From Anime to Autos: How Cool Japan Fund Is Rewriting Soft Power in Southeast Asia
The region is in a funding drought. While regional VCs retreat, Cool Japan Fund is quietly expanding. Is the scrutiny back home a hindrance or a driving factor?
In the midst of a funding winter that has seen even the most ardent supporters of the region winding back their commitment, a Japanese fund is doubling down on its presence in Southeast Asia.
Cool Japan Fund (CJF), a public-private investment fund established by the Japanese government in 2013, recently led a US$60 million investment round in Carro, a Singapore-headquartered online used car marketplace, as disclosed by the company on September 17. A few months prior, on December 19, 2024, CJF deployed US$25 million to back Funding Societies, a Singapore-based digital lending platform for small and medium enterprises (SMEs). Both investees are leading players in the region in their respective categories.
CJF’s interest in the region is nothing new. In 2019, the fund invested US$50 million in Gojek, an Indonesian ride-hailing and food delivery startup (now publicly listed as GoTo, having merged with e-commerce firm Tokopedia in 2021. TikTok later made a deal with GoTo to acquire 75% of Tokopedia’s shares). While that is so, CJF’s more recent investments are noteworthy, as it signals confidence in what the region may still have to offer, considering wider cautionary investment trends.
In a report published last month, Dealstreet Asia writes that “the first half of 2025 marked the weakest point of Southeast Asia’s equity investment cycle in over six years”. Within a year, the number of deals was down by 37%, while the total value of those deals decreased by 20%. When compared to activities in the first half of 2021—the “hottest” year for startup investing—deal volume dropped by 48% while the total deal value shrank by 81%.
In hindsight, 2021’s high seems to be a one-off event. A correction was expected to happen. But Cento Ventures, a venture capital firm investing in the region, said in a report published last month that this period is not merely a cool down from Covid-19 funding frenzy: “What looked like an early adjustment turned into the deepest and longest slump of any emerging market”. India and Latin America have escaped Southeast Asia’s gloom, as suggested by the report.
Amid such bleak weather, one might wonder why a Japanese fund is not mirroring the caution captured in the report. Why is CJF remaining optimistic about Southeast Asia?
Expansion and Contraction
When CJF was launched on November 25, 2013, the crowd of Japanese business people and bureaucrats gathered at Tokyo’s Roppongi Hills seemed quite enthusiastic. They managed to pool in about 40 billion yen—the Japanese government allotted 30 billion, while 15 private firms contributed 7.5 billion.
“We’d like to somehow help those of you who want to promote Japan’s great design, cool content, safe and delicious food, and Japanese services [that come] with generous hospitality,” Cool Japan Fund CEO Nobuyuki Ota said at the launch event, as reported by The Japan Times.
The fund was launched as part of an agenda to expand Japanese influence in the global market. It is mandated to invest in strategic cultural industries, as listed by its then CEO. From companies that create anime and distribute them, to Japanese food suppliers and restaurants establishing their presence across the world, CJF was keen on being a steadfast supporter.
Over the years, the fund has grown in size. By April 2025, it had completed 72 deals, managed about US$1.1 billion in assets, and drew nearly 90% of its capital from the Japanese government. Though technically a public–private partnership, CJF functions far more like a public vehicle, one designed less for outsized returns than for national projection.
Compared to a typical private fund that invests in startups, CJF is unique for its social mandate, its investment horizon, and returns expectation. This is important to be outlined as a benchmark to assess CJF’s more recent activities.
Aside from its mandate to elevate Japanese cultural products, its fund horizon is set at 20 years. In comparison, a typical private venture fund’s investment timeline is anywhere between 5 to 10 years. This means that the fund was built to outlast the hype cycles it invests in. It could hold stakes longer, and, as the way public funds are evaluated, it is not expected to deliver outsized returns the way private funds are.
That longer horizon explains why CJF can stay invested even when others retreat, but it also exposes how the fund’s patience is being tested.
This brings us to the reason why CJF’s recent investments in Southeast Asia are interesting. Other than the fact that it stood apart from wider pessimism of the region, it is also because CJF hasn’t exactly been operating from a place of optimism. Instead of reinforcing its commitment to its mandate, in the past few years, it has actively been exiting its prior investments.
