Investors turn bullish on new Japanese companies
TOKYO -- Japan's venture companies are increasingly popular with investors of late, with unlisted companies raising more than 140 billion yen ($1.23 billion) last year, up about 10% on the year and recovering to levels last seen before the 2008 global financial crisis, according to a survey by Japan Venture Research.
In the aftermath of the meltdown, from 2009 through 2013, the amount of cash flowing to ventures was stuck in the 60 billion yen to 70 billion yen range. The recovery has been slow in Japan: investment in U.S. venture companies had exceeded its precrisis high by 2011.
JVR's estimate is based on press releases, changes in capital and other data for roughly 8,000 companies.
Japanese venture investment in 2015 was about where it was in 2006. Later that year, the dot-com bubble burst in the wake of the collapse of Livedoor, which was brought down by a securities fraud. Accounting malpractice at another Japanese venture also contributed to the prolonged slump in investment, starting in 2007.
Those days appear over. Many companies have recently launched venture capital funds. In an effort to import technology and ideas from outside, some established concerns are looking to start new businesses with venture companies. Financial institutions are also more willing to put money on the table in a low interest rate environment.
Park24, Japan's largest parking lot operator, set up a venture capital entity, Times Innovation Capital, last July. Five months after its launch, the unit made its second investment in a venture business working in the Internet of Things area. The company is planning to invest 3 billion yen in total.
Last year, corporate venture capital funds invested 24.8 billion yen in new businesses in Japan, according to Recof, a Tokyo-based consultancy specializing in mergers and acquisitions. That was a jump of 430% on the year.
Spiber, a company based in Japan's northern Yamagata Prefecture that makes synthetic spider silk, raised about 10 billion yen through a third-party share placement. Investors include sportswear maker Goldwin. Spiber's durable elastic fibers have applications in sportswear.
Until recently, investors have been reluctant to include tech-oriented ventures in their portfolios. These take time and money to turn a profit. But an official at one venture company said money has begun flowing into the sector. The uptrend looks set to continue, even amid the broader stock market rout. JVR said that 14 venture companies have raised more than 300 million yen from the beginning of the year through Feb. 16, an increase compared with the previous year.
An official at Mitsubishi UFJ Capital said the assessed values of invested companies have held up, thanks to the large inflow of money. University-backed venture funds are boosting their investment activity, with help from government subsidies. This assistance should encourage the flow of new money into venture businesses in 2016.
Kyoto University announced in January the launch of a new fund with around 16 billion yen in assets under management. The Tokyo University of Science and a fund-management arm of Astmax jointly launched a fund worth 4 billion yen on Feb. 15. The University of Tokyo is planning to use 41.7 billion yen from government on venture investments.