The event is at a nascent stage, with most Japanese VCs persevering with to take a seat on the fence, at the same time as those that put money into India are retaining fund sizes in addition to cheque quantities small. However Japanese VCs mentioned India is more and more approaching their radar.
“Japanese traders are realising that the southeast Asian market is a tough market and India is an rising market open for everybody,” Nao Murakami, founder and normal associate at Incubate Fund Asia and associate, investments at SMBC Asia Rising Fund instructed Mint in an interview. “On high of that, the nation’s IPO market is booming.”
Final yr, Incubate Fund Asia closed a $30-million fund with 80% of the capital going in direction of Indian startups. The agency has beforehand invested in startups similar to Captain Contemporary, Yulu, ShopKirana (which was lately acquired by Udaan) and Plum. This yr, the corporate will start elevating its largest fund in direction of the tip of the yr, a $75-100 million fund with a concentrate on India, in line with Murakami.
Why India
Within the first half of 2025, Indian exchanges noticed 119 firms going public, collectively elevating ₹ 51,150 crore (roughly $6.1 billion), in line with a S&P World Market Intelligence report. In the identical time interval, southeast Asia’s complete has been a lot decrease–53 IPOs elevating over $1.4 billion, in line with a report from Deloitte.
In 2024, southeast Asia’s major markets noticed roughly $3 billion being raised from 122 preliminary public choices (IPOs), Deloitte knowledge confirmed. Compared, the Indian market raised $19.5 billion from 268 IPOs, in line with a launch from the Nationwide Inventory Trade (NSE).
The largest IPO from India final yr was from Hyundai Motor India, which raised $3.3 billion. In southeast Asia, the largest IPO in 2024 was a $531-million providing from Malaysia’s 99 Velocity Mart Retail Holdings Berhard–the nation’s largest public providing in seven years. Notably, it was the one IPO from the area final yr that crossed $500 million.
Who’s investing
Another Japanese VCs are additionally pushing the accelerator in India, together with BeyondNext Ventures, which entered the nation in 2019. “Again then, the thought was to get a style, get some publicity. Now, we’ve determined to go full hog in India,” the corporate’s associate and head of India investments, Jay Krishnan, instructed Mint in an earlier dialog.
To this point, BeyondNext has backed 14 Indian ventures, in line with Krishnan, however the capital for these investments got here out of its Japan funds. Now, it’s within the strategy of elevating a $50-million India-focused fund from its Japanese restricted companions. (LPs are individuals or entities who put cash in enterprise funds.)
One other Japanese agency, Enrission India Capital, allotted the complete $120 million it raised in Japan final yr, to Indian startups. “The suggestions we’ve obtained from our Japanese LPs about their market is that it would not give nice returns,” mentioned Harsh Deodhar, principal at Enrission India Capital. “It’s like India’s mounted deposit story, it’s simply depleting and they also’re searching for choices.”
To this point, the corporate has made 16 investments this yr. A few of Enrission’s current investments embrace protein synthesis startup Loopworm, cleansing robotics firm Peppermint Robotics and bamboo packaging startup Bambrew.
Enrission tends to supply seed and pre-seed funding from $500,000 as much as $1 million. For follow-on progress investments, funding can go as much as $2 million.
There are others as effectively. Banking big SMBC (Sumitomo Mitsui Banking Company) invested $12 million in clear vitality startup Aerem this yr and its Asia Rising Fund was a part of a $35-million funding spherical in mortgage-tech startup Straightforward final yr.
Equally, car producer Suzuki is specializing in startups in agriculture, monetary inclusion, provide chain and mobility areas after it launched its first India-focused ₹340-crore fund in July final yr.
The newest fund to develop focus to India is Genesia Ventures, which focuses on pre-seed and seed investments. The corporate is at present elevating cash for its fourth fund (GV-4) and has obtained $22.5 million from Japan Funding Company (JIC) as an LP funding.
With the funding, the nation’s sovereign wealth fund says it “will strengthen its help for partnerships between Japanese firms and native startups, with the purpose of serving to Japanese firms create new companies and develop into new markets”, in line with its announcement.
To make certain, a number of different Japanese VCs are nonetheless in wait-and-watch mode, however Murakami says that may be a operate of how slowly Japanese corporations have a tendency to maneuver. “It is nonetheless gradual, nevertheless it’s sooner than earlier than. It is why the SMBC Asia Rising Fund is so essential as a result of one of many largest banking teams from Japan is placing $200 million to help Indian startups.”
Thesis for India
By way of sectors, banking and actual property have typically been favoured by bigger institutional traders popping out of Japan. Nevertheless, smaller funds, which have historically invested in sectors like fintech, shopper, and local weather tech are actually seeking to rising sectors like sustainability, deeptech and semiconductors.
Other than these sectors, BeyondNext is bullish on biotech. “India can take an IT providers strategy to biotech due to the industries round it like vaccines, lively pharmaceutical ingredient manufacturing, generic pharma. All these may have second-order results on new innovation developing,” mentioned Krishnan.
Given its ties with bigger Japanese companies, BeyondNext needs to faucet these hyperlinks to carry Indian startups to Japan, the place they’ll profit from R&D assist after which take their merchandise world and into markets just like the US.
In the meantime, Enrission is pretty sector agnostic. “We’re always discussing with our LPs, asking them what they like, what they wish to put money into. At present, there’s curiosity within the shopper area,” mentioned Deodhar. Loopworm and Peppermint Robotics, through which the agency made investments within the first quarter of FY26, are deeptech performs.
A lot of the smaller funds are getting into Indian startups early, taking a bigger chunk of fairness, and are keen to take a seat on their stake till the corporate goes public or is acquired for a considerable sum. It’s why deeptech has emerged as a brand new go-to sector for Japanese funds.
Incubate Fund Asia has historically invested in fintech and shopper firms, providing cheque sizes ranging between $750,000 and $1 million. Going ahead, they may goal sustainability as effectively, in line with Murakami. “Within the fourth fund, cheque sizes will probably be greater. We’ll most likely do between $1 million and $1.5 million after which double down later,” he mentioned.
For growth-stage investments for breakout firms, the Incubate Asia Fund faucets SMBC’s Asia Rising Fund, which is at present sized at $200 million.
By the lifecycle of the brand new fund, portfolio development will stay the identical, with the agency investing in 15-20 startups. This time round, they’ll be organising the fund in India itself, as a substitute of in Japan, although the fundraise will occur from Japanese LPs. The corporate is at present constructing its thesis round deeptech, defence and semiconductors.
“Earlier individuals had been sceptical, however persons are seeing the success of firms like Pixxel and AgniKul and their means to pivot, scale and generate worth is opening up sectors,” mentioned Rajeev Ranka, associate, India investments at Incubate Fund Asia and SMBC Asia Rising Fund. “Defence is one other class the place India is for the primary time changing into the patron slightly than investor.”
Â
