SIP Global Partners Launches $150M Fund for U.S. Startups Expanding to Japan and Asia

SIP Global Partners Launches $150M Fund to Facilitate U.S. Startup Expansion into Japan and Asia

SIP Global Partners has announced the first close of its new $150 million fund, successfully raising $75 million. This fund is strategically designed to invest in early-stage U.S. startups that demonstrate significant potential for international expansion, particularly into Japan and other key Asian markets, as well as countries within the Gulf Cooperation Council (GCC).

Investment Focus and Strategy

The fund targets companies at the late seed to Series B stages. A key criterion for investment is the startup's possession of a viable product, or one nearing market readiness, that is suitable for global scaling. SIP Global Partners aims to be more than just a financial backer; the firm intends to work closely with its portfolio companies, providing hands-on support to help them establish and grow their operations in Japan and across Asia.

The Japanese Market Opportunity

Justin Turkat, managing partner at SIP, highlighted Japan as a highly promising market for foreign startups. He noted that the Japanese venture capital ecosystem is currently undercapitalized, leading to a smaller pool of entrepreneurs and a tendency for top tech talent to join large conglomerates or government entities rather than startups. Despite this, Japan represents a significant opportunity due to its large consumer base (approximately 125 million consumers) and the demand from major corporations for scalable technological solutions.

Turkat expressed optimism about the current climate, stating, "If you look at what's happened in the last couple of years, I think Japan is open for business with U.S. startups with an urgency that I’ve never seen before... You look at investments and partnerships with U.S. startups, it’s at record levels over the last five years and deal counts are increasing every year."

SIP Global Partners Team

The firm is backed by a diverse team of four investors with extensive experience in cross-border operations and investments across the U.S. and Asia. Justin Turkat and Shigeki Saitoh (founder and managing partner, former director of the Japan Venture Capital Association) are based in Tokyo. General partner Jeffrey Smith operates from Boston, and founder and managing partner Matthew Salloway is based in New York. The partners collectively bring over 20 years of experience in this domain.

Investment Thesis: Infrastructure and Economic Layer

SIP Global Partners focuses on companies that are building either the core infrastructure or the economic layer for emerging technologies. This includes:

Infrastructure Layer: Companies leveraging advancements like 5G rollout, edge computing, semiconductors, security, and AI/machine learning. Examples include OpenRAN startup Parallel Wireless and collaboration platform Croquet.
Economic Layer: Platforms and applications built on top of this infrastructure. Portfolio companies in this category include Fable (motion design platform), Tilt Five (AR gaming platform), and Kinetic (industrial IoT for workplace safety).

Focus Areas:

The fund specifically looks for startups in three key areas:

Creativity: Augmented and extended reality (AR/XR), synthetic media, and web-based platforms.
Productivity: Artificial intelligence (AI) and machine learning (ML), edge computing, the Internet of Things (IoT), and semiconductors.
Safety: Digital health and information security.

Global Expansion Trends

Turkat observed a significant trend of global expansion occurring earlier in a startup's lifecycle. Previously, it was common for U.S. startups to consider international expansion only after Series D funding. However, companies are now actively exploring foreign markets as early as their seed rounds.

Strategic Support for Expansion

As a strategic investor, SIP Global Partners provides comprehensive support to its portfolio companies during their international expansion. This includes assistance with talent acquisition, identifying initial business partners, establishing distribution channels, and exploring potential joint ventures. Beyond Japan, SIP also aids startups in entering other Asian markets, particularly within ASEAN countries like Thailand, Vietnam, and Indonesia.

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About the Author:

Catherine Shu is a Senior Reporter at TechCrunch, covering startups in Asia and breaking news. Her work has also been featured in major publications like The New York Times and The Wall Street Journal. She studied at Sarah Lawrence College and the Columbia Graduate School of Journalism.

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