SUMMARY
Two out of five startup founders in India are likely to raise capital from Japan in the next two years
Five out of ten Indian VCs want to raise capital from Japan-based LPs
Unravel the potential of startup-to-startup collaboration between India and Japan
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The Indian startup ecosystem has come a long way. It was, indeed, a niche segment in 2014 with just about $5.3 Bn in venture capital funding. Fast forward to the end of 2021, and the sector has amassed more than $112 Bn in total cumulative funding. Following the growth of venture capital activity in Indian startups, the participation of foreign-origin investors has also increased.
Japan is a case in point. Only 23 Japanese-origin investors participated in the funding rounds of Indian startups in 2015. But the number increased nearly fourfold to more than 87 by December 2021. Overall, this number is growing at a CAGR of 78%, indicating a growing interest among Japanese investors in India’s burgeoning tech startup ecosystem.
Over the years, Inc42 has been at the forefront of promoting Indo-Japanese startup collaborations. We have now come out with a comprehensive report covering the businesses and the investment opportunities that will further attract Japanese investors and startups. Inc42 has curated survey responses from 100+ Indian startup founders and 30+ Indian venture capitalists for this study.
What Indian Startups Want From Japan?
India boasts a thriving startup ecosystem. Hundreds of companies have forayed into tech-powered, new-age sectors like fintech and ecommerce due to the rapidly growing addressable markets and the overarching support ensured by non-financial factors such as environmental, social and governance (ESG) parameters. The demographic dividend is also accelerating startup growth. The country is home to more than 700 Mn young people (under the age of 25) and 834 Mn+ internet subscribers, making it one of the most lucrative markets for new-age industry segments.
The section will look at Indian startups’ readiness to explore business collaborations and venture capital funding from Japan.
Indian startups are more inclined towards business collaborations with Japanese enterprises than raising capital from Japanese investors.
Venture capital from Japan is more popular when choosing between VC funding and business expansion.
Overall, Indian startup founders from fintech, deeptech, ESG and other new-age sectors are keen to pursue business collaboration and venture capital access. However, Indian startups are not well aware of the relevant events organised by public and private institutions of Japan. Around 77% of the startup founders in India were unaware of such events and did not know much about the Japanese organisations promoting startup-to-startup collaboration in India.
What Indian Investors Want From Japan?
As investors are the bedrock of any thriving startup ecosystem, we reached out to more than 30 partners and principals of Indian VC firms to understand what they want out of the startup business exchange between India and Japan.
Capital from Japanese LPs is most popular among Indian investors.
Find more information and actionable insights from Indian investors and founders keen to collaborate with the Japanese business community in our latest release — Indo-Japan Startup Connect, Report 2022.
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