Former Nomura, GPIF heavyweights launch tech startup fund backed by Temasek

[TOKYO] Former heavyweights of Nomura Holdings and Japan's behemoth pension fund have launched a fund betting on tech startups, supported by growing global interest in the nation's venture companies.

The fund started in December by Takumi Shibata and Tokihiko Shimizu has raised 3.3 billion yen (S$38.4 million) so far, with about a quarter of that money coming from a private equity arm of Singapore's Temasek Holdings, they said in an interview. The 2 aim to expand assets to 10 billion yen over the coming year, partly by attracting more overseas money.

"I think there should be a few more foreign investors," said Shibata, 69, co-founding partner of the fund's operator Fiducia and a former Nomura executive known for championing the brokerage's purchase of Lehman Brothers businesses in 2008. "We can be more international."

Japan's startups raised 780 billion yen in 2021, triple the amount 5 years earlier as foreign investors plowed in more money, according to local data tracker Initial. While the figure is a fraction of the global total, it raised hopes Japan may be starting to shake off a reputation as a venture backwater.

Technology investment has been booming worldwide, prompting a record 732 tech-focused private equity funds to launch last year, according to data compiled by Bloomberg. This year has already seen more than 100 new entities starting.

The Fiducia GrowthTech Fund targets Japanese firms that have developed innovative "real tech" or "deep tech" solutions rather than just IT platforms, but haven't necessarily made money yet, said Shimizu, 58, the other Fiducia co-founding partner.

"This is territory sitting in between venture capital funds and private equity funds," said Shimizu, a former welfare ministry official who helped the Government Pension Investment Fund - the world's biggest retirement fund - diversify its portfolio during the previous decade. "This is where the growth is."

By focusing on minority investments, the fund aims to raise its value by 4 to 5 times over the next decade by helping companies improve their management and potentially expand abroad. It is also investing in the medical industry.

"Japan's real-tech industry is strengthening on the back of government strategies, and the medical sector is gaining strength in research and development - and yet the private sector is slow to offer them money," Shibata said. "This is a structural problem. We've figured this is where we should get started." BLOOMBERG