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Entrepreneurs who studied in U.S. building Japan’s startup ecosystem, uniting amid COVID-19 pandemic

  • April 17, 2020
  • , NIKKEI Business Daily , Lead, 16
  • JMH Translation

By Eisaku Nitta


Japanese “students” who studied in the U.S. and got firsthand exposure to the country’s startup culture are taking the lead in fostering Japan’s entrepreneurship. They acquired management knowhow at prestigious schools not only on the U.S.’ West Coast, where Silicon Valley is located, but also on the East Coast as well as the Midwest, and are honing their skills through friendly rivalry. Some are building an “ecosystem” together with people who studied in the U.S. and creating opportunities to grow their businesses by inviting former classmates, who they developed respect for during their studies at American schools, to management positions and introducing prospective investors to each other.


“Is the COVID-19 pandemic causing any impact on your sourcing of venture capital? And how about investment banks?” On the evening of April 9, Money Forward CEO Yosuke Tsuji was talking through his PC at home with a can of beer in his hand. Discussions lasted about an hour and half and the talk included such topics as the impact of the COVID-19 on the Japanese and the U.S. startup communities and latest developments.


Tsuji was in an “urgent online drinking session” convened by young graduates of the Wharton School of the University of Pennsylvania to discuss responses to the COVID-19 outbreak. Besides Tsuji, about ten chief finance officers of several startups, venture capital partners, and people from investment banks chatted online and exchanged information.


Wharton graduates have a strong presence in the Japanese startup community. In the past, students who studied at Wharton were elites sent by banks, such as foreign-affiliated financial banks and big-name corporations, and once they finished their studies, they returned to their old nests. But of late Wharton graduates are opting to start their own businesses upon the completion of their studies.


Money Forward is one such example. It was co-founded by Tsuji and Toshio Taki, an executive officer at the firm. They met in 2011 when Tsuji was studying at Wharton and Taki was at Stanford University.


Taki, who hailed from Nomura Securities, got acquainted with Tsuji through one of his colleagues who was studying at Wharton. Through a number of conversations via Skype, they established a rapport. In less than a year after they graduated, they set up the firm.


Around the time when Money Forward was set up, Fintech was beginning to attract attention as a promising field in the U.S. Akira Kurabayashi, managing director of DNX Ventures, which specializes in startups, was attracted by Tsuji’s passion and became one of the first investors in Money Forward.


According to KPMG, Japan’s venture capital investments jumped 50-fold to about 190 billion yen in 2019 compared with 2006. Though the Japanese market is about several tenths of the U.S. market, a range of startups are being set up in Japan and an “ecosystem” of venture capitalists and lawyers and other stakeholders who support those startups  is beginning to take shape. Kurabayashi explains: “Former bankers are striking out on their own after they studied in the U.S. and got exposed to real entrepreneurship culture there.”


Daisuke Asahara, who hailed from Goldman Sachs and studied at Wharton, is one of those entrepreneurs. He joined HEROZ, which develops artificial intelligence, as chief financial officer and supported the firm’s initial public offering in 2018. He said he joined HEROZ as he “became interested in startups by listening to how my American classmates who are entrepreneurs set up their businesses.”


Stanford University, which is located at the heart of Silicon Valley, is also spawning a number of Japanese entrepreneurs. Oh My Glasses CEO Tadayasu Kiyokawa came up with the idea for his business when he was attending a lecture there given by then-Google Chairman Eric Schmidt at school. His classmates, graduates of 2011, included such talented individuals as Taki of Money Forward and Seigo Hara, representative of MICIN, a medical IT firm. 


Telexistence CEO Jin Tomioka embarked on a robotic development business as demand for consumer services was beginning to slow down and research and development was emerging as a promising field. Sensing firsthand the trend of Silicon Valley helped him make the right decision.


Atsushi Nakanishi, who studied at the University of California Berkeley, hit on a business idea when he was working as a summer intern. He said that he had consulted with senior venture capitalists on more than 20 business models and that the idea of developing a device that uses ultrasound technology to predict the timing of urination was received well.


Mutual aid is another aspect of business culture that is unique to U.S. entrepreneurship. “On the U.S. West Coast, they speak of ‘FrienDA’,” said Metcela Co-CEO Kenichi Nogami. It is a portmanteau of “friend” and “NDA (nondisclosure agreement)” and refers to the relationship entrepreneurs build between them for sharing their expertise as well as  problems they can’t openly discuss with outsiders.


