Japan’s Akatsuki fund plans to invest in India’s vernacular segment

Industry:    June, 2019

The Akatsuki Entertainment Technology Fund (AET Fund), a Japanese venture capital fund, is planning five more early-stage investments in the vernacular segment in India with an average ticket size of $500,000, according to the fund’s top executive.

The AET fund has made 10 early-stage investments in India since its launch in March. It has invested in startups such as Doubtnut, Planet Superheroes, LBB and Mech Mocha. The fund has a corpus of $50 million for investments in India and the US.

The venture capital arm of Japan’s Akatsuki Inc. follows a co-investment model and typically does partner deals with other VCs such as Accel Partners, Blume Ventures, Sequoia, Inventus, Chiratae, DSG, 3one4, Infoedge and Shunwei.

The AET Fund’s principal partner Yuki Kawamura said consumer segments such as vernacular video, vertical media, mobile gaming and live streaming will be its key focus areas in India.

India’s vernacular content market is seeing an upsurge in terms of investments and monthly user growth. Kawamura said however that the segment is largely unexplored with a large demand-supply gap.

“…(while India’s) regional vernacular audiences are now starting to consume digital content, the absolute volume (and also quality) of content in their languages is insufficient (as most of the content is in English). This is the reason why we see India (as a more investable opportunity) over other regions like Europe,” he said in an email interview.

Kawamura said the fund will keep its focus on the vernacular segment though it won’t differentiate on consumer segments for investments.

Although the bulk of the fund’s investments are in the content and discovery space, it has also invested in B2B e-commerce startup ShopKirana.

“We will invest across segments including in content, media, lifestyle and entertainment startups with near term focus on vernacular content,” Kawamura said.

Since its inception in 2017, the fund has made over 30 investments in Japan, India and the US.

Kawamura said the fund is also open to collaboration within its portfolio brands.

“AET Fund is a pure financial play vs. strategic investment (fund). Hence, if we see there’s an opportunity to increase the value of portfolio companies by collaborating together, there’s no reason to not doing it,” he said.

The AET Fund is committed to closing deals worth at least $1.5 million in seed to early-stage startups, with an option of follow-up investments. “We’re seeing good traction from our current portfolio, so we are likely to raise our next fund in the next 2-3 years. Also, now, we see so many opportunities in content, media and entertainment space in India, we’re considering to start our own business in this verticals as a part of Akatsuki’s operating team. Which should have a synergetic effect with our portfolio companies,” Kawamura said.

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