Tokyo-Based XTech Ventures Closes JPY 13bn Fund III, Expanding Focus to Space, Defense, and Deep Tech
XTech Ventures, a Tokyo-based venture capital firm, has successfully closed its third flagship fund at approximately 13 billion yen ($86 million). The new vehicle, formally named XTech 3rd Investment Partnership, will maintain the firm’s focus on seed and early-stage startups while aggressively expanding its mandate into national-interest sectors such as defense, aerospace, and energy infrastructure.
According to managing partners Hiroki Teshima and Shinichi Saijo, Fund III has already begun deploying capital, backing 15 startups since its initial formation period in late 2024.
While the fund remains officially sector-agnostic, XTech is strategically pivoting toward macro-level structural transformations. Beyond its traditional strongholds in software and consumer technology, the firm outlined five core focus areas for the new fund:
- Energy: Next-generation power generation (including small modular reactors) and grid efficiency, driven by the surging power demands of AI data centers.
- Applied AI: "AI-native" business models that completely redesign traditional industry operations.
- Consumer Experiences: Scalable, highly profitable brick-and-mortar and experiential consumer businesses.
- Space & Defense: Backing private startups operating in national-policy sectors where domestic market growth is highly anticipated.
- Deep Tech: Commercializing cutting-edge Japanese research in physical AI, robotics, quantum computing, semiconductors, and life sciences.
Investment Strategy and Track Record
Fund III will target seed to Series A rounds, primarily acting as a lead investor. Initial ticket sizes will range from 20 million to 500 million yen, with the firm reserving dry powder to back individual portfolio companies with up to 1 billion yen cumulatively.
XTech Ventures has differentiated itself in the Japanese venture landscape through a pragmatic liquidity philosophy. Operating under the ethos that "an IPO is not the only right answer," the firm actively structures dual-track exit scenarios—including M&A and secondary buyouts—tailored to long-term corporate value.
This strategy has yielded solid returns across its earlier vintages. Fund I (launched in 2018 with ¥5.2 billion) generated six IPOs, 11 M&As, and two secondary exits from a portfolio of 39 companies. Fund II (launched in 2021 with ¥12.3 billion) has already recorded three IPOs and four M&As out of 60 investments. Notable past liquidity events include the public listing of nutritional food brand Base Food, as well as the strategic acquisitions of GRAND by Mitsubishi Estate and Thinkings by BizReach.
Leadership and Ecosystem Expansion
To support the deployment of Fund III, XTech has expanded its leadership bench, appointing Takashi Fujimoto as a Partner. Fujimoto brings a hybrid background of private equity expertise and personal entrepreneurial experience to the firm's heavily operator-led team.
The firm also announced the continued expansion of its early-stage incubation efforts. Through "xBridge-Yaesu," a VC-colocated workspace located steps from Tokyo Station, XTech operates the "X-Gate" accelerator program. The zero-equity-required program is currently accepting applicants for its ninth cohort, offering early-stage founders 24-hour facility access and direct mentorship from XTech capitalists.
Norbert Gehrke
