In January of 2016 Japanese C2C (consumer-to-consumer) marketplace app Mercari announced a 450 million yen (about $4.1M US dollars) investment in Base, the Japanese version of Shopify, effectively shocking it back to life.
Somehow it feels as if the Japanese entrepreneurial ecosystem has been enriched.
On Tuesday Tokyo-based Mercari revealed their project “Mercari Fund” to invest in startups specialized in C2C products/services and marketplaces. It is an “investment project” with Mercari itself making the investments rather than establishing an investment arm or subsidiary. The companies invested in will also be considered for partnerships with Mercari’s services, such as Mercari (marketplace app) and Mercari Atte (a service enabling users to sell/buy stuff on a meeting basis).
Up to now, Mercari has been investing in startups such as Base (Shopify-like instant e-commerce platform), Rentio (rental service of home appliances and camera), Flamingo (language learning service). In February of this year they acquired Zawatt, the Japanese startup which has been operating the Sumaoku flea market app.
Although I confirmed the company’s goals, I feel that the main purpose is to create an economic zone with Mercari at the center, meet the needs of even more users, and carve out a secure place for themselves. One example is Kauru, Mercari’s new service released in May, it takes the established market of books and gives an enriched user experience by providing them with estimated market prices from information gained when they input a barcode.
It is possible to tackle this type of specialized service through their own initiative alone, but if they are looking to expand the economic zone more speedily, investment will be a natural way. I also confirmed this, but we can assume there will be more cases of acquisition, similar to Zawatt. Regarding concrete methods of collaboration, the company is considering further collaborations with Mercari ID and Atte, and has plans to make this information public in the future.
Also, while the individual investment amount will not be disclosed, keeping in mind the considerable investment volume of 450 million yen in Base in January of last year, we can think of it as being in the investment amount range where business synergies are felt and adjust it individually. Unlike an investment fund that keeps external funds here and there, it will be an investment project purely for business synergy.
Translated by Amanda Imasaka
Edited by Masaru Ikeda
See the original story in Japanese. Rakuten Lifull Stay, a Rakuten Group company offering vacation rental services, and Expedia Group’s HomeAway jointly announced their partnership at a press conference in Tokyo on Monday. Rakuten Lifull Stay is a joint venture company (JV) between Rakuten (TSE:4755) and Japanese real estate giant Lifull (TSE:2120) with the aim of doing business under the Japanese Home-Sharing Business Act which will be effective January 2018. Through this new partnership, Rakuten Lifull Stay will procure and supply the properties from “hosts”, while HomeAway will attract visitors to Japan as “guests”. Rakuten Lifull Stay will supply HomeAway with domestic properties to be posted on the company’s up and coming website Vacation Stay (tentative name). HomeAway will utilize the power of their 40 million monthly website visitors to market to visitors of Japan, leading to an expansion of inbound travel demand. See also: Expedia buys HomeAway for $3.9B because Airbnb Rakuten Lifull Stay’s CEO Munekatsu Ota and HomeAway Japan’s Director Natsuko Kimura took the stage at the conference. Ota has previous experience as Rakuten International Travel’s Director and was also a general manager of Rakuten’s New Service Development Company, Sharing Economy Division. Kimura has prior work experience…
Rakuten Lifull Stay, a Rakuten Group company offering vacation rental services, and Expedia Group’s HomeAway jointly announced their partnership at a press conference in Tokyo on Monday. Rakuten Lifull Stay is a joint venture company (JV) between Rakuten (TSE:4755) and Japanese real estate giant Lifull (TSE:2120) with the aim of doing business under the Japanese Home-Sharing Business Act which will be effective January 2018.
Through this new partnership, Rakuten Lifull Stay will procure and supply the properties from “hosts”, while HomeAway will attract visitors to Japan as “guests”. Rakuten Lifull Stay will supply HomeAway with domestic properties to be posted on the company’s up and coming website Vacation Stay (tentative name). HomeAway will utilize the power of their 40 million monthly website visitors to market to visitors of Japan, leading to an expansion of inbound travel demand.
