On July 12th, X-HUB TOKYO, a platform which supports overseas expansion of Tokyo-based startups, held the FY2024 X-HUB TOKYO #2 Overseas Expansion Seminar titled “Challenging Europe Today ~Trends and Strategic Approaches to the UK and European Markets~”. The seminar included an overview of X-HUB TOKYO and highlighted the characteristics and attractions of the UK and European markets.

During the first half of the seminar, Mr. Naoki Kamimaeda, London Office Representative and European Division Head of Global Brain Co., Ltd. presented the market overview and the latest trends in the UK and Europe.
In the latter half of the seminar, two panelists: Mr. Yuhei Urabe, Global Business Development Manager of Tenchijin inc., and Ms. Mao Parr, CEO/Founder of datagusto,inc., joined. Under the facilitation of Mr. Kamimaeda, they discussed how to draw up the strategy for expansion into the UK and Europe based on their real-life experiences.

Overview of the Startup Ecosystem in the UK and Europe

Mr. Naoki Kamimaeda, London Office Representative and Europe Division Head of Global Brain Corporation

We would like to start by asking Mr. Naoki Kamimaeda, representative of the London office of Global Brain, the first Japanese VC to establish an office in Europe in 2019, about an overview of the UK and European markets.

According to a report published in 2024 by Startup Genome, a U.S. research firm, many European cities, including London, Amsterdam, Paris, and Berlin, were ranked in the top 20 startup ecosystems by city in the world. These cities have formed some of the world’s leading startup hubs, with London in particular gaining further recognition in recent years as a startup hub on par with Silicon Valley and New York in the United States.
A key feature of the startup ecosystem since 2023 and beyond is the rapid acceleration of investment in the manufacturing sector within Europe due to geopolitical influences. By city, investment has been increasing in cities with strong manufacturing industries, such as Frankfurt and Stuttgart in Germany.

What are the latest trends in the startup scene in the UK and Europe?

I would like to make three main points. The first point is that many startups related to generative AI have been established and investment is concentrated mainly in the UK, Germany, Israel, and France. Many of these startups are founded by GAFA graduates or CEOs who have experience in cutting-edge research on AI at UK universities.
Second, in light of the recent political situation, there has been active discussion on “defense tech,” namely, solutions and services to solve defense issues using digital technologies such as cloud computing and AI. Many startups are developing their businesses with a “dual-use only ” policy (technology that can be used for both commercial and military applications), drawing attention to the moral aspect.
The third point is that Greece is undergoing a turnaround, or in other words, a turnaround and management reform as a country, and since 2021 it has grown into an ecosystem that is attracting global attention because of the quality of engineers, living environment, and price and wage levels. When considering expansion into the UK or Europe, I think it would be a good idea to take these trends into account when selecting and preparing for expansion.

Finally, what advice would you give to startups looking to expand into the UK or Europe?

In Europe, laws including corporate laws differ greatly from country to country, so research as far in advance as possible will improve the resolution of the business or services. For market research, it is also useful to gather information at startup events held in Europe, such as LONDON TECH WEEK and VIVA TECHNOLOGY. Japanese government and private institutions also provide diverse support. On the other hand, it should be noted that foreign government agencies are not always proactive in supporting Japanese companies and Japanese startups to enter the local market.

Panel Discussion: Strategy and tips for startups aiming to enter the UK and European markets

(Top left) Mr. Naoki Kamimaeda, London Office Representative and Europe Division Head, Global Brain Co., Ltd. (Top right) Mr. Yuhei Urabe, Global Business Development Manager, Tenchijin Inc. (Bottom) Ms. Mao Parr, CEO/Founder, datagusto,inc.

In the latter half of this seminar, we will have a panel discussion. The panelists include Mr. Yuhei Urabe, Global Business Development Manager of Tenchijin Co., Ltd., and Ms. Mao Parr, CEO/Founder of datagusto,inc. Mr. Naoki Kamimaeda, London Office Representative and Europe Division Head, Global Brain Co., Ltd., will be facilitating from here. To start, could you introduce yourselves and tell us about your business in the UK or Europe?

Mr. Urabe: We, Tenchijin, are a startup founded in 2019 that develops new businesses and satellite hardware using space satellite data. In recent years, the business of managing the risk of water pipe leaks with using space big data has been growing, and we are developing services to solve the social issue of aging water infrastructure.

As for the progress of overseas expansion, we are headquartered in Tokyo while our members residing abroad are mainly engaged in sales to Europe and Asia. I am stationed in France, and some of our members are in Australia and Guam, making a total of about 70 people in our business. We are able to develop and design our services in accordance with the culture and business customs of each region by communicating the local needs, that the sales team has identified in local interviews, to the development team in Japan.

Ms. Parr: We, datagusto, are in the field of generative AI and develop SaaS type analytical tools for developers. Founded in 2020, we provide services from planning to development and consulting for AI products and data-related products. We have gone through several pivots to develop our current tools.

As for the progress of our overseas development, we are proceeding with business development in the UK and the US. In the course of our business in the UK, I find it very attractive that it is relatively easy to meet and talk with managers and corporate decision makers from around the world including the US and Europe.

Why did you decide to expand into the UK and Europe when the company was just starting out?

Ms. Parr: The main reason we decided to go to the UK was the abundance of AI talent. The world’s leading universities, such as Oxford and Cambridge, are concentrated in there, and there are many “top of the top” AI professionals in the country. In addition, labor costs can be reduced compared to places like San Francisco in the United States. Another attraction was the strong political ties between Japan and the UK. Also, I feel that high level of public safety is a value that is hard replace for money.

Mr. Urabe: Japan is said to be a “country with advanced challenges” in various fields. We chose Europe, especially France and Germany, as the destination for our water infrastructure solutions because they have similar problems with aging infrastructure. When we actually entered the market, however, we realized that it would take a long time to provide services to local governments, which we had somewhat expected. We are steadily building a relationship of trust and moving forward with our business step by step, while showing our past achievements and the global awards we have won.

Finally, do you have a message for startups that are looking to expand into the UK or Europe?

Ms. Parr: Some people may think that when it comes to overseas expansion, they need to plan as much in advance as possible, but the reality is that there are many things that you cannot know until you are in the country. Therefore, I recommend that you make a rough plan first, and then be flexible according to the situation and revise the plan accordingly. Also, in any case, to meet a good business partner, it is important to go to bat. Nothing starts without taking the first step. I would like to encourage everyone to relax and move forward with an easy going spirit.

Mr. Urabe: I agree exactly with Ms. Parr. I think the only thing you can prepare in advance is to ask yourself if you really want to work abroad. In overseas business, you need to be enthusiastic. Make sure you are prepared to keep going even if it is hard. As long as you are, by repeating the process of “move and think”, the path will open up little by little. Let us do our best to aim for the world together!

At this seminar, we introduced the characteristics of markets and the attractions of the startup ecosystem in the UK and Europe. Moving forward, X-HUB TOKYO will continue to provide the latest information on the characteristics and attractions of overseas startup ecosystems, as well as strategic approaches for expanding abroad.