36Kr Going Global - Japan | Asu Capital Partners Closes Final Round of Fund I, Betting on Japan, Aiming for Global Reach?

36Kr Global learned that Japanese venture capital fund Asu Capital Partners recently announced the final close of its Fund I with 1.5 billion yen (approximately $10 million), which will continue to support Japanese startups in their journey "from Japan to the world."

In 2024, Asu Capital Partners announced the first close of its fund, receiving investments from companies such as MIXI, DeNA, iid, Yoshimei, Yoren Limited, and angel investors like Honda Ken. At the final close, new investors including Fukuoka Bank and TBS Television joined, with approximately 40% of the total investors coming from overseas.

Established about two years ago, Asu Capital Partners focuses on seed - stage investments under the theme of "From Japan to Global" and has invested in 12 startups covering diverse fields such as entertainment, sports, and healthcare.

The two partners of Asu Capital Partners, Hideo Natsume and Lucheng Li, are from Tokyo, Japan, and Shanghai, China, respectively, and have both Chinese and Japanese educational and venture - capital backgrounds. They have relatively consistent judgments on the fund's development direction and preferences for founders' styles, but also have many different perspectives. In Hideo Natsume's view, having both Japanese industrial thinking and a Chinese macro - perspective enables them to "combine two cultures and make interesting investments in the Japanese market that are different from other funds."

Encouraged and catalyzed by government policies, a new generation of Japanese entrepreneurs has emerged. What are the characteristics of their entrepreneurial fields? How do their globalization concepts differ from those of previous Japanese companies? With the AI wave sweeping the globe, what changes are taking place in the unique Japanese market? What roles do Chinese - background entrepreneurs and engineers play in this process?

Recently, Hideo Natsume and Lucheng Li shared their observations on the Japanese venture - capital market and interpreted the new generation of entrepreneurial opportunities that are rooted in Japan's local advantages and have the potential for global expansion.

"From Japan to Global": Finding the New Generation of Japanese Entrepreneurs with Global Thinking

36Kr Global: How many projects have you invested in so far, and what are their commonalities?

Hideo Natsume: So far, we have invested in 12 companies across industries such as entertainment, sports, healthcare, and e - commerce. Generally, a single investment in the Japanese seed - stage is around $200,000 - $300,000, which is equivalent to the angel - stage overseas and is the first step in supporting entrepreneurs.

Our overarching theme is "Japan to Global." The common feature of these invested companies is that they leverage Japan's strengths and have a global - market mindset.

After all, we are investing in the seed - stage. These companies may not have a clear global strategy from the start, but we hope that the entrepreneurs themselves have a global mindset: Do they pay attention to changes overseas? How do they view the overseas market? How do they combine the development trends of the overseas market to develop the local market? Therefore, more than 50% of the entrepreneurs we invest in have overseas backgrounds, including Japanese with overseas study experiences, Sino - Japanese mixed teams, or Chinese entrepreneurs who have been rooted in the Japanese market for a long time.

Lucheng Li: Currently, most seed - stage financings in the United States or China are technology startups mainly focused on AI, but early - stage startups in Japan are more diverse: in addition to AI, there are also startups that combine cultural IP with consumption, technology, and other fields.

For example, we invested in VOLVE CREATIVE, which mainly creates music IP. Recently, we also invested in another company in the pop - music field. The team members are all in their twenties, and the company has also received investments from top Japanese music production companies.

Many of these young creators come from large Japanese companies, but there is a certain gap between the creative capabilities of established companies and the current new - generation consumer market. The changing market demand has prompted them to start their own businesses. Based on their past accumulation of ideas about the world and consumer culture, they have advantages in developing new products and their thinking patterns are also different from those in China and the United States.

Japanese entrepreneurs need to avoid direct competition, so they are taking a different competitive route from Chinese and American teams, which may give rise to some interesting and uniquely Japanese startups.

The virtual music artist IP launched by VOLVE CREATIVE

36Kr Global: Japanese companies have had successful globalization experiences in the past. How is the current globalization theme different from the previous ones?

Lucheng Li: The previous generation of Japanese hardware companies such as Sony and Fujitsu may have a common feature in that they don't need much language explanation. Users can tell the quality of their products once they use them, and they continuously build up word - of - mouth and brand effects.