In June 2025, CJF exited Myanmar-based Dream Vision Co (DVC), which helped distribute Japanese dramas, animation, and other content to the Myanmar audience. While it cited concerns over DVC’s role in disseminating Myanmar’s military propaganda following the military’s February 2021 coup, CJF has also exited similar deals.
In April 2025, CJF announced the dissolution of the Japan Contents Factory Investment Business Limited Liability Partnership, which supported the production of Japanese visual content for international audiences. In the same month, CJF also exited Global Next Atom, which supplied fresh and processed food ingredients to Japanese food restaurants in Taiwan and China.
These exits followed a broader trend of the fund’s divestments. It’s safe to say that CJF is looking for early exits across its portfolio. But what looked like tactical retreats increasingly resembled an identity reset. Those exits marked not just portfolio trimming, but a crisis of purpose. In hindsight, they foreshadowed the reckoning to come in Tokyo. The question is, what’s the urgency? And for a fund deep in restructuring mode, what does it now seek in Southeast Asia: redemption or reinvention?
Betting on Japanese Influence
Around the time CJF turned 10, it was confronted by an existential question back home: how must it continue to operate? The pandemic had caused deep ruptures in CJF’s portfolio companies, grinding down profitability and leading to public scrutiny over the fund’s performance and prospects.
On June 20, 2022, a subcommittee of Japan’s Fiscal System Council made a proposal to merge CJF with other investment funds, or eliminate the fund altogether, as reported by Japanese daily newspaper The Asahi Shimbun. As of March 2022, the Japanese government had contributed 106.6 billion yen to the fund. The fund’s poor performance, however, had led to scrutiny as to whether such a commitment was to be continued.
At the end of fiscal 2020, the fund accumulated a loss of 23.1 billion yen. In the year following, at the end of fiscal 2021, those losses increased to 30.9 billion yen; the fund failed to achieve its own goal of capping the year’s accumulated losses at 25.7 billion. In the same meeting with the subcommittee, the officials at CJF said they expected a turnaround as the economy improved as part of a recovery trajectory from the pandemic.
But what if the challenge is bigger than merely recuperating from the losses incurred by the pandemic? That even as the economy lifts, a better outcome is not guaranteed?
“Who talks about Cool Japan now? Korean culture took it over…I heard that we are even struggling to sell Japanese anime overseas,” said one senior government official to The Asahi Shimbun.
For a project born to make Japan look modern to the world, the irony is that it’s now searching abroad to rediscover relevance.
According to the report by the newspaper, dated November 2022, most of CJF’s investments have failed. The fund, for example, channeled 1 billion yen to anime distributor Anime Consortium Japan and 4.4 billion yen to satellite broadcasting company WakuWaku Japan. The former was closed down in 2017, while the latter in 2022.
By this point, CJF had found it increasingly difficult to operate as a fund that honors its social mandate, as well as delivering the kind of return warranted to justify its existence. It’s a catch-22 scenario: focus on supporting Japan’s cultural diplomacy and it risks collapsing on its deficits, or focus on pursuing profitability and it drifts away from its reason of existence.
This brings us to CJF’s recent investments in Southeast Asia. It is clear that the fund is in a quest of expanding the types of businesses it invests in. Against increasing pressure to deliver outcomes, it’s being forced to redefine what “Cool Japan” means. At its inception, ‘strategic Japanese cultural products’ meant anime, film, fashion, food, and beverages. More recently, and curiously, Japanese diplomacy takes the form of used cars and SMEs financing. Southeast Asia is now a testing ground for this new thesis.
There’s perhaps a logic to this. Despite the gloomy outlook in Southeast Asia, the region’s middle class is growing fast, with two countries—Vietnam and Indonesia—expected to be the fastest growing middle-class population in the world. Among important themes of middle-class expansion are: transport and financing. That’s an argument the fund can credibly make to its critics back home.
If Cool Japan’s next frontier is mobility and fintech, perhaps what Japan exports now isn’t content—it’s conviction.
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