X-HUB TOKYO, which supports the overseas expansion of startups in Tokyo, held an event on March 26, 2020 to share the results of X-HUB TOKYO: “Senior Entrepreneurs Talk about the Appeal of Overseas Expansion”. The event was moderated by Ms. Yuka Tanimoto, Editor-in-Chief of Forbes JAPAN Web, and featured a panel discussion on the future of overseas expansion and the secrets of success.
At this event, we asked Mr. Ani Terada, Founder and CEO of Aniwo Ltd, Mr. Takashi Furukawa, Chairman of Innophis Inc. and Mr. Retsu Kitagawa, CEO of Smart Drive Inc. about the appeal of overseas markets and the key points that lead to successful overseas expansion.
In the second half of the event, startups that participated in the 2020 X-HUB TOKYO program presented their achievements, sharing the latest information that is useful not only for startups aiming to expand overseas, but also for VCs, large corporations and other support organizations for startups.
Senior entrepreneurs talk ~The appeal of overseas expansion~
- First of all, please tell us about your business and services.
Mr. Terada：Based in Israel, Aniwo Ltd is an innovation advisory service connecting Israel and Japan. We are also involved in DX (Digital Transformation) promotion, online recruitment platforms, and cyber security services.
Mr. Kitagawa：SmartDrive collects and analyses a wide range of mobility-related data to create new services in the field of mobility. We also develop a wide range of mobility-specific data platforms and collaborate with a wide range of companies both in Japan and overseas.
Mr. Furukawa：Innophis is a university-launched start-up that develops and sells Muscle Suit, a wearable robot that uses artificial muscles. Our products are used in nursing care and agriculture, and we focus on developing products to solve the problems of users with challenges.
- The spread of COVID-19 infections is changing the way people live. What changes are you seeing in the way you do business now?
Mr. Terada：As a result of remote working, I feel that many cyber security related startups are playing an active role in the fight against information leakage. In Israel, investment in startups is already on a recovery track, with around 1 trillion yen invested in the year 2020. This figure is equivalent to twice the amount of start-up investment in Japan.
Mr. Furukawa：The expansion of the new Corona has made it difficult to hold exhibitions, which has affected the sales of our products. Our main desire is for our customers to experience our products once before they purchase them. We are now focusing on developing new sales channels by promoting the use of online, but I feel that there are some issues that are different from traditional sales promotion activities.
- Many startups in the Corona Periphery are struggling with the timing of their overseas expansion. What are the most important points in deciding when to expand overseas?
Mr. Kitagawa：I think it is important to have the momentum to expand overseas without getting too caught up in the timing. Depending on the country or region, regulations and rules may be very different from those in Japan. Therefore, it is important to be prepared to create a business from scratch.
Mr. Furukawa：In my own view, “Made in Japan” can be an advantage overseas. For this reason, I feel that in many cases it is better to build a solid track record in Japan before expanding overseas.
- Please tell us about any mistakes you have made in your overseas business development to date.
Mr. Kitagawa：When setting up a business overseas, it took a lot of time to go through the local procedures. Nowadays, it is easy to gather information online, so just talking to expatriates in advance, for example, should make it easier to get a feel for the local area.
Mr. Terada：Prices and labor costs are high in Israel, so it was quite costly when we first started our business. It was also difficult to get a visa. I entered the market without any connections, but I felt that it was important to gather information and form connections in advance.
Mr. Furukawa：In our case, the laws and regulations differed greatly between Japan and the region we were expanding into, making it difficult to proceed with business negotiations as planned. It is essential to conduct market research and study the laws and regulations before expanding overseas.
- What should Japanese startups be aware of in order to succeed overseas?
Mr. Kitagawa：Determine what issues you can solve and how you can solve them through your business. In Asia, there are many companies that respect Japan and governments that focus on supporting start-ups, so if you can plan your strategy well in advance, I think you will be able to successfully develop your business overseas.
Mr. Terada：Try to gather information from various sources such as the Ministry of Foreign Affairs, JETRO, and embassies of various countries, conduct local market analysis and competitive research in advance, and focus on whether or not you can demonstrate your value as a Japanese. It is also important to build a relationship of trust with those around you so that you can help each other in times of need, as many unexpected events can occur overseas.
- Thank you very much. Finally, do you have a message for startups that are looking to expand overseas?
