The development is at a nascent stage, with most Japanese VCs continuing to sit on the fence, even as the ones that invest in India are keeping fund sizes as well as cheque amounts small. But Japanese VCs said India is increasingly coming on their radar.
“Japanese investors are realising that the southeast Asian market is a difficult market and India is an emerging market open for everyone,” Nao Murakami, founder and general partner at Incubate Fund Asia and partner, investments at SMBC Asia Rising Fund told Mint in an interview. “On top of that, the country’s IPO market is booming.”
Last year, Incubate Fund Asia closed a $30-million fund with 80% of the capital going towards Indian startups. The firm has previously invested in startups such as Captain Fresh, Yulu, ShopKirana (which was recently acquired by Udaan) and Plum. This year, the company will begin raising its largest fund towards the end of the year, a $75-100 million fund with a focus on India, according to Murakami.
Why India
In the first half of 2025, Indian exchanges saw 119 companies going public, collectively raising ₹ 51,150 crore (approximately $6.1 billion), according to a S&P Global Market Intelligence report. In the same time period, southeast Asia’s total has been much lower–53 IPOs raising over $1.4 billion, according to a report from Deloitte.
In 2024, southeast Asia’s primary markets saw approximately $3 billion being raised from 122 initial public offerings (IPOs), Deloitte data showed. In comparison, the Indian market raised $19.5 billion from 268 IPOs, according to a release from the National Stock Exchange (NSE).
The biggest IPO from India last year was from Hyundai Motor India, which raised $3.3 billion. In southeast Asia, the biggest IPO in 2024 was a $531-million offering from Malaysia’s 99 Speed Mart Retail Holdings Berhard–the country’s largest public offering in seven years. Notably, it was the only IPO from the region last year that crossed $500 million.
Who’s investing
Some other Japanese VCs are also pushing the accelerator in India, including BeyondNext Ventures, which entered the country in 2019. “Back then, the idea was to get a taste, get some exposure. Now, we’ve decided to go full hog in India,” the company’s partner and head of India investments, Jay Krishnan, told Mint in an earlier conversation.
So far, BeyondNext has backed 14 Indian ventures, according to Krishnan, but the capital for those investments came out of its Japan funds. Now, it is in the process of raising a $50-million India-focused fund from its Japanese limited partners. (LPs are people or entities who put money in venture funds.)
Another Japanese firm, Enrission India Capital, allocated the entire $120 million it raised in Japan last year, to Indian startups. “The feedback we’ve received from our Japanese LPs about their market is that it doesn’t give great returns,” said Harsh Deodhar, principal at Enrission India Capital. “It’s like India’s fixed deposit story, it’s just depleting and so they’re looking for options.”
So far, the company has made 16 investments this year. Some of Enrission’s recent investments include protein synthesis startup Loopworm, cleaning robotics company Peppermint Robotics and bamboo packaging startup Bambrew.
Enrission tends to provide seed and pre-seed funding from $500,000 up to $1 million. For follow-on growth investments, funding can go up to $2 million.
There are others as well. Banking giant SMBC (Sumitomo Mitsui Banking Corporation) invested $12 million in clean energy startup Aerem this year and its Asia Rising Fund was part of a $35-million funding round in mortgage-tech startup Easy last year.
Similarly, automobile manufacturer Suzuki is focusing on startups in agriculture, financial inclusion, supply chain and mobility spaces after it launched its first India-focused ₹340-crore fund in July last year.
The most recent fund to expand focus to India is Genesia Ventures, which focuses on pre-seed and seed investments. The company is currently raising money for its fourth fund (GV-4) and has received $22.5 million from Japan Investment Corporation (JIC) as an LP investment.
With the investment, the country’s sovereign wealth fund says it “will strengthen its support for partnerships between Japanese companies and local startups, with the aim of helping Japanese companies create new businesses and expand into new markets”, according to its announcement.
To be sure, several other Japanese VCs are still in wait-and-watch mode, but Murakami says that might be a function of how slowly Japanese firms tend to move. “It’s still slow, but it’s faster than before. It’s why the SMBC Asia Rising Fund is so important because one of the largest banking groups from Japan is putting $200 million to support Indian startups.”
Thesis for India
In terms of sectors, banking and real estate have generally been favoured by larger institutional investors coming out of Japan. However, smaller funds, which have traditionally invested in sectors like fintech, consumer, and climate tech are now looking to emerging sectors like sustainability, deeptech and semiconductors.
Apart from these sectors, BeyondNext is bullish on biotech. “India can take an IT services approach to biotech because of the industries around it like vaccines, active pharmaceutical ingredient manufacturing, generic pharma. All those will have second-order effects on new innovation coming up,” said Krishnan.
Given its ties with larger Japanese corporations, BeyondNext wants to tap those links to bring Indian startups to Japan, where they can benefit from R&D help and then take their products global and into markets like the US.
Meanwhile, Enrission is fairly sector agnostic. “We’re constantly discussing with our LPs, asking them what they like, what they want to invest in. Currently, there’s interest in the consumer space,” said Deodhar. Loopworm and Peppermint Robotics, in which the firm made investments in the first quarter of FY26, are deeptech plays.
Most of the smaller funds are entering Indian startups early, taking a larger chunk of equity, and are willing to sit on their stake until the company goes public or is acquired for a substantial sum. It’s why deeptech has emerged as a new go-to sector for Japanese funds.
Incubate Fund Asia has traditionally invested in fintech and consumer companies, offering cheque sizes ranging between $750,000 and $1 million. Going forward, they will target sustainability as well, according to Murakami. “In the fourth fund, cheque sizes will be bigger. We’ll probably do between $1 million and $1.5 million and then double down later,” he said.
For growth-stage investments for breakout companies, the Incubate Asia Fund taps SMBC’s Asia Rising Fund, which is currently sized at $200 million.
Through the lifecycle of the new fund, portfolio construction will remain the same, with the firm investing in 15-20 startups. This time around, they’ll be setting up the fund in India itself, instead of in Japan, though the fundraise will happen from Japanese LPs. The company is currently building its thesis around deeptech, defence and semiconductors.
“Earlier people were sceptical, but people are seeing the success of companies like Pixxel and AgniKul and their ability to pivot, scale and generate value is opening up sectors,” said Rajeev Ranka, partner, India investments at Incubate Fund Asia and SMBC Asia Rising Fund. “Defence is another category where India is for the first time becoming the consumer rather than investor.”
