Coral Capital, a venture capital firm based in Tokyo, announced today that its third fund, Coral Capital III, had closed, raising $128 million (14 billion yen). Coral Capital now has $275 million in total assets under management (AUM).
Mizuho Bank, Mitsubishi Estate, Shinsei Bank, Pavilion Capital, Founders Found, Dai-ichi Life Insurance, GREE, and unnamed domestic and foreign institutional investors are among the vehicle’s limited partners.
Coral Capital, created by two partners James Riney and Yohei Sawayama, plans to continue investing in seed and early-stage firms in Japan, with first checks ranging from $500,000 to $5 million, as well as follow-on funding, according to CEO and founding partner Riney.
“We’ve put $20 million into SmartHR and $17 million into Graffer as follow-on investments. “We also set aside a large amount of our most recent fund for follow-on investment,” Riney explained. Coral Capital intends to be a bridge between its Japan-based portfolio firms and the worldwide venture capital community for reaching international size, and over 30% of its third fund comes from global investors from the US, Asia, and Europe, according to Riney. The current fund is distinguished by its longer fund life, which can be extended to 14 years, according to Riney.
Riney told TechCrunch, “We want our founders to focus on creating without the burden of a VC seeking for a speedy exit.” Riney highlighted that the fund’s prior two funds had a fund life of around ten years.
In February 2016, Riney and Sawayama, co-founders of 500 Startups Japan, announced their first fund in collaboration with 500 Startups. In February 2019, Coral Capital launched its $45 million second fund, Capital Fund II, under its own brand name. According to Riney, Coral Capital has invested in over 80 firms in Japan and has departed seven of them. SmartHR, Graffer, GITAI, and Kyoto Fusioneering are among the companies in which it has invested.
According to Riney, the company would invest in digital transformation in areas such as SaaS, insurance, fintech, healthcare, deep tech, fusion engineering companies, and robotic enterprises.
In comparison to 9 years ago, the Japanese startup environment is now hitting its stride, according to Riney. According to Riney, the startup sector was a black box in the country when he and Sawayama began investing in seed and early-stage startups in 2012. In Japan, he added, less than a billion dollars is invested in startups each year, and there are few unicorns, and there isn’t enough information in Japanese on how to start a business.