Spiral Asia Fund I to hit first close in Sept, targets to raise double-digit million USD

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Mount Fuji and buildings in the Shinjuku district are reflected on a table at an observation deck in Tokyo, Japan. Photographer: Kiyoshi Ota/Bloomberg

Spiral Ventures (formerly IMJ Investment Partners) – a Japanese startup-focused VC firm with offices in Singapore and Tokyo – is raising  its first vehicle – ‘Spiral Asia Fund I’ – with a targeted size of a double-digit million USD, an executive with the firm told DEALSTREETASIA.

The Cayman Island-domiciled fund expects to garner the first close in September 2017 and a final close by the end of 2018, Ryusuke Hirota, principal at Spiral Ventures, said in a recent interaction. “The first close is mainly targeting investors from Japan and the rest is open for Japanese as well as international investors,” he said.

Following a management buyout, as reported recently by this portal, the VC firm rebranded and undertook an organisational restructuring resulting in it becoming a group under the Singapore-based corporation Spiral Ventures Pte Ltd.

The new structure consists of Spiral Ventures Asia Ltd concentrating on investment activities in Japan and Southeast Asia, while Spiral Ventures Japan LLP will target East Asia and Japan. Yuji Horiguchi and Tomokazu Okuno, who were earlier managing partners of IMJ, are the CEOs of Spiral Ventures and Spiral Ventures Japan LLP respectively.

The previous entity, IMJ Investment Partners, had made over 30 investments largely in seed stage startups across Southeast Asia and South Asia since its inception in 2012.

The new vehicle will continue to invest in startups in the region, targeting Series A and B stages with check sizes between $500,000 and $1 million for Southeast Asia, as well as seed and series A rounds ranging $300,000-500,000 for South Asia, particularly India.

“As the entire startup ecosystem has been growing well in the ASEAN region, it is natural for us to move up to Series A and B stages which still lacks growth stage capital providers whereas the Seed stage is getting overcrowded these days,” said Hirota.

Meanwhile, in India, he sees the early stage as “a sweet spot” despite a spike in valuations in growth stage startups due to overflow of capital.

“We could potentially find startups at still reasonable valuations, which would be targeting niche verticals yet still huge addressable markets thanks to population size and rapid expansion of the digital economy,” he added.

Spiral Asia Fund I will closely look at fintech, logistics, healthcare and HR, while it is open to invest in promising startups in any verticals.

Hirota said M&A was still a viable option for exits in the firm’s target markets, while the aim would be to go in for listings.

“Since we have a strong network of investors from Japan, who are thirsty for overseas growth opportunity and now becoming intensely interested in looking at the Southeast Asia and South Asia regions, we believe that we could provide a unique investment/exit opportunity for Japanese investors and startups in the regions by bridging them,” Hirota said.

The new structure for Spiral Ventures was launched in March 2017 as the firm transformed from a corporate VC arm to an independent investor. A group of shareholders led by the firm’s management acquired the shares held by Culture Convenience Club.

“The core investment strategy is to look for startups which are trying to solve huge problems such as inefficiency and fragmentation in the industries, targeting over $100 million addressable market, and have excellent co-founding team with relevant background and execution power on the ground,” Hirota added.

In addition to Spiral Asia Fund I, the firm’s existing Japan fund has reportedly raised more than 5 billion yen ($45 million) out of the 6 billion yen target. The corpus might be extended to 7 billion yen, according to a report on The Bridge.

Also Read: Japan: IMJ Investment Partners rebrands to Spiral Ventures