X-HUB TOKYO, which supports the overseas expansion of startups in Tokyo, held its 4th overseas expansion seminar on October 22, 2022, titled “Cutting-edge eye from Silicon Valley”.
The event included presentations from Mr. Kenji Kushida, Research Scholar of Japan Studies Program and International Research Fellow of Canon Institute for Global Studies, as well as Mr. Yosuke Okada, CEO of ABEJA Inc, Ayumi Ode, Director of Japan and Roland Osborne, Principal at 500 Global, on the characteristics of the Silicon Valley ecosystem and what to look for when entering the market.
They also provided tips for Japanese companies and startups in developing their business strategy to expand into Silicon Valley.
The Essence of the Silicon Valley Ecosystem
Research Scholar, Japan Studies Program, Institute of Asia-Pacific Studies, Stanford University
Kenji E. Kushida
- To begin, we invite Mr. Kushida, Research Scholar in the Japan Program at Stanford University, to provide a general overview of Silicon Valley’s ecosystem.
Silicon Valley is not a formal city or county name, and it encompasses much of the San Francisco Bay Area. It is one of the world’s leading centers of innovation and has been home to technology companies such as Intel, Apple, Google, Twitter, Airbnb, Uber Technologies and Tesla.
COVID-19 has wreaked havoc across the US, including in Silicon Valley. However, Silicon Valley has also proven to be a strong business environment, with a extremely large initial public offerings (IPOs) despite the global pandemic. In 2020, California was the overwhelming leader in the US with 313 billion dollars in assets under management of VC funds.
However, partly due to the rising costs of living in Silicon Valley, an outflow of companies to other parts of the country, such as Austin, Texas is becoming a trend. However, my view, supported by some evidence, is that Silicon Valley continues to attact startups, companies and people to access world-class VCs and top talent.
- Silicon Valley has been the birthplace of many technologies and new services. What are the characteristics and strengths of the ecosystem in this area?
There are four key elements to the Silicon Valley ecosystem: top VCs, high mobility of talent, industry-university-government collaborations, and symbiosis between startups and large companies. These elements have complemented each other to achieve growth, attracting the best talent and VCs from around the world to Silicon Valley, which in turn has led to a concentration of high quality companies and startups. This “virtuous spiral” is one of Silicon Valley’s greatest strengths.
Of course, Silicon Valley is highly competitive if you are trying to succeed. However, if you can meet and attract the right people, you can create a world-class business, and it is definitely an environment where you will grow. You’ll also get to see new technologies and products being developed on a daily basis, which is a one-of-a-kind excitement only available in Silicon Valley.
Important aspects regarding the mindset of an entrepreneur who wants to expand to Silicon Valley is to have a strong will to succeed and to have the right people to help you achieve that goal. If you start creating a service or product based solely on your own ideas, you may end up with something that does not meet the needs of society. This is why you need to be willing to listen to what users have to say, to dig deep into the issues, and to to continually test new hypotheses.
If you are easily discouraged by one or two failures, I would not recommend entering Silicon Valley. However, if you have grit and are prepared to take on the challenge, the possibilities are endless. By thinking deeply about why you want to condutct business in Silicon Valley and approach the process with determination, I’m sure you will have a bright future.
Keys to a Successful Startup in Silicon Valley
ABEJA Inc. Founder, CEO
- Next, we would like to invite Mr. Yosuke Okada, CEO of ABEJA Inc., to speak to us about his reason for entering the US market and the overview of ABEJA.
ABEJA, following our vision to “implement a rich world,” have been developing services integrating innovating technologies including image analysis and natural language processing based on deep learning and advanced machine learning. Since our founding in 2012, ABEJA has supported more than 200 companies achieve digital transformation with investments from companies such as Google.
Our focus is on enabling innovation through technology and making an impactful contribution to society. Although new technologies are emerging around the world, including Japan, in the field of software and technology, it is not easy to transform these technologies into a usable form for society. That is why we are working to bridge the gap between technology and society.
From the very beginning, ABEJA has had a strong will to expand our business globally, and we now have offices abroad, including California.
Unfortunately, there aren’t any Japanese startups in the software business that have a global impact. We want to be one of the first to compete on the world stage, and that’s why we have continued to expand our business to this day.
- What do you feel are the characteristics of Silicon Valley and what advice would you give to Japanese startups looking to expand their business there?
There is a coldness to the Silicon Valley ecosystem, where if you give up too soon, you will never be taken seriously again. At the same time, however, because it is a very open environment, once someone is interested, it is easy to continue the relationship.
In order to get people interested in your business, the key lies in how well you communicate the intrinsic value of your company, service and product. If it is difficult to convey this value verbally, try to do so visually, using diagrams and text.
When we started our business in the United States, it was important for us to understand why we wanted to do business overseas along with identifying the needs of the market. It is very difficult to consider expanding without local information and connections, so consulting with a Japanese organization such as JETRO first should provide you with information to determing your next move.
Insight for Foreign Startup Success in Sillicon Valley
500 Global Director of Japan
- Finally, we invite Mr. Ode, Director of Japan at 500 Global, to tell us about their business.
500 Global is a venture capital firm that invests primarily in early-stage technology companies. By investing closely in the technology and innovation markets, we have been able to drive economic growth while increasing the long-term value of companies.
Since our founding in 2010, we have invested in over 2,500 companies in 77 countries. With nearly half of our portfolio companies outside of the U.S., we have experienced investors and executives in more than 15 countries who are committed to working with the local startup ecosystem while supporting the growth of talented people and companies around the world.
500 Global Principal
- From the perspective of 500 Global’s President, Mr. Roland Osborne, what are the key points that companies looking to enter Silicon Valley should consider?
If you are contemplating entering the Silicon Valley market, we recommend that you consider a business strategy based on three key points. The first is to understand your company’s strengths and areas of expertise. Does your technology have an advantage over your competitors? Does your strategy have a chance of winning? Determine where your strengths lie in comparison to your competitors, then aim towards overseas expansion.
Second, you need to deeply understand the local issues and needs. Although you are able to gather information on the internet nowadays, you will have a better understanding if you talk directly to local accelerators and entrepreneurs. There are many success stories in Silicon Valley, so you should be able to learn from the many aspects surrounding business.
Finally, gain a thorough understanding of the market with the intention of knowing it better than the locals. Determining the market and the timing is of utmost importance when considering overseas expansion.
Silicon Valley, which was severely affected by COVID-19, has recovered quite well. Why do you want to do business abroad, and why do you want to do business in Silicon Valley? If you feel that you have an advantage that can be exploited in Silicon Valley, we definetly encourage you to do so.
- Throughout this event, we introduced the characteristics and attractions of the Silicon Valley ecosystem, as well as important points to consider when considering overseas expansion. X-HUB TOKYO will continue to provide useful information for startups aiming to expand overseas, as well as the latest trends in ecosystem and open innovation through various events.