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The firm will use the $315 million fund to invest in seed-plus and Series A rounds for U.S.- and Japan-based startups in the industries of cloud and enterprise software, cybersecurity, frontier tech, fintech and retail tech. DNX will be involved in fundings from $1 million to $5 million per round.
“Supporting category-defining startups in the U.S. and Japan has proven to be amazing for us,” DNX General Partner Q Motiwala said in an interview. “We have been able to help U.S. companies expand into Japan and then Japanese companies go to Southeast Asia.”
Since forming in 2011, San Mateo-based DNX has invested and advised more than 150 startups supporting some to M&A and IPO.
DNX Ventures has already invested in several U.S. and Japan startups from Fund III. Investments U.S. startups include Banzai, Diligent Robotics, Macrometa, Mitiga and PayStand, while the Japan investments include HERP, Techtouch, Tutorial, Resily and Adacotech.
The initial goal for the new fund was $250 million to $275 million, but when the firm started fundraising in 2019, it gained good enough traction that the fund became oversubscribed. Motiwala said he attributes that to DNX’s track record and trends seen during economic downturns that show fundraising is not as affected.
Some of the sectors he sees thriving right now are remote work, cybersecurity, migration to the cloud, and automation. With the firm’s track record, it is also able to see these trends play out in the U.S., and then see them following up in Japan, he added.
In addition, investing in the two markets offers financial diversification as well. The U.S. has a rich M&A market, while Japan is good in IPOs, where there are exchange levels that enable a company to start on one exchange and work its way up, Motiwala said.
“With funds I and II, we have been able to use both of these different trends as an advantage for our investors,” he added.
Illustration: Li-Anne Dias