Rakuten Lifull Stay’s CEO Munekatsu Ota and HomeAway Japan’s Director Natsuko Kimura took the stage at the conference. Ota has previous experience as Rakuten International Travel’s Director and was also a general manager of Rakuten’s New Service Development Company, Sharing Economy Division. Kimura has prior work experience as Expedia’s Marketing Director in Japan.
In the US and other countries, HomeAway specializes in renting a whole house, so it is characterized by the fact that the property is concentrated in rural and resort areas, compared to Airbnb and similar players in the same industry. Additionally, while Airbnb meets the needs of many young people traveling alone, with HomeAway the users are often middle-aged families and group travelers. It is unclear whether Rakuten Lifull Stay and HomeAway will take a similar strategy in the Japanese market, as the demand for the renting accommodations of Japan-bound visitors is concentrated in urban areas.
At the press conference, Kimura explained they are focusing on pull marketing efforts (Showing users personalized results based on their search history on the HomeAway website, driving user traffic from Google ads etc.) for urban areas such as Tokyo, Osaka and Kyoto which are in high demand of renting accommodations while they are also developing push marketing efforts that arouse demand for regions with high visibility. HomeAway introduced their promotion content for the Setouchi area facing inland sea in the western part of Japan, which it offers in 9 languages geared at 10 countries, as an example of such efforts.
In the field of vacation rentals, Airbnb is leading in sales and growth rate both in Japan and the rest of the world, and with HomeAway entering as a subsidiary of Expedia, and cooperating with other OTA (online travel agency) sites, they are actively aiming to acquire other companies in the same industry. In Japan, it can be said that this new alliance will be mutually beneficial for HomeAway, which has the urgent task of acquiring properties and hosts since they are entering the field later than their competitors, and Rakuten Lifull Stay, which needs to newly develop inbound demand from overseas.
Meanwhile, Tujia, a major Chinese vacation rental company, acquired the vacation rental service department of OTA companies Ctrip and Qunar last October. In February of this year, it was reported that Tujia will establish a Japanese corporation and enter the Japanese market in anticipation of the enforcement of Japanese Home-Sharing Business Act.
Translated by Amanda Imasaka
Edited by Masaru Ikeda
Yokohama-based Aperza, running the Cluez online catalogue site and the Aperza price comparison site specifically focused on industrial supply products, announced on Monday that it has secured a series A round from Jafco (TSE:8595) and GMO Venture Partners (GMO-VP). The amount of the funding is estimated 600 million yen (about $5.3 million). This funding succeeds the previous one with 150 million yen (about $1.3 million) from GMO-VP conducted back in November and the one with an undisclosed amount from Nobuyuki Idei (former chairman and group CEO of Sony, now CEO of Quantum Leaps), Toru Shimada (former executive vice president of Rakuten) and Fumiaki Koizumi (Director of Mercari) conducted this March due to their assumption of the management consultant. Aperza was founded in December of 2014 by the current CEO Makoto Ishihara (with the original company name of Cluez). In the Cluez portal site, about 1,600 trading companies dealing with industrial supply products had exhibited their catalogues as of last November. The firm revealed the number of exhibitor companies exceeded 3,000 this March and subsequently reached 4,000 this June, and the total number of catalogues is 13,000 now. With this fund, Aperza aims to secure human resources for existing business, as…
Yokohama-based Aperza, running the Cluez online catalogue site and the Aperza price comparison site specifically focused on industrial supply products, announced on Monday that it has secured a series A round from Jafco (TSE:8595) and GMO Venture Partners (GMO-VP). The amount of the funding is estimated 600 million yen (about $5.3 million).
This funding succeeds the previous one with 150 million yen (about $1.3 million) from GMO-VP conducted back in November and the one with an undisclosed amount from Nobuyuki Idei (former chairman and group CEO of Sony, now CEO of Quantum Leaps), Toru Shimada (former executive vice president of Rakuten) and Fumiaki Koizumi (Director of Mercari) conducted this March due to their assumption of the management consultant.
