The Tokyo Startup Scene

An overview by Ikuo Hiraishi, Serial Entrepreneur & CEO of SunBridge Global Ventures. This is a summary of the talk given by our Keynote speaker for our Tokyo-Munich FinTech Symposium on Jul. 05, 2016.

For more details, charts, and stats, watch the full video on our Youtube channel here:

Introduction:

Hiraishi-san had established 8 companies with two successful exits: one went public, the other was acquired by Yahoo! Japan. However he notes he mistook his two lucky breaks for true ability, and hence he “screwed up another one beautifully”.

He cites Dave McClure, Founding Partner of 500 Startups, from his keynote talk at InnovationWeekend Osaka : “Failure is not a problem, it’s a necessary PROCESS to succeed.”

This resonated with him greatly. Thus, when he was approached by a publisher, he wrote a book titled “Recommendations from Failure” (translation from the paperback title 挫折のすすめ also available on kindle.)

Overview of last 20 years:

Three major incidents had caused the decline in the number of IPOs in Japan. The first: the burst of the internet bubble in 2000. The second: the 'Livedoor Shock’, a local event in Japan that led to the temporary shutdown of the Tokyo Stock exchange. The third: Lehman’s fall. This latest one had plummeted the number of IPOs to 19, just 1/10th of the volume before the bubble and the Livedoor Shock. Last year, the number has risen back up to 99.

During the downturns and stagnation of the economy, the Japanese government realised that they’re not able to create new jobs, and so they turned to supporting startups for their booster strategy.

While back in the 1990s no investor knew anything about IT businesses. Now most are experienced in the field, and Japan finally had its very first unicorn this year in the form of Mercari, a P2P marketplace app.

Presently, fintech is very hot. So much so that this year in March, the news publisher Nikkei launched its first FintTech focused version.

It’s BIG enough

While Japan is geographically small, it still has the 3rd highest GDP in the world and 2nd highest per capita among the top 10 GDP countries. Tokyo alone has a population of 37M, significantly larger than the 19M in New York, 17M in Shanghai, 9M in London, and 7M in SF & Bay Area.

Many IT giants such as Google, Twitter, and Evernote have opened their 1st non-US office in Tokyo. Japan has the highest number of users of Twitter and Evernote outside the US. Mobile users in Japan download on average three times more paid apps than users in Germany

Big success is possible

Japan’s messaging app Line has become a global success with over 400M users world wide in 2014, and will be going public this year.

Large Japanese companies are also looking overseas, with giants like Rakuten, Recruit, and SoftBank paying big money to acquire foreign startups.

New trends & Startups in Japan

  1. Fintech. Startups to look out for: Freee, and MoneyFoward which are both accounting software, and Coiney which is a credit card processing service.
  2. E-Commerce. Look out for: Mercari, BASE, Gochikuru, Stores, Sumally.
  3. EduTech. Look out for: Schoo, RareJob, Quipper.
  4. Social, Crowd, and Curation. Look out for: SmartNews, Gunosy, Antenna, PeaTiX, Retty, CrowdWorks, Gengo.
  5. IoT & Hardware. Look out for: Moff, Ring, Schaft.