On July 16th, X-HUB TOKYO, a platform which supports overseas expansion of Tokyo-based startups, held the FY2024 X-HUB TOKYO #3 Overseas Expansion Seminar titled “Entering into New York and Silicon Valley ～Comparing the Two Major Markets in the U.S.～.” The seminar included an overview of X-HUB TOKYO and highlighted the characteristics and attractions of the US market, focusing on New York and Silicon Valley.

During the first half of the event, Mr. Tetsuo Oyama, CEO of Skylight America Inc., a Japanese-affiliated consulting firm, shared firsthand insights into the American market, focusing on New York and Silicon Valley, including current trends and the latest developments, giving us a sense of the local atmosphere.

In the latter of half of the seminar, two panelists: Mr. Kota Kubo, Co-founder/CEO of Ubie Inc., and Mr. Osamu Iizuka, CEO of Medmain Inc., joined. Under the facilitation of Mr. Oyama, CEO of Skylight America Inc., they discussed how to develop strategies for expanding into New York and Silicon Valley, as well as how to utilize support programs.

Introduction to the New York and Silicon Valley ecosystems

Skylight America Inc.
Mr. Tetsuo Oyama

First, we would like to ask Mr. Tetsuo Oyama, who supports startups’ business expansion at Skylight America Inc., about the differences between the U.S. and Japan’s economy and startup ecosystem.

I have been expanding our business in the U.S. since 2017, and have felt firsthand that the momentum of economic growth is significantly different between Japan and the U.S.
For example, if we look at the nominal GDP growth rankings over the 30 years from 1991 to 2019, Japan is unfortunately at the bottom of the world.
Also, a point of concern is that Japanese executives are not represented in the leadership of global companies.
It can be said that Japan is reaching a critical point where it must seriously consider how to compete on the global stage in the future.
In contrast, looking at the U.S., the Magnificent 7-companies like GAFA and Tesla that represent the technology industry are all born in the U.S., especially on the West Coast.
Additionally, the GDP of California is almost the same as that of Japan as a whole.
Furthermore, the total market capitalization of publicly traded companies in Silicon Valley exceeds that of all company in Japan combined, so you can feel the momentum of California and Silicon Valley.

When Japanese startups consider expanding into the U.S., what are the key points to review in advance?

There are roughly 3 points. The first point is that it is very important to determine the area in which you are going to do business in the U.S.
Due to the vastness of the U.S., different areas have their own industry clusters, so the choice of location can be vary depending on the business. Compared to Tokyo concentration Japan, it’s important to keep in mind that each region in the U.S. has its own distinct characteristics and focus.
For example, while Silicon Valley is home to IT and AI companies and Startups, the East Coast region, including New York, has strengths in finance, fintech, biotech, and healthcare.
Also, in New York City, especially in Manhattan, whereas in California, the population and industries are dispersed throughout the state. With these characteristics in mind, you should consider the following three aspects when deciding on a location; 1. Where to officially register the company; 2. where to place the headquarter; 3. Where to conduct operations.
The second point is about human resources. Acquiring human resources is extremely important for startups to develop competitive services and advance research and development. Depending on the location of your base, the basic talent pool accessible will vary significantly. For example, Stanford University and the University of California, Berkeley are located on the West Coast, and the Massachusetts Institute of Technology and Harvard University are located on the East Coast.
The third point is about funding. As California stands out globally and in the U.S. for its high funding amounts and concentration of VCs and investors, I highly recommend it for raising capital.

Finally, please provide a message for startups looking to expand into the U.S.

In expanding into the U.S., funding, energy and passion, and visas are three important keys.
Also, I personally feel that the West Coast of the U.S. has a culture of “keep destroying existing giant players in the industry,” whereas the East Coast tends to value tradition and conventions. Understanding the business culture specific to each region like these is also important for expanding your business.
Considering the recent economic conditions, including exchange rates, it seems that the barriers for Japanese companies expanding into the U.S. and overseas are becoming higher year by year. Furthermore, with the recent shift towards protectionism in the U.S., it is undeniable that Japanese companies and startups may face some impact.
However, from the perspectives of legal systems, corporate stability, and funding opportunities, the U.S. offers a highly advantageous business environment. I hope you will give it a try in the unique market of America!

