Japanese Venture Capital Firm Expands Indian Footprint
Incubate Fund Asia, the prominent early-stage investment firm, has announced a significant expansion of its India operations with two new funds in the pipeline. The Tokyo-headquartered firm, known for backing successful startups like M2P and Captain Fresh, is initiating a major fundraising drive to capitalize on India's growing startup ecosystem.
Dual Fund Strategy: $60M Seed Fund and $200M+ Growth Vehicle
The firm will launch its fourth India-focused seed fund with an initial corpus of $60 million, doubling the size of its previous $30 million fund. According to founder and general partner Nao Murakami, the fundraising process for this vehicle is scheduled to begin next month.
In a parallel development, Incubate Fund Asia is evaluating a second, larger fund in collaboration with Japan's Sumitomo Mitsui Financial Group Inc. This vehicle is targeting a corpus equal to or slightly higher than the firm's previous $200 million fund and is expected to hit the market within six to nine months.
India's Booming Exit Environment Attracts Global Capital
This flurry of fundraising activity comes at a time when multiple private equity and venture capital firms are actively raising capital for Indian investments. Recent successful fund closures include PE players like ChrysCapital, Kedaara Capital, and Multiples Alternate Asset Management, alongside VC firms such as Blume Ventures and India Quotient.
Murakami highlighted that India has become a huge area of interest for overseas limited partners (LPs), particularly due to the country's vibrant IPO market. "The IPO market is now wide open," Murakami stated. "There is no other such market in South-East Asia with such phenomenal exit opportunities."
The growing appeal of India among Japanese investors is particularly noteworthy. A increasing number of Japanese VC and PE firms have been redirecting capital to India, drawn by a healthier exit environment and stronger portfolio outcomes compared to both Japan and the broader APAC region.
Global Presence and Strategic LP Diversification
Incubate Fund Asia operates as part of the larger Incubate Fund group headquartered in Tokyo, with independent sister funds across Brazil, the US, and India. The group maintains a global presence with offices in Tokyo, Singapore, Bengaluru, Mumbai, São Paulo, and Mountain View.
While the Japanese parent fund has backed over 200 startups, the Asia/India arm has been actively investing in early-stage companies since 2016. Across its first three funds, Incubate Fund Asia has invested in notable companies including Captain Fresh, Yulu, ShopKirana, and Plum.
Murakami revealed that the firm is now focusing on diversifying its LP base "in terms of both geography and type of investor profile," with particular emphasis on attracting more institutional investors from Europe, the UK, and the US. While Japan will continue to constitute more than 50% of the LP base, Murakami noted that South Korea is also "catching up" as an important source of capital.
According to Shreevardhan Sinha, senior partner at Desai & Diwanji, "Fundraising is undoubtedly more crowded and, while the capital is still there, LPs are deploying more selectively. Managers today need a clearer track record, stronger governance and sharper positioning to break through the noise." He added that "Diversifying the LP base reduces reliance on any one geography or economic cycle and improves capital stability across fund cycles. US, UK and European LPs continue to see India as a structural growth story."
