Venture Fund Backed by Skype Co-Founder Eyes Quick IPOs in Japan

(Bloomberg) -- A new Tokyo-based venture capital fund raised $17.6 million from overseas investors including a co-founder of Skype Inc., betting that startups in Japan offer quicker exits because they have a shorter path to public markets.

Pacific Bays Capital LLP’s limited partners include MetaPlanet Holdings, an investment vehicle of Skype co-founder Jaan Tallinn, South Korean accelerator and early stage investor FuturePlay, and an unnamed financial company based in Singapore, according to documents supplied by the fund. PacCap, as the fund is known, has a five-year maturity and a 10-year lifetime to recoup investments.

Japan has a lingering reputation as a tough place to start up a company, but conditions are improving with more available funding, incubators, programming schools and supportive government policies. The Tokyo Stock Exchange also makes going public for small and mid-sized companies relatively easy. PacCap estimates it costs less than $500,000 to list on the bourse’s Mothers section for startups, a fraction of the price tag in other markets.

“The IPO has effectively taken the role of billion-dollar funds in Japan for late-stage startup financing,” said Maxwell Imai Weiss, a partner in the fund. “The immediate availability of liquidity means investors can exit at an earlier stage.”

Imai Weiss, who’s spent 10 years in venture capital in Japan and was an early investment team member at B Dash Ventures, will be based in Tokyo along with Matt Sinks, a healthcare startup founder and early-stage fintech VC investor. Allen Hu, a former venture partner at Sequoia China, is a partner based in Silicon Valley.

PacCap’s slate of deals includes a startup using drones to inspect gas pipeline and mining sites, a company using AI to diagnose pet cancers and a maker of electric scooter and three-wheeled vehicles. The fund expects to make five to 10 investments a year averaging $500,000 to $1 million in rounds ranging from seed to pre-IPO.

“We are seeing a trend, on one hand, of Western interest in Japanese businesses and technology, and on the other hand, of Japanese interest in Western startup culture,” Tallinn said in a statement. “MetaPlanet is excited to take action on Japan’s globally competitive technology, strong exit ecosystem, and high- market.”

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