Coral Capital, a Tokyo-based venture capital company, today announced that it closed Coral Capital III, its third fund. It raised $128 million (14 trillion yen). Coral Capitals total assets under administration (AUM), is now $275 millions.
Mizuho Bank and Mitsubishi Estate are limited partners. Shinsei Bank and Pavilion Capital are Founders Found. Dai-ichi Life Insurance and GREE are unidentified institutional investors.
Coral Capital was founded by Yohei Sawayama and James Riney. It will continue to invest in early-stage and seed companies in Japan. The first checks will be from $500,000 to $5,000,000 and then follow-on funding. Riney, the CEO and founding partner, told TechCrunch.
We made several large follow-on investments of $20 million in SmartHR and $17 Million into Graffer. Riney stated that a large portion of the latest fund was also used for follow-on investments. Riney said that around 30% of the third fund comes from global investors, including those in America, Asia, and Europe. Coral Capital wants to act as a bridge between its portfolio companies based in Japan and the global venture capital community, Riney explained.
Riney stated that the fund's latest version has a 14-year fund life, which Riney believes is unique. TechCrunch was told by Riney that we want founders to be able to build without being rushed by VCs looking for quick exits. Riney pointed out that the fund's two previous funds had a 10-year average fund life.
In February 2016, 500 Startups Japan co-founders Riney and Sawayama launched their first fund together with 500 Startups. Coral Capital launched its second fund Capital Fund II, worth $45 million, under their own brand in February 2019.
According to Riney, Coral Capital has made investments in more than 80 Japanese companies and has exited seven companies. It has made numerous investments, including SmartHR and Graffer, GITAI and Kyoto Fusioneering.
Riney stated that the company will invest in digital transformation areas such as SaaS and insurance, fintech and healthcare, deep techs, fusion engineering companies, robot companies, and more, TechCrunch reported.
Riney stated that the Japanese startup scene is now more active than it was nine years ago. Riney said that the startup industry was still a black box when Sawayama and Riney began investing in early-stage and seed companies in 2012. Riney stated that Japan had less than one billion dollars invested in startups each year, with very few unicorns. There wasn't enough information in Japanese about building companies.
Riney stated that many Japanese startups are forgoing an early IPO to raise larger amounts during later stages.
Japan's annual startup investment is $5 billion. Six unicorns, including Coral Capitals portfolio company are included in this figure. This is a significant increase from the $600 million invested in 2012. Riney stated that Japan's annual startup investment of $5 billion is nothing considering China and the U.S. attract billions and that even Korea, which has produced Coupang (a decacorn), attracts $4 billion. Riney said that we can do better and Coral Capital will continue supporting and playing an important role in driving Japan's ecosystem forward.
Coral Capital plans to increase its media outlet, Coral Insights. It also plans on recruiting staff for its community. Riney stated that many startup founders, employees and investors share their learnings. Japan is beginning to look more like Silicon Valley.
