Mix of Japanese Investors investing in venture capital funds

by Yong Xiang Pua

  • 22 May 2012
  • PE

Preqin’s Investor Intelligence tracks 86 Japan-based investors (excluding fund of funds managers) that are investing in private equity funds. While 86% of these investors have previously expressed an interest in or invested in venture capital funds, 67% still show an appetite for such investments.

When investing in venture capital funds, half of such Japanese investors will consider funds that target only the domestic market. Funds that invest in Asia are favored by 91% of the investors, indicating a strong Japanese interest in seeking regional exposure when investing in venture capital funds. Sixty percent of the Japanese investors in venture capital funds will consider funds that invest in the US while 38% seek exposure to European markets.

Of Japanese LPs that have shown a preference for investing in venture funds, the largest group of LPs by type are corporate investors, which make up 33%. The next largest pool of such investors is formed by banks, which make up 15%, followed by insurance companies (14%), investment companies (9%), and asset managers (9%). Other investor types include pension funds and government agencies.

Japanese LPs place huge emphasis on the track records and experience of fund managers when committing to venture capital funds, with just under half (47%) of Japanese investors interested in venture capital funds only looking to invest in follow-on venture capital funds. Eleven percent will consider first-time funds if they are managed by a spin-off from an established GP. The remaining proportion is more receptive towards fund managers looking to raise their first fund, with 24% looking to invest with first-time fund managers, and a further 18% that will consider first-time funds on a case-by-case basis.

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