[MUFG Bank] Invests in "Funds Venture Debt Fund No. 2", a Venture Debt Fund Specializing in Deep Tech

MUFG Bank, Ltd. (hereinafter referred to as "the Bank"), a consolidated subsidiary of Mitsubishi UFJ Financial Group, Inc. (hereinafter referred to as "MUFG"), has invested as an anchor LP investor (Note 1) in "Funds Venture Debt Fund No. 2 Investment Limited Partnership" (hereinafter referred to as "the Fund") with the aim of providing diverse financing options to startups.

The Fund is a venture debt fund (Note 2) operated by Funds Startups, Inc. (hereinafter referred to as "Funds Startups"), a wholly-owned subsidiary of Funds Co., Ltd. The Bank serves as an anchor LP investor, and the Fund was established through investments from multiple investors. This marks the Bank's first LP investment in a domestic venture debt fund.

(Note 1) Refers to an investor who participates as a major investor from the fund's launch stage.

(Note 2) Refers to a fund that provides financing options such as loans and convertible bonds to startups, rather than equity.

Background of Investment in the Fund

In recent years, rapid technological advancements have been seen in deep tech fields such as AI/semiconductors, quantum technology, biotechnology, and aerospace, attracting attention as critical areas that will influence Japan's medium- to long-term industrial competitiveness. These fields are positioned as priority areas in the government's growth strategy, and growth investment involving both public and private sectors is becoming more active.

On the other hand, startups in the deep tech field often require substantial R&D investment and long business commercialization periods, leading to a growing need for diverse financing options that combine debt financing with traditional equity financing.

In light of this situation, the Bank met Funds Startups, which aims to solve the financing challenges faced by startups through the provision of venture debt, and has engaged in discussions regarding the ideal approach to startup support. Through these discussions, the Bank has deeply resonated with the vision espoused by Funds Startups and the concept of the Fund, and has determined that it has high compatibility with the Bank's own goal of supporting startup challenges by providing sustainable growth capital. Consequently, the Bank decided to participate in the Fund as an anchor LP investor.

Features of the Fund

Under its mission to "develop a system that allows startups creating social impact to achieve their ideal growth," Funds Startups supports startups through the operation of venture debt funds and the provision of capital.

With the concept of an "All Stage Deep Tech Debt Fund," the Fund addresses the capital needs of deep tech startups. In particular, it aims to achieve diverse capital supply tailored to growth phases by utilizing convertible bonds for large-scale capital investment and R&D funding, in addition to grant bridge financing to support capital demand until grant disbursement.

Future Initiatives

MUFG, with its purpose of "Becoming the power that moves the world," is implementing various support measures under the tagline "Let's go surprise the world!" which signifies its commitment to supporting startups.

Through its investment in the Fund, MUFG will further strengthen its capital supply to startups. In addition, by collaborating with Funds Startups and other LP investors, MUFG will support the growth of startups challenging innovative technologies and businesses, thereby contributing to the resolution of social issues and the creation and nurturing of next-generation industries.