Incubate Fund Asia is preparing to launch its Fund IV in early 2026, with plans to back 10–15 startups by FY26. The fund will continue to pursue high-conviction pre-seed and seed investments across India and Southeast Asia. In an interview, founder Nao Murakami speaks to S. Shanthi about the company’s plan and its growth expansion potential in Tier-2 and Tier-3 markets. Excerpts
What segments Incubate Fund Asia currently keen on investing in?
The fund is sector-agnostic but is especially interested in segments with grassroots-level scale. These include health-tech, agritech, fintech and e-commerce, with a strong interest in category-creating businesses such as consumer brands and supply-chain platforms serving non-urban India. We’ve also begun investing in deeptech—including space tech, energy tech and manufacturing tech—in India and plan to double down on this focus.
Are there specific business models within these segments that you prefer?
Our investment lens has evolved from a primarily B2B focus to a stronger tilt toward B2C and B2B2C models, particularly in Tier-2 and Tier-3 cities. These markets are driving the next wave of India’s consumption growth. We prefer business models that are capital-efficient, scalable and have a clear path to profitability rather than those dependent on aggressive cash burn.
Nao on investment in FY25
How many investments have you made so far this financial year?
So far this financial year, we’ve made four new investments and four follow-on investments through Fund III. In addition, our SMBC Asia Rising Fund has closed five new growth-stage investments. Across both funds, we’ve focused on high-conviction bets aligned with our India and Southeast Asia thesis.
Tell us about your upcoming investments. How many do you plan to make by the end of FY26?
With Fund IV launching in early 2026, we plan to invest in 10 to 15 new companies by the end of FY26. Our focus will remain on high-conviction pre-seed and seed bets across India and Southeast Asia, especially in consumer internet, tech-enabled services, fintech, health, agri, supply chain and export-ready businesses. We also intend to deepen our presence in Tier-2 and Tier-3 cities in India, where we see significant white space for category-creating startups.
What cheque sizes are you targeting?
We typically write initial cheques ranging from $400,000 to $1 million. We also make follow-on investments in portfolio companies that successfully reach subsequent funding rounds.
Nao on expansion plans
Tell us about your expansion plans within Southeast Asia.
We are gradually expanding our early-stage presence in Southeast Asia with a focus on markets that mirror India’s consumption and digitisation trends, such as Indonesia. We aim to build a small but high-conviction portfolio across consumer goods, fintech and supply chain. Rather than broad regional coverage, our approach is to partner deeply with local founders and co-investors and selectively back companies that can scale meaningfully.
Why are you bullish on this market?
We’re bullish because a massive wave of consumption, digitisation and formalisation is underway across India and Southeast Asia. A young population, rising incomes and improving digital infrastructure are creating large, underserved customer segments seeking better products and services. This shift is opening space for category-creating startups with strong unit economics and rapid-scaling potential. For early-stage investors, this is one of the world’s most attractive growth stories.
What are the three key things you look at before investing?
Our evaluation framework remains founder-first. About 70% of our decision-making centres on the founder’s conviction, adaptability and depth of understanding. Next, we assess market potential—the scale and growth prospects of the addressable market. Finally, we examine the pathway to profitability and whether the business can become financially sound in the long term.
What recent bets are you particularly proud of?
Under Fund III, several companies have shown strong progress and secured follow-on rounds. Some of our recent investments we’re particularly proud of include Green Fortune, Includ, Saswat Finance, FairDeal and Stride Green. Each reflects the type of high-conviction, category-creating opportunity we seek—whether in sustainability, agri-supply chains, consumer services or tech-enabled solutions for Tier-2 and Tier-3 India. These founders are building for large, underserved markets with strong unit economics and deep customer engagement, aligning closely with our early-stage investment thesis.