Dentsu launches second $91M startup-focused fund

The Dentsu Ventures team
Image credit: Dentsu Ventures

Dentsu Group (TSE:4324) has recently launched Dentsu Ventures Fund II, the second fund worth 10 billion yen (about $91 million) by its corporate venture capital arm Dentsu Ventures. Combining with the Fund I launched back in April of 2015, they now have 20 billion yen (about $184 million) cash for startup investments. According to the arm’s Managing Partner Kotaro Sasamoto, the second fund will be focused on investing in both Japanese and foreign startups with exploring potential synergy while the first fund was more focused on investing in mid- and later-stage foreign startups planning to enter the Japanese market.

From its first fund, Dentsu Ventures had invested in about 40 startups, mainly in the US, and been targeting mid- and later-stage startups in the bioscience and healthcare industries which are less likely to work with Dentsu’s primary business. Their remarkable investees from the first fund include Nextbit (the developer of the Robin cloud-optimized smartphone, acquired by Razer), Cheddar (a video news service for millennials, acquired by Altice USA), and Twist Bioscience (DNA synthesis startup, IPOed).

Sasamoto says,

From our first fund, more than 30 out of 40 invested startups are from the overseas, with an eye on potential synergy with Dentsu’s future business domain in 5 to 10 years from now. We had invested in very few Japanese startups such as Alp (developing the Scalebase platform helping subscription businesses maximize revenue) and Kakehashi (SaaS for pharmacists).

From the second fund, we would like to more work with Japanese startups in collaboration with Dentsu Innovation Initiative (DII), especially focused on investing in the areas a little bit closer to our core business such as MarTech, SalesTech, retail, commerce, media, and community. We expect to co-create new business with them.

Dentsu Ventures’ portfolio
Image credit: Dentsu Ventures

DII is Dentsu’s R&D arm with the mission of “creating the future businesses that only Dentsu can create”, promoting investment in and business development with promising global startups and technology companies with an aim to create the business infrastructure for the future. It has recently been offering internships with business development in mind. Dentsu Ventures intends to strengthen its investment efforts with an eye to have startups co-create not only with the Dentsu Group and its affiliated companies but also with their clients.

Compared to the first fund, the COVID-19 pandemic has apparently influenced to changing the policy of the second fund because it is no longer possible for investors to hop around foreign destinations for sourcing startups and their due diligence. On the other hand, six years have been passed since the launch of Dentsu Ventures, they are getting better recognized in the startup landscape, which may be partly due to the fact that it is now more likely to be able to lead or co-lead investment deals in the seed stage, both in Japan and overseas.