India, Japan jointly float $187-mn fund-of-funds to back Indian tech startups
Photo Credit: VCCircle

India and Japan are jointly launching a fund-of-funds of $187 million (Rs 1,298 crore) to invest in technology startups in the South Asian market.

The fund-of-funds -- Indo Japan Emerging Technology & Innovation AIF -- is raising $150 million of the targeted corpus from Japanese investors while the remaining will be raised from Indian investors, according to a statement. 

Four Japanese investors -- Mizuho Bank, Development Bank of Japan, Nippon Life and Suzuki -- have already signed letters of intent for the fund-of-funds, it added.

The first close is expected in September this year. Reliance Nippon Life Asset Management Ltd (RNAM), the Indian asset management arm of Nippon Life, will manage the fund.

The fund-of-funds aims to invest in more than 200 Indian companies focssed on emerging areas such as Internet of Things (IoT), Artificial Intelligence (AI), Machine Learning (ML), fintech, healthcare, consumer, education, robotics, automation and business-to-business (B2B) software.

"As of now, the Japanese presence in India is still small, but this fund-of-funds will stimulate the Japan-India partnership in digital area, and will expedite participations from Japan to Indian startup ecosystem," the statement said.

The announcement was made ahead of Prime Minister Narendra Modi's visit to Japan this week.

Japanese investment firms, notably SoftBank Group Corp, have been actively investing in Indian startups. The Japanese technology investor -- either on its own or through its $100 billion Vision Fund -- has previously backed online retailers Flipkart, Snapdeal, Paytm, Ola, Grofers and PolicyBazaar. 

Last year, the SoftBank Vision Fund agreed to sell its stake in Flipkart to US-based retailer Walmart Inc.

Besides SoftBank, other Japanese investors have also been quite active in India. Japanese seed investor Incubate Fund's bets in India include e-sports startup GamingMonk and co-living startup StayAbode. 

Akatsuki Entertainment Technology Fund (AET Fund), a $50-million proprietary investment vehicle of Los Angeles- and Tokyo-based entertainment company Akatsuki Inc, has invested in gaming startup Mech Mocha and B2B e-commerce startup ShopKirana, among others.

Last month, Japanese venture capital firm GREE Ventures marked the first close of its third fund that seeks to raise $130 million to invest in startups in India, Southeast Asia and Japan.


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