However, as the world's mainstream is shifting towards software, this generation of Japanese overseas - expansion companies needs to communicate more directly with overseas users. This requires this generation of entrepreneurs to change from being introverted to extroverted. We have also seen that more and more Japanese young people are willing to enter the US and Chinese markets from the very beginning, communicate and learn from local entrepreneurs, and understand user needs. The number of Japanese entrepreneurs applying to and being admitted to YC has increased from almost zero to several in each batch. This generation of Japanese entrepreneurs is learning how to integrate into the international entrepreneurial community, and we are curious to see how far they can go.

However, what remains unchanged is that Japanese company founders usually attach great importance to demand definition. They often do things that seem "too niche," and sometimes these niche things don't become major trends. But in the case of virtual culture, the Japanese market has been constantly innovating in concepts.

Collectibles, Content, AI: The "Long - Termism" of Japanese Startups

36Kr Global: When it comes to the cultural and IP fields, how is the overseas expansion of Pop Mart different from that of Japanese cultural IP products?

Lucheng Li: At the cold - start stage of IP, the methods may vary. The terms like "play - style" and "tactics" are rarely heard in Japanese startups. They care more about the value, experience, and feelings of early users, and the concentration and intensity of the IP as a cultural consumer product among a certain group of people.

The difference in the underlying logic is that, on the one hand, we haven't observed any real cases in the Japanese market of growth based on new channels. On the other hand, the content - production system centered around publishers means that IP production still relies on producers. Therefore, we understand that quickly producing IP and making good use of promotion channels, like Pop Mart does, is a trend, but cases like Sanrio are still in the minority in the market. IP business also needs to be adapted to local conditions. Generally speaking, Japanese IPs focus more on long - termism.

Hideo Natsume: As a Japanese person, I think that whether it's works or software, Japanese projects attach great importance to the "world - view," that is, how to change the target group. Japanese consumers also make purchases based on whether they can project themselves into the "world - view" behind the product.

Many of Japan's most outstanding comic writers are not from big cities like Tokyo or Osaka but from regional cities. They express regional perspectives in the form of comics, which have a very strong story - line from the start. For example, traditional IPs like Doraemon, Crayon Shin - chan, and Dragon Ball still have a large number of fans, all of whom are fans who have been attracted by the world - view. For the world - view formed after the IP production, the original audience may not necessarily recognize or care about it. Their psychology may be more like "fast - consumption," just liking the image.

Although Japan seems to be a unified market and the consumption hierarchy is not as polarized as in China, there are still many differences in consumption trends and preferences when looking at the details. So many Japanese products focus more on niche markets. Some foreign investors may wonder if such a small market or a highly - segmented world - view can go global. However, Japanese brands can design products with a focus on human individuality and fully realize the world - view, and they also have a large global fan base. We believe that no matter how large the market is, it will eventually return to individuality at a certain stage of development.

36Kr Global: Asu Capital Partners has also invested in AI application companies. What are your observations on the Japanese AI entrepreneurial ecosystem?

Lucheng Li: We invested in AquaAge, founded by a scholar from Nagoya University, which focuses on the central control platform for drone operation. Traditionally, operating a drone requires a remote control, but through their platform, drones can be controlled using natural language. Japan has relatively weak accumulation in the fields of AI and autonomous aircraft, but the founder has nearly a decade of research experience in this field and also has a Chinese background. He closely follows and learns from the development of drones in China and the United States and develops solutions that meet Japanese needs. Currently, they are in in - depth cooperation discussions with some large Japanese companies and have also received government subsidies.

In my opinion, this startup is both typical and atypical in Japan. It's atypical because it involves both hardware and software, which is more difficult. It's typical because it targets logistics companies and solves B - side needs, which is easy to understand and can generate revenue. I think this is the common path for Japanese AI companies: define the problem, provide solutions, deliver results, and make money. In this regard, the growth method of AI companies in Japan is similar to SaaS, and the market is healthy.

In the overall Japanese AI entrepreneurial ecosystem, both ordinary users and enterprise users in the Japanese market have a strong demand for learning and using AI applications and solutions. However, due to the poor digital infrastructure of the previous generation in Japan and the shortage of talent, the development pace is not fast enough. Therefore, from the perspective of Chinese or American founders or investors, although there are already many Japanese - born AI companies, their solutions seem a bit "outdated." However, some companies, although their technology is not leading, can meet the needs of Japanese users, position their products as the best in Japan, and achieve an annual revenue growth of 100% or 200%.

