X-HUB TOKYO, which supports the overseas expansion of startups in Tokyo, held its 2024X-HUB TOKYO Kickoff Event “Changes in the Japanese Startups Environment and Future Prospects” on June 20th.

This event provided valuable insights for Tokyo startups aiming to expand internationally, covering an overview of business operations, the evolving landscape surrounding Japanese startups, and the importance of considering global business expansion since inception.

During the first half of the event, Takaaki Umada, Director of FoundX at the University of Tokyo, delivered a keynote speech on “The Future of Japan’s Startup Ecosystem.” He gave a speech on the changes in the Japanese startup environment and emphasized the significance of planning for international expansion from the early stages, supported by various data and examples.

In the latter half of the event, we had a panel discussion on “The Reasons for competing with a Global Perspective.” The panel featured Mr.Satoshi Konagai, Executive Officer, COO, and Head of Sales at Elephantech Inc., who is advancing the development of printed electronics manufacturing technology aimed at reducing environmental impact; Mr.Fumitaka Osumi, COO and CFO of Mathmaji Co., Ltd., which is launching a global math learning app incorporating Japanese-style math education in the United States; and Mr.Yu Sunada, CFO of Spider Labs Inc., the developer of the anti-ad fraud tool SpiderAF.

Following this, a networking session was held at the event venue. The session saw enthusiastic participation not only from startup executives interested in expanding overseas and participants in the business planning stage before launching their ventures, but also from supporters and institutions that assist startups.

The future of Japan’s startup ecosystem

Mr. Takaaki Umada, Director of FoundX at the University of Tokyo

To begin, we will hear from Mr.Takaaki Umada, Director of FoundX at the University of Tokyo, about the changes in the environment surrounding Japan’s startup ecosystem.

The environment surrounding Japanese startups has changed significantly over the past decade. To look at the specific numbers, the investment amount in startups, which was about 90 billion yen in 2013, increased tenfold to 966.4 billion yen by 2022.
Additionally, the total amount and number of established funds have approximately tripled over the past ten years. This can be seen as a manifestation of the growing expectation that the next wave of industries will emerge from this sector.
On the other hand, it is important to note that alongside these heightened expectations, there is a growing demand for increased growth rates and scale of startups. Generally, the minimum return targeted by VCs over ten years is said to be three to four times the fund size. Considering that approximately 600 billion yen funds are being established annually, this translates to a required return of 1.8 trillion yen per year across the Japanese VC industry in ten years.
Of course, the ultimate target scale varies significantly by VC. However, regarding the entire eco system in Japan, the current significant shift seems to be the expectation to produce “decacorns” with a company value of over 10 billion dollars, rather than just “unicorns” valued at over 1 billion dollars.

Amid these significant environmental changes, what key points should Japanese startups consider in advance?

While the initial steps may not differ significantly from the past, it seems like there’s more to consider for startups, such as clearly defining “6W1H” from the early stages: which market, what kind of business, with what team, for whom, why, when, and how. Additionally, it is crucial to target larger markets and develop more substantial strategies than before.
As previously mentioned, startups aiming to become decacorns, with a company value of over 10 billion dollars, are currently developing their business around four key areas or keywords.
The first area is global expansion; the second is “uncharted territories for humanity,” such as space and energy; the third is “national issues,” such as cybersecurity; and the last is the “physical world,” including hardware development. For example, it is anticipated that Japan’s labor force will significantly decline in the future, which simultaneously implies a shrinking national market size in various industries. Therefore, to expand business expanding globally finally is now essential. Additionally, I encourage you to consider how to leverage Japan’s strengths to address global challenges, such as climate change.

Finally, please share a message for Japanese startups that are beginning to venture overseas.

To become a significant startup, you must tackle largen challenges. To become a global startup, you must address global problems such as climate change. From the early stages of starting business, it is essential to have long-term planning and develop strategies for solving big problems in a back casting manner to raise substantial funds. At the same time, accumulating small, consistent actions is equally important. Solving the immediate problems of your customers will pave the way for services and businesses that can save Japan and the world.
I encourage you to approach your business areas with the mindset of “taking on the change of the industry.” Develop your strategies on a grand scale. Together, let’s envision big ideas and think about the methodologies to achieve them. Let’s create the companies and industries that will support Japan’s future and provide what the world needs.

Panel Discussion：The Reasons for Competing with a Global Perspective

Next, in the latter half of the event, we will have a panel discussion. The facilitator is Mr. Takaaki Umada from FoundX at the University of Tokyo. Thepanelists are Mr.Satoshi Konagai, Executive Officer, COO, and Head of Sales at Elephantech Inc.; Mr.Fumitaka Osumi, Director, COO, and CFO of Mathmaji Co., Ltd..; and Mr.Yu Sunada, CFO of Spider Labs Inc. To start, please introduce yourselves and share the progress of your overseas expansion.

Konagai: Nice to meet you. At Elephantech, we are engaged in the development of printed circuit boards for heavy circuits that contribute to reducing environmental impact. Since our founding in 2014, we focused on capturing the Japanese market, but we noticed stronger demand from overseas compared to Japan. Therefore, we began full-scale overseas expansion in the summer of 2022. In particular, we have seen a growing interest in our products in Europe due to the continuous introduction of environmental policies. We have also expanded into North America, and being able to communicate with locals in English is a positive factor for business development. Additionally, in Europe, entrusting sales to local representatives has gradually started to bring our business on track.

Osumi: Our company, Mathmaji, offers a global math learning app incorporating Japanese-style math education in the United States. The main reasons for choosing the U.S. as our expansion destination include the market size, the magnitude of the challenges, and the advantages of the founding members’ backgrounds. The U.S. has significant variations depending on the state and area. Therefore, we are currently offering our service in specific areas within Texas. Our strategy is to make remarkable achievements in a niche area first and then gradually expand our coverage. Furthermore, having very reliable collaborators on the ground for content creation has greatly assisted our business expansion.

Sunada: I am Sunada from Spider Labs. We develop and sell “Spider AF,” a tool that prevents fraud and waste in digital advertising and reduces risks. Founded in 2011, we now have branches in Portugal and the United States. From the inception of our company, we have had foreign employees, and currently, about 40% of our team is composed of international members. This background led us to envision overseas expansion from the start. In the process of expanding globally, we have realized that while the digital advertising platforms we work with are “universal,” localization, including sales approaches, is crucial. As a result, our CEO has relocated to Lisbon, Portugal, where one of our subsidiaries is located, to gain local insights and drive our business forward.

Based on your experiences so far, please share a message for startups aiming to expand overseas.

Konagai: Although we are still in the midst of our own challenges, I feel that when aiming for overseas expansion, it is important to enhance the resolution of market analysis and prioritize customers. Once this is achieved, you will be able to receive support from various people and organizations as you push your business forward. I support everyone’s efforts!

Osumi: While we are still a small company, we think about what society should look like in 2045 and determine the mountains we want to climb by then. By setting these goals and benchmarks, it becomes clearer why we should focus on certain segments now, and it helps speed up the business development process.

Sunada: We are still far from calling ourselves a true “global company,” so I hope to exchange best practices in forums like this and continue learning from each other as we grow our businesses. Let’s work together to boost Japan!

In this event, we invited startups and seasoned entrepreneurs who are expanding overseas to share their experiences and provide valuable information for Tokyo-based startups aiming for global expansion. X-HUB TOKYO will continue to disseminate information on the characteristics of overseas ecosystems and markets, as well as key points for expanding abroad, through various events.