Beyond First Impressions and Misconceptions: A Panel Discussion on Japan's Startup Ecosystem

Beyond First Impressions and Misconceptions: A Panel Discussion on Japan's Startup Ecosystem

We’re delighted to introduce a new panel discussion series hosted by Fuminori Gunji, CEO of TokyoMate and featuring Mark Bivens, managing partner of Shizen Capital, and Kazuyoshi Yamada, Co-founder of Blue Circle

In this series, our panel will tackle questions and themes of interest to foreign investors, entrepreneurs, startups, and anyone looking to enter Japan’s market.  

A brief introduction of our host and our panelists who will provide the multi-angled commentary for this series:  


Mark Bivens is a managing partner of Shizen Capital (formerly known as Tachi.ai Ventures) now with 17+ years in VC and a career IRR over 150% per year. Bivens is a Silicon Valley native and former entrepreneur, having started three tech companies during the dot-com bubble (co-founded Birdview Tech, which he successfully sold in 1999). He holds a Kellogg MBA and a degree in Electrical Engineering and is the author of two books, Japan: Bitcoin #1 and Land of the Rising Bitcoin. Bivens splits his time between Paris and Tokyo.

Kazuyoshi Yamada is co-founder of Blue Circle and specializes in equity-based business strategy. After studying financial accounting and investment theory at New York's Baruch School of Finance, he worked at GE Japan, and in 2013 he joined Masayoshi Son’s Softbank’s special team for the launch of their robotics venture where he was in charge of finance. In 2015, he became the CFO of a funeral service venture company and raised 3 billion yen in total in Series C/D rounds. In 2020, he co-founded BlueCircle and helped several seed-stage startups to raise hundreds of millions of yen.

Fuminori Gunji is CEO of TokyoMate, born in Tokyo, raised in Germany, studied at Maastricht University (Netherlands). Over 12 years of experience where B2B x IT x new business development overlap. He has worked in a management consulting firm, at SoftBank/SoftBank Robotics, a B2B SaaS Fintech startup MakeLeaps, where he successfully contributed to doing an M&A deal with Ricoh in 2018. In June 2021, he was made CEO of TokyoMate, a tech startup specializing in Office-as-a-Service solutions.


FUMINORI GUNJI: How is Japan’s startup market different from European or US markets? 

MARK BIVENS: As a French-American whose career to date has been mainly outside Japan, my perspective is influenced by my position as a relative newcomer here. When I look at Japan's startup ecosystem today, I observe a market that is still relatively nascent compared to its counterparts in North America and Europe. 

I often state that it reminds me of France's startup landscape 15-20 years ago. Traditionally, French culture did not encourage entrepreneurship (the irony here is that the origin of the word "entrepreneur" is French). Societal norms encouraged smart young people to pursue careers inside large traditional organizations, often for life. Job stability was favored over risk-taking. Failure was stigmatized. The early startup entrepreneurs were often those who had nothing to lose, such as outsiders who were not fully accepted into mainstream society.

The image I’ve painted above perhaps more accurately reflects Japan’s ecosystem of five years ago and not of today, because we can already observe signs of positive evolution. France's startup ecosystem radically transformed itself into a global powerhouse of innovation. I see the potential for Japan to do the same; it just takes time plus goodwill from a wide array of stakeholders.


GUNJI: How has the Japanese business environment and culture changed over the past years?

KAZUYOSHI YAMADA: Over the last few years, Japan’s startup ecosystem has caught up with the global standard. Based on private sector statistics, investment funds have reached the 400 to 500 billion yen range, and the number of venture capital and corporate venture capital funds has considerably increased. First with Mercari, then in the past 4 years, a number of Japanese startups that have achieved unicorn-class market capitalization have also played a big role. As a result, the inflow of foreign capital has been gradually increasing, and PE firms such as KKR, and major VC firms such as Sequoia and Light Street are now entering the Japanese market.

Also, distribution of know-how and information related to startups, policy support from the government, and social acceptance and perspectives have become increasingly favorable--all of which have accelerated the startup ecosystem in Japan.

BIVENS: Although I lived in Japan for a couple of years as a child, as an adult I am quite new here. So I defer to Yamada-san‘s deeper insights on how the startup community in Japan has changed. One thing I have noticed in the few short years that I’ve lived here is the growing interest among a young generation of talented and ambitious individuals to consider entrepreneurship as a career. For me, this represents a very fortuitous signal which makes me optimistic for the future. This is one of the driving reasons for us to establish our venture capital fund here.


GUNJI: What aspects of Japanese startup business culture are wrong or outdated, if any?

YAMADA: Especially in terms of startups, a big problem is that almost no companies are thinking about expanding overseas.

While Japanese corporations have the image of being inward-focused, in fact, many of Japan’s major manufacturing companies are earning overseas. However, it is true that few Japanese startups are thinking about expanding overseas from the beginning, and investors’ expectations are still focused on domestic digitalization.

Even IT services and SaaS, which are easy to scale, are mainly for the domestic market, and as a result, the upper limit of market capitalization for startups is constrained by the size of the domestic market.

This means the maximum market capitalization of startups has been limited by the size of the domestic market. Yet, great things are happening, and there are signs of change, such as the success in the US of Mercari and SmartNews. However, the current situation is that these limited number of cases are being treated like miracles.

BIVENS: I appreciate Yamada-san's commentary, as it reminds me a bit of a similar phenomenon we observed in major European countries like France and Germany. These two countries possess large domestic markets. This represented both a blessing and a curse. The advantage of a large domestic market is that a new business could grow for quite some time into a fairly healthy-sized company without ever going international. On the other hand, as technology innovation became an increasingly globalized arena, these growing French and German startups struggled to expand beyond their home countries' borders. In contrast, startups in a country like The Netherlands held no illusions about the limited size of their home market. They understood that from day one they needed to expand internationally if they wanted to scale. A global mindset was thus integrated in their startup DNA.

I am optimistic that Japan's ecosystem will continue to progress, and accordingly, many of the aspects that might be considered outdated will eventually evolve in a positive way. 


GUNJI: What makes Japan an attractive market to invest and do business in right now? 

YAMADA: I believe that there is a huge opportunity for global startup investors in the Japanese market right now.

In Japan, for an overall market size of 500 trillion yen in GDP, the number of startup investors is lacking. The U.S. startup investment market is said to be 16 trillion yen, which is 0.8% of GDP, while Japan's investment market is only 0.1% of GDP. As mentioned above, investment in startups is growing, and the market has entered a growth stage, with tens of billions of yen rounds having been concluded in recent years, so now is the best time to take advantage of this growth trend.

On the other hand, foreign investors have not made much progress in entering the market, except in the later stage because of the significant language barrier. Due to moderate competition, valuations at the seed stage are kept low compared to the U.S., so there are particularly good opportunities for international standard investors who can [invest in a startup] at the early-middle stage.

BIVENS: I am very bullish on the potential for Japan’s venture ecosystem, especially at the early stage. The growing entrepreneurial ambition among the younger generation and the increase in social acceptance of entrepreneurship are positive drivers. 

Additionally, corporate Japan is undergoing a digital renaissance of sorts. Many Japanese enterprises are trailing those in other developed countries in their degree of digitalization and their embrace of sustainability into their operations. Their desire to catch up requires adopting innovative solutions, which often come from outside the walls of the traditional corporation, namely, from innovative startups both domestic and foreign.

Given that both the talent mindset and the market opportunity are coming into place, risk capital should follow. We view this as our duty at Shizen Capital.

(Note: Come back soon for the next in this series!)


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