Nao Murakami, Founder & General Partner at Incubate Fund Asia – Interview Series

Nao Murakami is a Co-Founder and serves as General Partner at Incubate Fund Asia. He brings a wealth of experience in the IT/Internet startup sector. He honed his expertise at the Tokyo and New York offices of Nomura Securities Group's Investment Banking Division, successfully guiding numerous tech startups to IPOs. In 2014, he ventured to India, where he gained hands-on experience by launching his own startup. Recognizing India's potential, he founded Incubate Fund Asia (previously Incubate Fund India) in 2016 and assumed the role of General Partner, further contributing to the growth and success of startups in the region. He earned a B.A. in Political Science from University of Illinois at Urbana-Champaign.

Incubate Fund Asia is one of Japan’s largest venture capital firms specializing in seed-stage investing, backed by a comparatively long track record in this segment of the market. Since its establishment in 2010, the firm has accumulated over 125 billion yen in assets under management and has invested in more than 700 startups. Its extensive history of early-stage investments is often cited as evidence of the trust-based relationships it has cultivated with entrepreneurs and the wider venture capital community.

What inspired you to found Incubate Fund Asia, and what was your vision when you started?

When I first arrived in India in 2014, I interacted with several Indian entrepreneurs and investors who fascinated me deeply. Their passion for creating a significant positive impact on the country through building successful businesses was truly remarkable. That experience made me start thinking about investing in India. I was lucky enough to partner with Incubate Fund which is one of the largest venture capital groups in Japan and started an India dedicated fund in 2016.

When we began in 2016, our vision was to support seed-stage entrepreneurs and help them scale innovative ideas that could redefine industries and create a significant positive impact to the society. Over the years, we’ve learnt a lot about India and its startup ecosystem and we now confidently see ourselves not just as investors but as partners in startups’ growth, offering a combination of capital, strategic guidance, and a robust network.

Can you share some insights into how Incubate Fund Asia has evolved since its inception in 2016? What key milestones have you achieved along the way?

Incubate Fund Asia was established in 2016 as “Incubate Fund India”, a fund dedicated to invest in Indian seed stage startups. To expand our investment focus from just India to all of Asia, we renamed it to Incubate Fund Asia starting from our third fund. We recently completed the final close of the third fund, and currently, 95% of our investments are in Indian companies, though we plan to gradually expand our investments into Southeast Asia – maybe 80-85% in India and 15-20% in Southeast Asia.

Key milestones include expanding our presence across the region, launching multiple funds, and supporting over 50 plus startups, many of which have gone on to become industry leaders. Also, in addition to our sector agnostic seed-stage focused fund, we have launched a growth-stage focused fin-tech fund called SMBC Asia Rising Fund in 2023. SMBC Asia Rising Fund is a joint initiative between Incubate Fund and SMBC, which is one of the largest banking groups in Japan.

The notable investments of us include Captain Fresh, Yulu, Plum, ShopKirana, Vayana, Easy Home Finance, MODIFI, etc.

What sets Incubate Fund Asia apart from other venture capital funds in the region?

We pride ourselves on being founder-first, meaning our decisions and actions are always centered around the needs of entrepreneurs. Our focus on the seed stage allows us to work closely with startups at the critical phase of their initial journey, offering hands-on guidance. Additionally, being backed by the Incubate Fund network across Japan, Southeast Asia, USA, and Brazil gives us access to unique resources and expertise that we can channel into the growth of our portfolio companies.

Your focus spans multiple sectors, including B2B commerce, mobility, SaaS, and healthcare. How did you identify these sectors as focal points, and how has that approach evolved?

Most of our investments have been in businesses related to supply chains, such as B2B e-commerce and logistics, reflecting a clear emphasis on B2B over B2C. This focus stems from a combination of market realities and strategic considerations. In a very large market like India, B2C businesses often face high marketing and advertising costs, which can be risky for a small funds like us before. On the other hand, B2B businesses provide opportunities to manage costs effectively through targeted sales efforts, allowing us to fulfill our role as a lead investor more responsibly.

We are now expanding our focus into emerging areas like D2C brands which can grow significantly with emerging Indian middle class. Additionally, cross-border commerce is an area we are increasingly exploring, especially businesses that manufacture in India and sell globally, both in B2B and B2C domains. Fintech remains a priority as well, given the advanced digital infrastructure for payments and identity verification in India, which continues to unlock new possibilities for innovation and scalability.

Could you elaborate on Incubate Fund Asia’s investment thesis and how you identify companies with strong potential at the seed stage?

Our number 1 principle is “Seed Round, Lead Position” – we invest at the first VC round as a lead investor. As shared above our investment thesis revolves around backing strong, mission-driven founders who demonstrate clarity of purpose and the ability to build for scale. At the seed stage, we look for teams with a unique understanding of their market, a clear problem-solving approach, and early signs of product-market fit. We also emphasize long-term partnerships, ensuring that our values align with those of the founders.

What do you look for in a startup team or founder, and how does that influence your decision to invest?

A founder’s mindset is crucial. We look for resilience, adaptability, and a willingness to learn, the traits that are indispensable when navigating the challenges of building a startup. We’re also drawn to founders who demonstrate deep domain expertise and a strong vision for the future. These qualities often influence our decision as much as, if not more than, the business idea itself.

How do you balance taking risks on innovative, early-stage startups with managing investor expectations?

Managing this balance is about clear communication and disciplined investment. We maintain transparency with our investors about the inherent risks and potential of early-stage investments while ensuring a diversified portfolio. At the same time, we focus on diligent evaluation and working closely with startups post-investment to mitigate risks and maximize outcomes. We are a rare venture capital fund which communicate with most of our investors (LPs) on monthly basis.

How hands-on is Incubate Fund Asia with its portfolio companies? What kind of support do you offer beyond financial investment?

We are deeply engaged with our portfolio companies. For example, with most of the pre-seed startups, we usually have weekly or bi-weekly calls with founders. For seed stage companies or companies with more experienced founders, we may have monthly calls/meetings with them. Beyond capital, we provide mentorship, access to networks, and strategic support tailored to their specific needs. Whether it’s hiring key talent, refining go-to-market strategies, or preparing for future funding rounds, we aim to be a trusted partner at every step of their journey.

What excites you most about the venture capital landscape in Asia, particularly in SEA and India?

The dynamism and diversity of the region are truly inspiring. With a rapidly growing digital economy, favorable demographics, and increasing innovation, Southeast Asia and India present opportunities that are unmatched globally. What excites us most is the entrepreneurial spirit in these regions—founders are not just solving local problems but building solutions with global relevance.

What advice would you give to aspiring entrepreneurs in Asia who are looking to secure funding and scale their startups globally?

Focus on building a strong foundation. Understand your market deeply and prioritize creating real value for your customers. When seeking funding, remember that it’s not just about capital, it’s about finding the right partners who share your vision. And as you scale, stay adaptable and open to learning; the journey of a startup is as much about resilience as it is about growth.

Thank you for the great interview and for sharing your investment strategies, readers who wish to learn more should visit Incubate Fund Asia.