500 Startups Japan team launches new fund called Coral Capital

500 Startups’ Japan team is breaking off to start a new early-stage investment firm called Coral Capital.

The company will debut with a new fund and be run by James Riney and Yohei Sawayama, who launched 500 Startups Japan in 2016. The pair have raised 5 billion yen ($45 million) and aim to make larger investments compared with rival early-stage venture capital firms, the two said in an interview.

Fundraising took about two months and will see many of 500 Startups Japan’s limited partners return for the new Coral fund, including Mizuho Financial Group Inc. and Taizo Son, one of Japan’s best-known seed investors and the younger brother of Masayoshi Son. New investors include Shinsei Bank. Coral will operate out of the same Tokyo shared-office space used by 500 Startups Japan, and all five of the existing employees will migrate to the new fund.

“It has been a win-win relationship between us and 500, but in terms of why entrepreneurs are picking us as investors in the market, it is in a lot of ways because of the reputation we built as general partners,” Riney said.

The pair said the departure from 500 Startups is amicable and that they will continue to cooperate on events and investments “for the foreseeable future.” They will also continue to service the 2016 Japan fund for 500 Startups, which has invested about 5 billion yen in 43 companies.

For 500 Startups, it means the loss of one of their largest teams outside of Silicon Valley. The fund’s founder Dave McClure stepped down in 2017 amid allegations of sexual misconduct, leading employees at the company’s Canada fund to resign in protest. Riney said McClure’s departure had “pretty much zero” to do with the decision to launch Coral.

“500 has and continues to be a strong global brand,” said Kelsey Cullen, a spokeswoman for 500 Startups.

Riney and Sawayama’s portfolio for 500 Startups includes satellite-communications provider Infostellar Inc. and automation service SmartHR Inc. Another investment, restaurant reservation app Pocket Concierge Inc., was acquired by American Express Co. in January. The two have leveraged social media and services such as job fairs to reach Japan’s entrepreneurs and generate deals.

“In Silicon Valley, Andreessen Horowitz has lots of partners: there’s recruiting help and PR help and management help and there’s all kinds of help,” Riney said. “But we were one of the first VCs in Japan to bring in an in-house recruiting person and build that as a pillar of the support that we provide.”

Venture funding continues to expand in Japan, doubling since 2015 to about $3.5 billion last year, according to Uzabase Inc. That’s a record, but still far behind the $111 billion and $105 billion raised in the U.S. and China last year, respectively, according to Preqin. Coral’s first fund will exclusively focus on Japanese startups, but Riney and Sawayama are thinking of expanding further in Asia.

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.