As global venture capital recalibrates in line with shifting macroeconomics, Incubate Fund Asia is doubling down on India’s underserved but rapidly rising middle-class, says founding partner Nao Murakami. With a third India-dedicated fund in deployment and a fourth on the horizon, the Singapore-headquartered fund is bullish on backing founders with the first institutional cheque, he says. Murakami breaks down the firm’s fund thesis, target sectors, cheque sizes, and exit strategies — and why corporate governance matters more than ever.
What is Incubate Fund Asia’s core investment thesis in India?
Incubate Fund Asia focuses on backing early-stage start-ups, typically at the pre-seed or seed stage. The fund aims to invest in founders building for the next 500 million Indian consumers, including outside the Tier-1 urban population. Its core thesis is to back scalable, tech-enabled businesses that serve the emerging middle-class in India.
Which sectors are you eyeing for investment?
The fund is sector-agnostic, but is particularly interested in segments that can scale up at the grassroots level. This includes health-tech, agri-tech, fintech, and e-commerce, category-creating businesses in areas like consumer brands, and supply-chain platforms that cater to non-urban India. The ‘Indian export story’ is another focus area, and we are keen to invest in products and services that can go global from India.
What is your typical cheque size?
The fund usually writes initial cheques ranging from $400,000 to $1 million. It follows a high-conviction approach, preferring to go deeper with fewer start-ups than spreading capital thin.
What kind of exits do you prefer?
Incubate Fund Asia looks for both strategic and financial exits. Since the fund invests in category-creating start-ups in a big market, IPO is the first choice for an exit. At the same time, given the early-stage focus, the firm also targets some exits during later funding rounds (Series C and beyond), often via secondary sales. M&A is also considered as a viable path, especially for start-upss in niche or regional markets.
How many start-ups will the current fund back?
The third India-dedicated fund — dubbed the ‘South Fund’ — is a $30-million vehicle, from which the firm plans to make 17-20 investments. As of now, it has backed eight companies.
How does the fund view governance in early-stage start-ups?
Governance is treated as a critical success factor from day one. The firm encourages founders to adopt scalable systems, form internal committees, and institute best practices in compliance and auditing early on — long before IPO is on the horizon. The long-term approach and early entry allow the firm to guide and support founders through multiple stages of organisational evolution.
The fund aims to invest in founders building for the next 500 million consumers, including those outside urban India.
How does the Incubate Fund Asia support founders post investment?
The firm positions itself They position themselves as a lead investors who helping actively help in building the business building. This includes support with hiring, setting-up processes, product development, and follow-on fundraising. The team emphasises a founder-first approach with a long-term partnership mindset.
Are there any geographic preferences within India for the fund?
Though the fund invests in any geographical areas within India, it wants to tap into the non-tier-1 market by allocating a certain budget. It believes in the significant untapped potential of tier-2, tier-3, and rural India, particularly in consumer internet and digitisation solutions to plays that solve real-world problems for this cohort.
(Nao Murakami, Founding partner, Incubate Fund Asia)