Silicon Valley VC 500 Startups to launch $30 million Japan fund

Japan is the world’s third biggest economy, with a GDP amounting to a little less than a quarter that of the U.S. Yet the difference in startup investment is huge between the two countries. Venture capitalists poured $48.3 billion in U.S. startups last year, while investments in Japan totaled only about $960 million. Thus, Japanese entrepreneurs have access to roughly 50 times less money than their American counterparts and if startups are to play a role in the reviving of Japan’s economy, something needs to change.

Head of 500 Startups Dave McLure with James Riney (right)

Head of 500 Startups Dave McLure with James Riney (right)

Last week, Silicon Valley-based fund 500 Startups took a step in the right direction when they announced the launch of a $30 million fund dedicated exclusively to Japan, the first of its kind. The company plans to use it to co-invest in early-stage deals, spending between $100,000 and $500,000 at a time. The relatively small size of the investments would mean a large spread and could encourage would-be entrepreneurs to make the move and start a business.

The fund will be headed by James Riney, founder of and member of the jury at the recent Tech in Asia Tokyo 2015 conference. Currently in the process of raising the $30 million, he says that most of the money will come from limited partners based in Japan, although some foreign investors have shown an interest in it as well.

According to Riney, the timing is right for the venture, as changes arising in the Japanese society make it more open to entrepreneurship. Once a guarantee of job stability, big Japanese corporations have started laying people off, increasing the incentive for young people to seek the potentially high rewards associated with the startup economy.

The unprecedented presence of a well-known Silicon Valley venture capital firm in the Japanese ecosystem could have a big impact, as the startups related to it will benefit from the experience and global network of 500 Startups. Consequently, this knowledge will spread to the rest of the scene and will help it reach a wider audience. Such a move might also encourage other foreign investors to give the Japan market a chance and provide the money it is in need of.

Further reading: Techcrunch article, Riney’s Medium story

Photo credit: TechCrunch

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