan-based VC funds have generated steady returns over the past 10 years, with funds raised in the wake of the Global Financial Crisis making the largest gains.
Our CEO and CIO, Shinichiro Shiraki, honorably contributed as Head of LP relations committee of Japan Venture Capital Association (JVCA) to a partnership between Preqin and JVCA to produce a performance benchmark for Japan-based venture capital funds, which was announced on 4th of June, 2020. With the venture capital industry in Japan booming over the past two decades, reaching a market capitalization of JPY 2.5tn, this new benchmark has been created to meet the demand for more transparent and comprehensive data to assess fund performance. It is the first Japanese venture capital benchmark comprised entirely of pure third-party venture capital funds. It is based on data compiled from 76 venture capital funds with vintage years between 2000 and 2018, managed by 24 different JVCA members.
The study shows that funds established between 2010 and 2014 had a median net IRR of more than 14% and found that funds established in the immediate aftermath of the GFC had particularly good returns – funds with vintage 2012 reached a median net IRR of 31%. In the wake of the GFC, inflows into domestic venture capital funds declined significantly, but have been on a recovery path since 2013, hitting a 10-year high of JPY 76bn in 2017. Also, distributions to fund investors have increased for four consecutive years since 2012, with total distributions of nearly JPY 100 billion across 76 funds in 2015.
Jie Sin Chia, Head of APAC Products – Preqin:
“As the Japanese venture capital industry grows at a great pace, more institutional investors are looking to enter the market, adding to the need for more data and transparency. Preqin, together with the JVCA, is proud to add the new Japan venture capital performance benchmark into its comprehensive suite of industry-leading benchmarks in an effort to shed more light on the sector. Japan is the third-largest economy in the world, and its start-up ecosystem is being strengthened by government initiatives and corporate interest. As such, its venture capital industry looks well-poised to continue developing significantly in the coming decade. In support of its development, Preqin is committed to work with the industry to keep promoting transparency, and to highlight Japan as a venture capital investment destination for both international and domestic investors.”
Shiraki Shinichiro, Head of LP relations committee – JVCA:
“Thank you for your understanding and cooperation in the activities of JVCA. JVCA has decided to develop and disclose performance benchmarks in collaboration with Preqin in order to make it easier for institutional investors to invest in the Japanese VC industry, which continues to grow in both size and quality, and which is attracting attention in Japan and abroad. Japanese VCs have been raising record amounts of capital, hitting JPY 400 billion in 2019. Yet the industry has significant room for growth, comparing the size of the Japanese market with the US and Europe. JVCA, with the cooperation of its members, will continue to update this benchmark and actively work to deepen the understanding of Japanese VCs and attract more investments from more institutional investors.”
The benchmark is comprised of vehicles managed by the following JVCA member firms:
Daiwa Corporate Investment
Eight Roads Ventures Japan
Energy & Environment Investment
Fast Track Initiative
Globis Capital Partners
ITOCHU Technology Ventures
Keio Innovation Initiative
Nippon Venture Capital
Real Tech Japan LLC
The University of Tokyo Edge Capital Partners
TNP On The Road
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JVCA (Japan Venture Capital Association) is the first and only industry organization representing the VC industry in Japan. Since its inception in 2002, JVCA has been working toward the goal of strengthening mutual collaboration within the industry and cultivating the VC ecosystem. The number of its VC and CVC members has more than doubled in the last three years to 172, bringing the total to 240, including supporting members from government, university, LP investors, and service providers.
Akebono is an investment management company in Japan, and a niche player of secondary strategies in the Japanese illiquid asset space, such as interests to private equity funds and venture capital funds. Akebono is managing the Cayman Islands domiciled funds, Ariake Secondary Funds, and Japanese funds, to provide various opportunities of asset liquidation to investors/asset owners.