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Japanese investment firm aSTART announced on Monday it has formed the Space aSTART new fund specializing in space tech startups. The scale of the fund has not been finalized because the fundraising has not been closed yet, but it is said to be on a scale of 5 billion yen (about $46.2M USD). Their ticket size could be in the tens of billions of yen, and as a result it is expected that the startups on the receiving end will be limited to just a handful. aSTART will be focused on investing in space startups which are almost certain to become unicorns.

Last November Singapore- / Tokyo-based Astroscale, the startup cleaning up space debris, announced that it secured $50 million US dollars in a series D round. aSTART participated and the funds provided for this round are from this new fund (aSTART also invested in a series C round from its No. 1 fund).

aSTART was established in 2015 by Kazumasa Watanabe who has helped companies like internet cafe chain Next Japan and food delivery giant Ride On Expresss get public through IPO as their CFO respectively. Because of his experince as a business owner to exit companies succesfully while he’s now serving the VC industry, many fellow investors and entrepreneurs often request him to participate in their funding rounds with the expectation of his hands-on effort. The firm’s No.1 and No.2 funds, which have grown to billions of yen in size, is uniquely active in terms of focusing on investing in tech-oriented startups such as Sora (offering AI-powered dynamic pricing solution) and Connected Robotics (creating cooking robots for restaurants).

Watanabe says the reason to launch a space tech-focused fund is that there are certain conditions that only exist for space startups. Contrary to the fact that many startups in Japan typically start with focusing on the domestic market before trying their luck overseas, the fate of space tech startups lies in competing in the world market from their inception. And after giving it some thought, it is true, I have never heard of a space business targeted only for domestic demand, and it is more difficult for such businesses to proceed without being conscious of the world outside of Japan, including finding human resources and a place to launch their rockets or satellites.

Additionally, to become successful as a space tech startup requires significant investment. Traditionally, large enterprises such as Nissan, IHI (then Ishikawajima-Harima Heavy Industries), Mitsubishi Heavy Industries, under the direction of the Japan Aerospace Exploration Agency (JAXA) were going head to head over the Japanese Space Industry, but startups determined to survive in this field are also appearing. Rocket and satellite development require large amounts of funds, but the supply of risk money to this sector in Japan is far less than in the US and Europe.

Watanabe wants to attract risk money to this vertical through the formation of and investment from this fund. Given that space tech startups require much more money than other verticals, it is reasonable to say one approach could be an early listing on the TSE Mothers, whose terms are not as severe as other exchanges around the world. Obtaining funds widely from the market through an IPO makes sense especially for them.

aSTART will close its funding in spring this year, and in addition to the aforementioned Astroscale, it is expected to invest in several promising space startups in Japan within the year.

Translated by Amanda Imasaka
Edited by Masaru Ikeda