Incubate Fund Asia Announces First Close Of $50 Mn Fund To Back India & SEA Startups

SUMMARY

The VC firm will look to deploy the funds in 20 pre-seed and seed stage startups across India and Southeast Asia

Incubate Fund Asia will also make follow-on investments in portfolio startups via Fund III

Set up in 2016, the VC firm was initially an India-focused subsidiary of Japan-based Incubate, before being rebranded to its current form

The early stage Japanese venture capital (VC) firm Incubate Fund Asia has concluded the first close of its third fund with a target corpus of $50 Mn (around INR 416 Cr).

The VC firm will look to deploy the funds in 20 pre-seed and seed stage startups across India and Southeast Asia, investing in the $500K to $1.5 Mn range. Incubate Fund Asia will also make follow-on investments in portfolio startups via Fund III. The VC firm said it would invest 40% of its corpus in new startups, deploying the rest in portfolio startups.

The Japanese VC firm first started investing in Indian startups in 2015 via its $91 Mn Incubate Fund III.

Set up in 2016, Incubate Fund Asia was initially an India-focused subsidiary of the Japanese firm, before being rebranded to its current form. The VC firm is led by Nao Murakami, founder and general partner, with support from Incubate Fund’s Japan team.

Murakami said about the first close, “Our mission is to empower startups and fuel innovation across Asia. With the target fund closure of $50 Mn, we will be ready to significantly enhance our support to emerging ventures, driving sustainable growth and innovation. Incubate Fund Asia remains deeply committed to its vision of nurturing innovation and catalysing the growth of startups, ultimately contributing to the development of a thriving entrepreneurial ecosystem across Asia.”

The VC firm has invested in startups such as Captain Fresh, Yulu, ShopKirana and Plum. In all, Incubate Fund Asia has invested in 23 Indian startups, according to its website.

Incubate’s fund announcement comes against the backdrop of investors active in India accumulating large amounts of dry powder to deploy in startups. According to Inc42 statistics, around $22 Bn have already been raised or committed by investment firms active in India since the start of 2022.

Since the start of 2023 alone, there have been fund announcements worth nearly $4 Bn, per data collated by Inc42.

However, the Indian startup ecosystem is also going through a funding winter, driven largely by low investor confidence, high valuations and prevailing global macroeconomic headwinds, which has forced investors to be selective in their investments and preserve liquidity.