THIS June, Tokyo-listed venture firm Dream Incubator (DI) will launch a US$100 million fund in Singapore and the region, having set its sights on emerging companies here for almost a decade now, BT has learnt.
The DI Asian Industrial Fund II (DIAIF II), as the fund is known, is the second to be jointly operated by DI and Japanese financial services group Orix. Twice the size of DIAIF I - which was launched in 2010 and exclusive to Vietnamese companies - the new fund will target companies across South-east Asia (SEA) and India, even though some 65 per cent of it will go to Vietnamese firms.
"DI had formulated a growth strategy to expand to Asia after it was listed on the First Section of the Tokyo Stock Exchange in 2005, to tap the huge potential and business opportunities in the region," said Norihiko Isawa, a business producer at DI.
Beyond Tokyo, DI has offices in Ho Chi Minh City and Shanghai, and is now planning one in Mumbai. In 2011, DI opened an office in Singapore, but recently closed it and moved its Singapore staff to offices in India and Thailand, where its digital marketing subsidiary DI Marketing is located.
"The closure of DI Singapore does not mean that Singapore is out of DIAIF II's investment scope. Looking for potential investees in Singapore will be jointly conducted by DI Tokyo, DI Vietnam and DI India," said Mr Isawa.
He added that DI has had its eyes on the Singapore startup scene since the value of venture capital investment here exceeded that of Japan and Hong Kong, and is second in East Asia after China. In 2013 alone, venture capital investments into Singapore more than doubled year-on-year to US$454 million, according to the Singapore Venture Capital & Private Equity Association (SVCA).
The Republic has also consistently dominated the Asean region in terms of the proportion of number of deals: between 2007 and Q1 2014, it commanded an average of 66 per cent of the annual number of venture capital deals in Asean, the SVCA found.
Said Mr Isawa: "DI is especially impressed by Singapore's active policy to accelerate startups and attract talent and intelligence from all over the world … and considers Singapore as one of the most attractive talent pools in Asia."
DIAIF II will focus on growth-stage companies in consumer industries including food and beverage, retail, wholesale and healthcare. The fund will invest about US$10 million to US$20 million in each company for a 20 to 30 per cent equity stake and a position on its board of directors.
Under DIAIF I, four investments were made in medium-sized, growth- stage companies which Mr Isawa said were leaders in their own fields, such as medical equipment distributor JVC, pharmaceutical firm Santedo, and fast-moving consumer goods distributor MESA Group.
"Our investment philosophy is that DIAIF should support industrial growth and contribute to improvements in people's lives in Asia, rather than just obtain quick returns through fast-growing industries such as technology, real estate and financial services," said Mr Isawa.
Granted, DI does target digital media and entertainment companies, but more for principal investing, he said.
Aside from the cash investment, DIAIF portfolio companies will also enjoy management consultant and incubation services offered by DI, as well as partnership opportunities with leading Japanese companies.
DI, founded in 2000 by entrepreneur, investor and former BCG Japan president Koichi Hori, became listed in 2002. Since its inception, DI has invested in more than 100 startups, of which 20 have gone public to-date.