Panel discussion – Key Features and Differences of New York and Silicon Valley

（Top Left）Mr. Osamu Iizuka, CEO of Medmain Inc.
（Top Right）Mr. Tetsuo Oyama, CEO of Skylight America Inc.
（Bottom）Mr. Kota Kubo, Co-founder/CEO of Ubie Inc.

In the latter half of the event, we will invite Mr. Osamu Iizuka, CEO of Medmain Inc., and Mr. Kota Kubo, Co-founder/CEO of Ubie Inc. as panelists for a discussion.
The panel will be moderated by Mr. Tetsuo Oyama, CEO of Skylight America Inc.
To start, could you to introduce yourselves and your business in the U.S., and the characteristics of New York and Silicon Valley?

Mr. Kubo: Hello, everyone. We, Ubie, are a health tech startup founded in 2017 with the mission of “using technology to guide people to the right health care.”
We use AI as our core technology to provide services for healthcare providers, consumers, and pharmaceutical companies. In 2022, we established a local subsidiary in New York, and thanks to many supports, our services now have 2 million users in the U.S.
We decided to develop our business in the medical field with the desire to become a company that can compete in the world since our foundation.
In the U.S., particularly on the East Coast, including New York, many pharmaceutical companies have their promotion divisions. We chose this location to be closer to them and accelerate our business development.

Mr. Iizuka: Nice to meet you, I’m Iizuka. We are a medical AI startup founded in 2018.
As a partner for medical professionals around the world, we develop and operate PidPort, an analysis system for pathological image diagnosis using deep learning/AI. Since our founding, we have also aimed to solve global problems, and are expanding our business in Silicon Valley, as well as in India, Vietnam, and the Middle East.
In order to become a global startup from Japan, we are currently building achievements in Silicon Valley and plan to expand horizontally in the U.S.

Beyond being attracted by the size of the market, we expanded into the U.S. because we were drawn to Silicon Valley as a major hub and center for startups.
I currently spend about a third of the year in Silicon Valley, and I find that the local ecosystem is very attractive, including its talent and funding. Regarding talent, while there are exceptionally skilled individuals, there are also many entrepreneurs who engage in “foolish” activities, which is exciting.

If you have encountered any challenges while expanding your business in the U.S. and any lessons learned from them, please share.

Mr. Kubo: In my case, it took much longer than I expected to get a visa, and it was quite challenging. Also, I originally planned to handle U.S. sales from Japan, but it turned out that the time difference between the two countries were making communication difficult, so I decided to hire locally. As a result, we have made significant progress in business development.

Mr. Iizuka: Even for services that are already deployed in other countries or regions, I believe that business methods and strategies should be changed to suit the culture and business practices of the countries where we operate.
For example, in the U.S., we’ve observed a new demand for not only providing systems for healthcare institutions but also providing a set of diagnoses for doctors.

Finally, what advice would you give to startups looking to expand into the U.S.?

Mr. Kubo: We considered various angles before entering the market, but when we arrived in New York, we found that our competitors had not yet stood out, and we regretted that we should have entered the market earlier. We feel that we should have jumped in without being too timid. You can make it if your managed to survive the first year, so let’s all work hard together from now on with the mindset that “the day you think of it is the day it will happen!”.

Mr. Iizuka: We participated in X-HUB TOKYO and local accelerator programs in the U.S. to refine our business before making a full-scale entry into the U.S. market. Since it would be difficult to jump into a foreign country by yourself and form a network from scratch, I recommend that you first deepen your understanding of the market by utilizing these programs. Also, there are many things that can only be seen by actually putting yourself in the local field. Fortunately, Silicon Valley is an environment where you can concentrate on business without much entertainment. I encourage everyone to boldly take on this challenge!

Thank you very much!

At this seminar, we introduced the characteristics of the U.S. market and the attractions of the startup ecosystem, focusing on New York and Silicon Valley. 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.