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For 25 years, Pangaea Ventures has been investing in companies with technology centered on intellectual property—in materials, chemistry, and biology—that are driving industrial transformation and promoting planetary health. Andrew Haughian, a partner at Pangaea Ventures since 2006, understands that sustainability comes in many forms. "Sustainability is a broad term," he says. "It can include looking at a number of fields such as health, advanced manufacturing from a sustainability perspective, and, of course, decarbonization."
Pangaea Ventures' broad portfolio includes global companies such as Ardent, a membrane solution company committed to decarbonization, Vestaron Crop Protection, a company that has developed safer, more sustainable insecticides, as well as ChEmpower, a company revolutionizing a critically important semiconductor manufacturing process. By investing in these companies, Pangaea Venture hopes to create a world with a healthy climate, land, and people.
To achieve this, Haughian states that investments need to be made in efficient hard tech, "We are looking for solutions that are economic in their own right. It is not enough to simply be more sustainable; it has to be helping the world become more efficient. It must be an economical solution. These are the types of opportunities that we are focusing on."
These types of opportunities are on the rise in Tokyo, thanks to the city's considerable boost in funding and support. Though Pangaea Ventures has a long history of working with large Japanese companies, Tokyo's recent push in sustainable startup technology convinced them to finally open their first Asian-based office in the city.
"We started to see signs of more interesting sustainable startups in Tokyo we felt we could potentially invest in," Haughian states. "Given our strong pre-existing networks and relationships within the country, we felt Tokyo would be the best place to establish a presence in Asia."
Upon entering the Japanese market, the company was bolstered by the Subsidy to Support Overseas Financial Corporations in Priority Fields (the Green Finance Subsidy Program for Tokyo Market Entry), a program by the Tokyo Metropolitan Government (TMG) which offers support to foreign companies working in green finance. "VC firms are usually small organizations," Haughian explains, "we do not have the resources to deal with all the ins and outs of setting up a new office and dealing with those initial costs. The program helped us with many of the logistics that we are unfamiliar with, as well as offering financial support to allow our seamless start in Tokyo."
The company also onboarded venture capitalist expert Nonaka Sayuri as the Director of Asia, adding her years of experience in the industry as well as her knowledge of the Japanese startup space and its recent rapid evolution. "Over the last ten years, the startup ecosystem in Japan has grown substantially," Nonaka explains, "In that time, funding for startups has increased tenfold."
Nonaka feels that, beyond the burgeoning startup ecosystem, Japan's innovation strengths lie in hard tech; Pangaea Ventures' exact specialty. "Japan stands out for its world-leading innovation and patent activity in hard tech and materials, making it a strategic focus within the ecosystem." she explains. In 2023, a study showed that Japan had the third highest number of patents filed worldwide. "Bearing all this in mind, we believe that it is an opportune time to start investing in Japanese startups given it is a market that we expect to grow."
Venture capital companies do not operate within their own bubble, as investing in a company also means trusting the environment that surrounds it. For Pangaea Ventures, Tokyo is creating such an environment, one that aligns with their own goals.
Sustainable growth has become a cornerstone of Tokyo's overall aim to become a leading financial center. The previously mentioned initiative and large-scale events like SusHi Tech Tokyo, Asia's largest startup conference, ensure the city's future as a major global destination for green investment. "We are seeing a lot of support, which includes funding, aimed at sustainable startups here in Tokyo," Nonaka states, "and this support is not just aimed at Japanese businesses either."
Programs such as the Global City Network for Sustainability (G-NETS) highlight how Tokyo is engaging with the global market, creating relationships and networks beyond its borders to address an issue that impacts the entire world. Tokyo is also supporting overseas startups that wish to come and be a part of the city's startup ecosystem. This is a good sign for VC groups, with Nonaka expressing that "the TMG's concerted effort to create a global startup scene is much appreciated."
Many major global cities also offer financial incentives for startups and businesses to build their base there, but Nonaka feels that in many ways Tokyo has an edge. "While some global markets offer abundant funding, they do not always have the same depth of technology development or the concentration of world-leading tech companies as Tokyo. In Japan, especially in Tokyo, there is a unique accumulation of globally respected companies and research institutions. Tokyo is home to many established corporates with the capacity to deploy and scale new technologies. This combination of deep technological expertise and strong commercialization capabilities makes Tokyo a compelling candidate for innovation-driven investment."
Only a few years prior to Pangaea Ventures arrival in Tokyo, The Cambridge Innovation Center (CIC) opened their own base in the city. Providing working space, support, and countless networking opportunities, the CIC has become the home for many businesses, and was, in fact, the first base for Pangaea Ventures. "The CIC really helped us raise our visibility within Tokyo's startup ecosystem," Nonaka says, "This allowed us to connect to many players in the field, which was a massive positive for us."
Though the company has since moved offices, their presence is still felt as they joined the CIC's Environmental Energy Innovation Community (EEIC) as a VC Partner. "Given how the EEIC overlaps with much of what we do, and members of the community include potential collaboration partners, naturally we wanted to become integrated," Nonaka says, "It is a great space for sourcing startups and potential collaboration partners." For Pangaea Ventures, to have a connection with a space within Tokyo that supports so many startups is invaluable.
Having been based in Tokyo for just over a year now, Pangaea Ventures has been able to assess the ecosystem and are poised to move forward. "When we opened the Tokyo office, we had our initial thoughts on how to invest in Japan. Since then, we have built our strategy and investment thesis on how to best do that," Nonaka says, "Essentially, we want to help startups go global. At the moment, we are focusing on mid stage companies, ones that have had some success here and are ready to take the next step."
Andrew HaughianHaughian joined Pangaea Ventures in 2006 and since then has developed deep expertise in helping companies navigate the early growth stage as they work to prove product-market fit, build out high-performance teams, cultivate a culture of excellence, and optimize growth financing. He currently works closely with Aspect Biosystems, CarbonCure Technologies, Prime Roots, and Hinalea while previously working with companies such as Tidal Vision and ESS Inc. as they passed through the early growth stage. Haughian holds a Bachelor of Applied Science (Mechanical Engineering) from the University of Toronto and a Masters in Business Administration degree from the University of British Columbia.
Nonaka SayuriPrior to joining Pangaea, Nonaka cultivated expertise in the venture capital industry with a focus on investing in and scaling early-stage companies, particularly in the hard tech sector. Her background includes experience in investment and corporate financing at major financial institutions. At Pangaea Ventures, Nonaka is involved in startup investment activities and growth support for portfolio companies. She also actively participates in community building for Japanese startups and works on creating frameworks to promote their overseas expansion, enhancing their global reach and growth potential. Nonaka holds a Bachelor of Economics from Tokyo University.