Mr. Furukawa：Overseas, many companies are more tolerant of startups, and when your ideas and enthusiasm are conveyed to others, you can enjoy the thrill of developing your business with great momentum. I encourage you to actively communicate what you want to do and try to create businesses and services.
Mr. Terada：There are some companies that are so concerned about the timing of their overseas expansion that they are not actually able to go abroad. In the case of a startup, the environment is a little different from that of an expatriate in a large organization or company, so there is an attraction to be able to commit to overseas business over a long period of time. I encourage you to take the plunge and go abroad.
Mr. Kitagawa：As a result of the progress of DX in Corona, there are more opportunities to casually meet online with executives you would not normally be able to meet, and more chances to efficiently expand overseas. I encourage you to be proactive and take on overseas challenges with the “contrarian orientation” that only a startup can provide.
OUTBOUND PROGRAM Achievement briefing session
X-HUB TOKYO’s OUTBOUND PROGRAM in 2020 was run by the Japan External Trade Organization (JETRO) and provided support for startups in Tokyo who wanted to expand their business overseas, including matching with local companies and business negotiations. Six courses were offered in North America (West Coast and East Coast), Asia (Shenzhen and Singapore), and Europe (Germany and Web Summit), depending on the desired destination.
Ms. Saori Nitta of the Startup Support Division, Innovation and Intellectual Property Department, JETRO said, “Time and money are precious resources for startups. By developing the program online, we have been able to conserve these resources while providing access to the global ecosystem based on the full support of the Tokyo Metropolitan Government,” she said.
Through the support of X-HUB TOKYO, some startups are starting to make concrete progress in expanding their business overseas. Infostera, which operates an antenna sharing business in the field of satellites, plans to set up a subsidiary in the US in 2021. I’m beside you, which is developing an AI service for video analysis, has signed an NDA (Non-Disclosure Agreement) with a potential partner company in China, and has also conducted joint research with a local university.
The OUTBOUND PROGRAM created a number of opportunities that could lead to business partnerships and investments. Mr. Taichi Takayanagi, Branch Manager at the U.S. office of Triple Dove Japan, a nursing care startup, mentioned that the tool was used to efficiently develop partner companies. Mr. Wingjie Ou, the executive officer of PJP Eye, a company that develops and sells carbon batteries, recalled, “Through the program, we have been invited to speak at events more often, and we feel a variety of connections.
X-HUB TOKYO provided a variety of support for obtaining local user insights and market research, which are essential for overseas expansion. Daisuke Ishii, representative of Chiara, a company that develops and sells chatbots for simultaneous interpretation, shared, “By being able to input trends in Asian countries, we were able to analyze the attributes of potential customers in the Southeast Asian market. Mr. Goshin Ishida of APB, a company engaged in the development and production of all-resin batteries, shared, “I was able to experience firsthand the German company’s passion for renewable energy and gain a new perspective on the Japanese market.
INBOUND PROGMRAM Achievement briefing session
X-HUB TOKYO’s INBOUND PROGMRAM created mentoring and matching opportunities with Japanese companies for overseas startups aiming to enter the Japanese market in three areas: FinTech, Mobility, and LifeSciece. We also focused on building networks among global entrepreneurs and brushing up pitches by startup support experts. We were able to receive a total of 81 matching requests at the pitch session.
The program also included a lecture on laws and regulations and the market needed to expand into Tokyo. Mr. Enrico Di Oto, CEO of OaCP IE LTD, a medical service provider in Ireland, said, “In addition to building a broad network, learning about laws and regulations in detail was a big gain for us. We are now looking at providing services for cancer patients in Japan,” he said.
Through the matching opportunities created by X-HUB TOKYO, some startups are actually in talks to expand their business in Japan. Mr. Bernard Lee, Founder and CEO of HedgesSPA, a Singapore-based investment analysis platform, shared, “Based on the practical feedback we have received from advisors and Japanese users, we are making concrete progress in establishing a company in Japan. Patricia La Torre, Head of Strategic Partnerships at Humanizing Autonomy Ltd, a UK-based AI platform, said, “Through the program, we have been able to learn about the characteristics of the Japanese market and best practices, and we are currently working with new customers. Patricia La Torre, Head of Strategic Partnership at Humanizing Autonomy Ltd, a UK-based AI platform provider, reflected on the program’s achievements, saying, “Through the program, we learned about the characteristics and best practices of the Japanese market, and are now in discussions with new customers.