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Providing debt financing to deep tech startups left behind in the venture debt gap. Providing debt financing to deep tech startups left behind in the venture debt gap.

The deep tech startups we have supported since 2015 under the banner of “real tech” share a common challenge: they tend to rely on equity financing. Losses in the early stage, limited predictability of earnings in the growth stage, and fragile governance all make other forms of funding difficult to access.

Addressing this challenge calls for diversifying how these companies raise capital — providing debt capital based on a careful analysis of the management risks specific to research and development startups, and on appropriate risk-return management. Yet the supply of debt capital to R&D startups remains limited relative to demand, and we believe this is one of the factors holding back Japan’s research and development capability.

Drawing on our experience in investing in and supporting startups in the deep tech domain, we provide debt capital dedicated to deep tech startups. Combined with the equity support of REAL TECH FUND at the seed and early stages and the long-term capital of Crossover Impact Fund (XIF) for late-stage startups, this debt capital — centred on the early to middle stages — completes a seamless support structure across the full growth journey.

Our Approach

A debt fund dedicated to mid-stage deep tech — the space between our two existing funds

Filling the gap in deep tech support

REAL TECH FUND supports the seed and early stages, and Crossover Impact Fund supports the late stage and beyond listing. Between them lies the middle stage — the point at which demonstration begins and the path to mass production takes shape, and where funding needs are greatest. Until now, we have not been able to provide financial support at this stage. This fund provides debt capital dedicated to that gap, completing a seamless support structure from seed through post-IPO.

A decade of sourcing networks and technical judgement

Since the launch of REAL TECH FUND in 2015, we have spent a decade sourcing deep tech startups through networks of universities, research institutions and regional communities across Japan, investing in and supporting more than 80 companies. We have come to understand, from both a technical and a managerial perspective, what risks R&D businesses carry at each stage and where their funding needs grow. Building on this judgement, we provide debt capital, with appropriate risk-return management, to mid-stage deep tech companies that financial indicators alone cannot fully assess.

Collaboration with regional financial institutions

Many of REAL TECH FUND’s portfolio companies are based outside Tokyo, and we expect the same of the companies this fund will support. For regional deep tech companies to grow steadily, support from financial institutions in their own regions is essential. Through this fund, we actively pursue collaboration with regional financial institutions and help build a structure in which regional capital flows back into regional deep tech.

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