Will the "golden egg" grow?

Startup situation in Japan January 12 18:21

A startup is a start-up company that creates innovative technologies and services.

In the future, it may grow into a huge company like "Google" or "Amazon", so to speak, it can be said to be a "golden egg".

However, it has been pointed out that Japan has fewer and smaller scales compared to other countries.

Will the “golden egg” really grow?

(Economics Department reporter Keisuke Nakajima)

Japan's strength = overseas with robot technology

The first place I visited was Koganei City, Tokyo.

It is a startup “connected robotics” on the campus of a national university.

Nine years after its founding, it develops robots for the food industry.

The representative product of this company is "Soba Robot".

The robot arm automatically does everything from putting the buckwheat to boiling.

Detailed operations such as draining the hot water that require experience and intuition can be performed accurately on time and boiled evenly.

In addition, AI (artificial intelligence) recognizes ingredients and sells robots that automatically serve them to supermarkets.

About 40 have been sold so far.

Founder and Representative Director Tetsuya Sawato wondered if it would be possible to sell such robots in the United States amid soaring labor costs around the world.

The target is a local hamburger chain.

We are planning to export a robot that automatically fry French fries as early as next year.

Representative Director Sawano

"I want to spread the products cultivated in Japan, which has a strong commitment to quality, to the world. In the United States, problems such as soaring labor costs and labor shortages are occurring. In this large market, we will make use of our delicate robot skills for production. I want to contribute to the improvement of

Japanese startup situation inferior to overseas

However, there are not many startups in Japan aiming to expand overseas.

In the first place, it is said that Japan has a lower startup rate than Europe and the United States, and the number of startups itself is small.

The same goes for scale.

Unlisted companies with a corporate value of over $1 billion (approximately 130 billion yen, as of January 12) are called "unicorns."

As of February last year, there were 512 companies in the US, but only 6 in Japan.

The gap between us and the rest of the world continues to widen.

Representative Director Sawanobu

: “In countries such as Singapore and Israel, where the market size is relatively small, there are companies that aim for the global market from the beginning, but in Japan, they start from the domestic market first. I have a place to put it away.”

In addition, he says that there is a concern that the so-called Galapagosization may occur due to excessive efforts to apply to the Japanese market.

Once upon a time, the Japanese mobile phone "Garakei" underwent a unique evolution, but it did not spread overseas.

In order not to repeat the same mistakes, it is necessary to remake the contents of services and products according to the needs and current situation of each country.

Gather necessary information and partners through acquisitions

In order to do so, it is essential to have information on the destination and the existence of partners who will do business together.

There are companies that acquired them through "M&A = acquisition and merger".

"Opn" is an electronic payment service provider.

We are developing services in Southeast Asia that allow you to order and pay for products at restaurants using smartphones.

Furthermore, in November of last year, it acquired another company in the same industry in the United States for 50 billion yen.

It is the largest ever acquisition of a foreign company by a domestic startup.

This acquisition was made possible through the financial support of public-private funds such as the Innovation Investment Corporation of Japan and the Japan Bank for International Cooperation.

The company's CEO, Jun Hasegawa, says acquisitions are essential for a startup to grow into a truly global company.

Hasegawa CEO

“Globalization cannot be avoided in order to survive. Japan’s presence in the Internet service industry is very small. An acquisition is mandatory."

The government also provides full-scale support

Against this backdrop, the government is also making serious efforts to provide assistance.

Positioning 2022 as the “first year for creating startups,” we have included approximately 1 trillion yen in this year’s supplementary budget for startup development.

We will strengthen our support by investing in funds set up by domestic and overseas venture capitals and providing financial support for the overseas expansion of Japanese startups.

To become a startup powerhouse

This time, we interviewed two managers, and three issues emerged for Japanese startups.

Issue 1 Attractive tax system for

entrepreneurs When talented overseas talent chooses a country to start or work in, the country's tax system is an important criterion.

Many startups have a system called "stock option" that gives the right to buy the company's stock at a predetermined price in order to increase the motivation of managers and employees.

In Japan, gains from the sale of stocks are taxed at a rate of 20%, whereas in Singapore and Hong Kong, they are exempt.

In the United States, up to $10 million (about 1.3 billion yen, as of January 12) is tax-free.

Under these circumstances, Japan also plans to revise the tax system in 2023 with consideration for startups.

Specifically, if you reinvest in a startup or start your own business, up to 2 billion yen of the profit on sale will be exempted from income tax.

Challenge 2: Creating a highly mobile labor market The

second is to change the employment practices symbolized by lifetime employment and create a highly mobile labor market.

Recruiting top talent is a big challenge for startups that are just starting out.

Mr. Sawanobori, who we interviewed for this article, also said, "Japan has a strong presence in large companies, and there are very strong role models of people working at large companies until retirement age."

Employment mobility has increased compared to the past, but it is said to be still low compared to Western countries.

In the future, the government will provide integrated support from reskilling (re-learning to changing jobs), and will encourage the movement of human resources to growth fields such as startups.

Issue 3 Fostering Future Entrepreneurs The

third is fostering future entrepreneurs.

According to a survey conducted by the Japanese government, the proportion of people who positively evaluate "entrepreneurs" when choosing a career exceeds 70% in the United States, but remains at just over 20% in Japan.

In order to increase the number of startups, it is first necessary to increase the number of young people who aim to become entrepreneurs.

Until now, the government has implemented projects to encourage exchanges between university students and entrepreneurs, but it is trying to foster an entrepreneurial mindset among young people by expanding the scope of these programs to include high school students.

Through this interview, I learned that there are still many issues facing Japanese startups, but on the other hand, I have also seen promising trends.

Can you warm the "golden egg" and grow it into a unicorn that will leap into the world?

I keenly felt that this is an important theme for the future of the Japanese economy.

Economic Department Reporter

Keisuke Nakajima

Joined in 2004

After working at the Aomori Bureau and the Metropolitan Area Bureau, he is currently

in charge of the Ministry of Economy, Trade and Industry.