The current issue is that there are not many companies in Japan focusing on upper - layer AI technology innovation and applications, such as large - model or AI - agent companies, which are emerging in large numbers in China and the United States. We are conservatively optimistic that as long as Japan can build up its talent pipeline, it still has a chance to enter the AI game.

AquaAge, an enterprise invested by Asu Capital Partners

36Kr Global: How is the overseas expansion of Chinese AI products in Japan progressing? What challenges do they face?

Lucheng Li: Many products are well - known, such as Notta AI and PLAUD AI in the AI note - taking field, as well as Manus and Genspark. Although these products are developed by Chinese teams, they have a relatively high acceptance and discussion level in the Japanese market and have established a stable position in the Japanese market.

If it's a Chinese ToB AI product, the challenge of expanding into the Japanese market may lie in understanding the "business flow." They need to first understand customer needs, make local adaptations, establish sales and after - sales services, conduct market promotion, etc. This exploration process may require a relatively high time cost, which is often contrary to the rapid growth requirements of AI companies.

The difference from the past is that in the past, the channels for hardware and software, especially hardware, were relatively fixed. You only needed to find some reliable Japanese middlemen to see initial results. But in the Japanese software market, especially in the AI field, a higher degree of binding with customers is required, and a deeper understanding of other competitors in the track is also needed. From the customer's perspective, you need to help them understand why your product is the best - after all, AI changes every day. Additionally, being simply cheap is not enough. You need to let them truly see that using your product can solve specific needs and has a better ROI than other products. This means that founders need to have strong information - gathering ability and imagination to understand "Why do Japanese customers think this way?" If founders don't have a comprehensive knowledge, it's still difficult to achieve this.

The Prosperity of Chinese - Team Startups and the Rise of the Japanese Entrepreneurial Ecosystem

36Kr Global: Apart from AI and cultural - content consumption, which other fields are you currently focusing on?

Hideo Natsume: We also invested in a company specializing in image recognition in the baseball field, which analyzes data such as the ball speed, spin rate, and pitching efficiency of pitchers through video. This company initially targeted the Japanese market, but its largest consumer market is the United States. From a Chinese perspective, it may seem uninteresting or the market may seem too small, but from a Japanese perspective, it's a tangible opportunity. In fact, there is a large market space in countries such as Japan, the United States, and South Korea.

In addition, we also pay attention to the elderly - care industry. Japan is the most advanced country in the elderly - care industry in the world, but there hasn't been much digital iteration or the emergence of new Internet products.

We also focus on consumer brands, such as the global expansion opportunities of Japanese - style catering products like matcha. There are many successful overseas - expansion cases of Japanese catering, such as Ajisen Ramen, which originated in Japan. The Japanese catering industry is currently very active. In addition to two ramen chains going public last year, there have also been many catering mergers and acquisitions, which has led to an increasing number of entrepreneurs in the catering - brand field.

Due to the depreciation of the yen, a large number of overseas M&A funds have entered the Japanese market. There are also many profitable companies with asset - transfer problems due to the lack of heirs, and their assets are relatively cheap. All these factors have jointly given rise to many startups with M&A as their main business, which has been a hot topic in Japan in the past two years.

36Kr Global: Many domestic catering companies are also expanding globally. What challenges do Japanese catering companies face in the globalization process?

Hideo Natsume: Japanese catering brands face problems in terms of supply chain and localization in the globalization process. Japanese people may not consider Ajisen Ramen as Japanese ramen, but it has been very successful in China's localization. If traditional Japanese ramen shops want to enter the Chinese market, they are reluctant to change their original ingredients or brand concepts.

Cultural accumulation is a double - edged sword. Excessive "world - view" constraints can become an obstacle in globalization. For example, when overseas manufacturers want to introduce Japanese IP, they face extremely strict requirements on the explanation and form of the world - view. Excessive brand protection may hinder the overseas localization of Japanese companies.

36Kr Global: What are your phased observations on the Japanese venture - capital ecosystem?

Hideo Natsume: In terms of policy, Japan is still promoting a five - year entrepreneurship plan, and each region has corresponding support policies. For example, Tokyo is a large entrepreneurial cluster area, and the Tokyo Metropolitan Government has allocated a large budget to support the local entrepreneurial ecosystem. Fukuoka, Osaka, Sapporo, etc., also have their own incentive measures.

Lucheng Li: To add, the new regulations proposed by the Japanese Stock Exchange may have a significant impact on the direction of the entire Japanese entrepreneurial environment. The Tokyo Stock Exchange plans to change