JAPAN Trends and Developments Contributed by: Sadao Maeda, Yusuke Hayashi and Masato Tanaka, TMI Associates
• the number of Japanese investors is nine or fewer; and • the total amount of money or other proper - ties invested or contributed by investors does not exceed an amount equivalent to one third of the aggregate amount of money or other properties contributed from all of the LPs of the Limited Partnership fund, including off - shore investors. However, even in such cases, the need for a licence for the solicitation activities under (a) above remains. Therefore, it is necessary to either submit notifications for the SPBQII Exemption, or entrust the solicitation to a pri - vate placement agent holding a Type II Finan - cial Instruments Business licence. Additionally, it should be noted that the regulations mentioned above apply to partnership-type funds, and dif - ferent regulations apply to funds structured as trusts or corporations. Post-notification obligations After GPs submit a notification for the SPBQII Exemption, ongoing obligations include duties to: • submit a notification if there are any changes to the items stated in the notification; and • submit annual business reports. Venture Financing Trends Japanese start-ups are adapting to global eco - nomic trends and technological advancements, driving changes in the landscape. While the total funding amount in 2024 increased compared to 2023, the market environment remains challeng - ing for sectors oriented toward companies with high growth potential, such as the Tokyo Stock Exchange Growth Market. In this situation, the presence of VC investments has been increasing
along with the growing importance of start-ups in Japan; however, as pointed out in the Plan, the volume of and amounts invested in VC invest - ments in Japan remain relatively small compared to those overseas. The Japanese government, with the assumption that VC funds have significant capabilities for evaluating start-ups plus the ability to nurture start-ups, has stated in the Plan that it will expand investment through limited liability investment of public capital into VC funds (including overseas VC funds) and will expand government support for start-ups in co-operation with VC funds. This initiative includes strategic investments through the Organization for Small & Medium Enterprises and Regional Innovation, JAPAN (SME Support, JAPAN) and the Japan Invest - ment Corporation (JIC) as follows. JIC’s investment initiatives • In January 2023, JIC Venture Growth Invest - ments (JIC VGI), a subsidiary of JIC, launched its second fund with a fund size of JPY200 billion. As of March 2024, it has executed 18 investments totalling JPY6.39 billion. • To facilitate funding in the secondary market and for publicly listed start-ups, the JIC VGI Opportunity Fund No 1, with JPY40 billion, was established in September 2023, result - ing in two investments amounting to JPY12 billion. • JIC has committed a cumulative JPY174.9 billion to 41 private VC firms as of November 2024. It also invests in overseas VC firms to foster collaboration with domestic VC firms and start-ups. • The fiscal year 2024 supplementary budget included JPY10.5 billion for industrial invest - ment to support risk capital supply to regional university-based start-ups. Additionally, the
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