Incubate Fund Asia, backer of firms such as M2P and Captain Fresh, is kicking off a fundraising spree with its fourth India-focused seed fund. It will launch with an initial corpus of $60 million, up from $30 million in the last fund, and the fundraising process is slated to begin next month, founder and general partner Nao Murakami told Mint.
In parallel, the firm is evaluating a second vehicle with Japan’s Sumitomo Mitsui Financial Group Inc, targeting a corpus equal to or slightly higher than its previous $200 million fund. This vehicle is expected to hit the market in six to nine months.
The flurry of activity comes at a time when multiple private equity and venture capital firms have hit the market to raise capital. Private equity players such as ChrysCapital, Kedaara Capital and Multiples Alternate Asset Management, as well as venture capital firms, including Blume Ventures and India Quotient, have recently closed new funds.
“India has become a huge area of interest for overseas LPs, especially because the IPO market is now wide open,” Murakami said. “There is no other such market in South-East Asia with such phenomenal exit opportunities.”
Incubate Fund Asia is part of the larger Incubate Fund group headquartered in Tokyo.
The group operates through independent sister funds across Brazil, the US, and India, and has built a global presence with offices in Tokyo, Singapore, Bengaluru, Mumbai, São Paulo and Mountain View.
The Japanese parent fund has backed over 200 startups, while the Asia/India arm has been actively investing in early-stage companies since 2016.
Across its first three funds, Incubate Fund Asia has invested in companies such as Captain Fresh, Yulu, ShopKirana and Plum.
Murakami said the firm is now looking to diversify its LP base “in terms of both geography and type of investor profile”, with a focus on attracting more institutional investors from Europe, the UK and the US. While Japan will continue to make up more than 50% of the LP base, South Korea is also “catching up”, he added.
A growing number of Japanese VC and PE firms have been redirecting capital to India, drawn by a healthier exit environment and stronger portfolio outcomes relative to both Japan and the broader APAC region.
“Fundraising is undoubtedly more crowded and, while the capital is still there, LPs are deploying more selectively. Managers today need a clearer track record, stronger governance and sharper positioning to break through the noise,” said Shreevardhan Sinha, senior partner at Desai & Diwanji. “Diversifying the LP base reduces reliance on any one geography or economic cycle and improves capital stability across fund cycles. US, UK and European LPs continue to see India as a structural growth story.”
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