In fact, entrepreneurs who hailed from the University of California Los Angeles are using Messenger to share problems they face in running their businesses and keep themselves updated on things such as when to start telecommuting and subsidy programs. They also discuss funding, organization-building and issues that are unique to management.


These Japanese entrepreneurs have been through both the joy and pain of studying, starting businesses, and growing them together. They now face the new challenge of grappling with the impact of COVID-19.


“As we are in a better position to know the U.S., we are better equipped to respond,” said Money Forward CEO Tsuji, adding that experiences he gained through his studies in the U.S. should become of great use in overcoming the present challenge. Koichiro Okamoto, a UCLA graduate and founder of Yayoi, a developer of cloud-based accounting software, is offering support to cash-short fledgling entrepreneurs by saying, “I can get you investors when needed.” As the world is taking a hit from the COVID-19 pandemic, the startup ecosystem built by Japanese entrepreneurs who studied in the U.S. is being tested for its ability to overcome the pandemic challenge.


MBA graduates honing business skills each other


MBA graduates particularly stand out among the Japanese entrepreneurs. Many of them used to opt for joining investment banks or consulting firms after graduation, but the career path to entrepreneurship is growing increasingly popular with them of late.


Mobilus CEO Tomohiro Ishii, who runs an AI-chat business, pointed to “changes in education programs after the 2008 global financial crisis” as one reason. He added that after financial institutions’ moral hazard drew much criticism, MBA courses shifted focus to fostering entrepreneurs capable of running businesses with an emphasis on social significance.


Many ventured into business after focusing on entrepreneurship in MBA programs. Spacely CEO Hirokazu Morita and Border CEO Tomonori Hosoya, for example, set up a cloud-based virtual reality service and an online business trip service, respectively, from ideas that they had incubated while taking MBA courses. “In the class, I got feedback from brilliant classmates which helped me improve my business models,” said Mitsucari CEO Takanori Omote, who advocated the benefit of taking MBA courses.


Pursuing an MBA is estimated to cost more than 10 million yen. The financial burden is not at all light. MeetsMore CEO Ayako Ishikawa, who provides an online service to look for photographers, noted that “many MBA students consider the option of starting their own business to recoup the money they invested to study.”


MBA courses are also rich in diversity. MICIN CEO Hara said that he was inspired by his classmates with various backgrounds. “Some of my classmates have lived in refugee camps, and as I am luckily living a good life, I thought I must strike out on my own.” Microwave Chemical CEO Iwao Yoshino also noted that “exposure to various perspectives helped me create a flat organization.”


Cutting-edge technology learned at school also helps grow business ideas. Zaisan Net CEO Shirabe Ogino, who provides financial services, studied at Harvard during the “second AI boom” period in the late 1990s. “I was able to study AI at its inception stage, and that is helping my firm do financial analysis,” he said.


CureApp CEO Kohta Satake, who is also a medical doctor, pays attention to digital cure, which is beginning to catch on in the U.S. He says that the service “can help complement shortcomings of face-to-face diagnosis” and he is accelerating efforts to bring into service a smoking cessation app.


Takuro Miyazaki, who studied public health at the University of Michigan, set up in 2018 GCare with three classmates to provide support for patients with enteric illness. Mobilus CEO Ishii recruited Kenji Kato, a Wharton classmate, as chief financial officer. Hacobu CEO Taro Sasaki successively recruited Masaru Sakata as chief operating officer. [Sasaki and Sakata are UCLA graduates.]


How will these entrepreneurs change Japan’s startup ecosystem? Ulrike Schaede, a professor at the University of California San Diego who specializes in Japanese corporate strategy, stressed that “the biggest difference between Japanese and U.S entrepreneurs is the degree of confidence.” As Uber inspired the creation of Airbnb, one startup is spurring the creation of another startup in the U.S.


Japanese entrepreneurs who had studied in the U.S. and learned how to set up a business firsthand can act as catalysts to promote Japan’s entrepreneurship. Though cutthroat competition is common in Silicon Valley (Professor Schaede), they can build an ecosystem that accommodates both competition and coexistence to help the spirit of entrepreneurship take root in Japan.

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