Is it harder to launch a startup in Japan?
We hear a great deal about startups at the moment. In Japan, the word “startup” is often used interchangeably with “venture business”; strictly speaking, however, a startup is defined as a company that demonstrates social value, provides social innovation and is backed by a sound business model.
It is often said that startups are much harder to get going in Japan than in the West (and in particular in Silicon Valley). This can be attributed to a combination of factors: limited availability of risk money* in respect of future potential; the tendency for big business to focus on performance figures and past precedents; and the Japanese aversion to risk due to fear of failure. In 2014, investment in venture businesses was just ¥115.4 billion in Japan, compared to ¥5,184 billion in the United States.**
Yet startups are vital if Japan is to continue promoting innovation and developing exciting new products and services that will shine on the world stage. One way to assist startups is by encouraging closer coordination with and support from big business. When big business contributes the resources and startups contribute flexibility and exciting new ideas, the potential is limitless.
Through the MetaArc venture community, Fujitsu provides four programs specifically designed for startups: a cloud environment; a matching service for Fujitsu and startup businesses; product promotion and sales support; and funding. As part of the matching service, 11 startups were selected to take part in the Fujitsu Accelerated Program Pitch Contest, held on March 22 at Fujitsu Trusted Cloud Square.
* Risk money refers to market funds from sources such as hedge funds and product investment advisors
** Source: Funding procurement by unlisted venture companies in 2014 (Japan Venture Research, 2015)
Source: Venture capital investment in the United States (NVCA)
Converted at 1USD = ¥108 (official rate as at April 7 2016)
Pitch contest generates continuous stream of innovative ideas
This was the second iteration of the Fujitsu Accelerated Program in 2016. Some 12 companies were chosen through the application process, and 11 were represented at the event. Each company delivered a presentation lasting five minutes.
First prize went to Unirobot for their unique next-generation social robot Unibo, which was a big hit with visitors. Unibo is the first robot in the world capable of learning personal traits and characteristics. It features natural language processing and emotion recognition based on the much-vaunted deep learning principles, along with breakthrough functionality in a number of areas: for instance, it can change the content of a conversation depending on who is speaking, and employs Big Data to make advanced recommendations based on ordinary conversations. Unirobot plans to have a Unibo in every home eventually.
The first of two merit awards was given to Studist for Teachme Biz, a cloud-based service for creating and sharing manuals and procedural documents incorporating images and video. Teachme Biz makes it easy to produce great-looking manuals in an instant, and documents are compatible with multiple devices.
The other merit award went to Doreming Asia for Payming, a Fintech* payment service that allows workers to use salary payments as security. Fintech services cover a wide range of transactions, from mobile payment through to card settlement, and are expected to create jobs and boost income levels in newly emerging economies. The aim is to have a user base of about 330 million people (10% of the global working population) by 2030. Thus, Fintech services have a very significant social value.
Fujitsu is committed to working with all 12 of the selected startups (not just the three award winners) on developing new and exciting business propositions.
* Fintech, an amalgamation of finance and technology, is a generic term for IT solutions in the financial sector
The untapped potential of startups combining with big business
Former AWS evangelist, current Soracom president and leading startup proponent Ken Tamagawa was the guest speaker at the pitch contest.
Tamagawa described how startups are seen as the stars of Silicon Valley, whereas in Japan they are regarded with disdain. He argued that big business need to lift their game in assessing startups, with a broader view to building a community that fosters innovation by accepting risk.
There is a growing acceptance in Japan that startups can be an important driver of economic growth. Yet we are still well behind the United States, where the economic contribution of startups is already plain to see.
Fujitsu is committed to promoting new world-leading ideas and innovations through a joint creativity approach where we work together closely with startups.
The Unibo from Unirobot will be coming to Fujitsu Forum Tokyo in May, so be sure to head on down and take a look!