Aperza was founded in December of 2014 by the current CEO Makoto Ishihara (with the original company name of Cluez). In the Cluez portal site, about 1,600 trading companies dealing with industrial supply products had exhibited their catalogues as of last November. The firm revealed the number of exhibitor companies exceeded 3,000 this March and subsequently reached 4,000 this June, and the total number of catalogues is 13,000 now.
With this fund, Aperza aims to secure human resources for existing business, as well as to foray into global service expansion and e-commerce business.
Aperza commented it will make preparation for serious expansion overseas of its service Cluez and Aperza, as the number of accesses to the two services from China or Southeast Asia has been gradually been increasing. The firm launched Cluez of Taiwanese version in August 2015. In addition, it concluded a strategic business alliance with the Chinese biggest portal for manufacturers Gongkong in 2016.
Regarding the view of e-comerce business field, the firm is going to enhance the Aperza price comparison site. Ishihara had once showed us a blueprint wherein he planned to develop Aperza from a price comparison website into a marketplace or an e-commence site capable of selling products directly, and the plan was announced this time in accordance with the blueprint.
Translated by Taijiro Takeda Edited by “Tex” Pomeroy
This is a guest post by Tim Romero. Tim is a Tokyo-based entrepreneur, podcaster and author who has started four companies and led Japan market entry for others since coming to Japan more than 20 years ago. Tim hosts the Disrupting Japan podcast and is deeply involved in Japan’s startup community as an investor, founder and mentor. The Japanese translation of this article is available here. There is a common misunderstanding among Japanese startups that is causing many of the to go out of business just as they should be hitting their rapid growth phase. Correcting this misunderstanding would do more to promote the success of Japanese startups than all of government startup programs and academic accelerators combined. the difference between a relationship based company and a product based company is important, often not obvious at first. All famous consumer brands are product companies, Facebook, Nike, Honda, Apple, Seiko, Google. Customers are attracted to them, because of the product they make. On average customers feel a greater loyalty to those companies than those companies do to their customers. Sure, all of these companies developed a brand that acts as a kind of halo, that lets them charge a premium price…
This is a guest post by Tim Romero. Tim is a Tokyo-based entrepreneur, podcaster and author who has started four companies and led Japan market entry for others since coming to Japan more than 20 years ago. Tim hosts the Disrupting Japan podcast and is deeply involved in Japan’s startup community as an investor, founder and mentor.
The Japanese translation of this article is available here.
There is a common misunderstanding among Japanese startups that is causing many of the to go out of business just as they should be hitting their rapid growth phase. Correcting this misunderstanding would do more to promote the success of Japanese startups than all of government startup programs and academic accelerators combined.
the difference between a relationship based company and a product based company is important, often not obvious at first. All famous consumer brands are product companies, Facebook, Nike, Honda, Apple, Seiko, Google. Customers are attracted to them, because of the product they make. On average customers feel a greater loyalty to those companies than those companies do to their customers.
Sure, all of these companies developed a brand that acts as a kind of halo, that lets them charge a premium price and sell a greater range of products than their competitors. But, in the end, it’s all about the products they make. Product based companies can scale globally. But, just because you make a product, doesn’t mean you’re a product based company.
These relationships were more important back then
In fact, most Japanese companies with products are not actually product based companies at all. They’re relationship companies. This is slowly starting to change, but the cultural importance of relationships has a long history here. When I started my first Japanese company back in 1998, the goal of almost every startup was to become part of a large company supply chain. Having that kind of relationship guaranteed a steady, if low margin, stream of business.
These relationships were more important back then, because although the keiretsu were starting to crumble under their own weight, most companies still preferred to business within their own corporate groups. And, small to medium enterprises had very little independent buying power. In fact, these captive, protected keiretsu micro-markets, is one of the big reasons Japan did not develop a globally competitive software market in the ‘80s and ‘90s.
At the time an independent Japanese company that would sell its products across multiple keiretsu groups, was a rare and powerful beast indeed. For the most part, the way to survive was to build what your client, very often your only client, to build what they told you to build.
Things have improved a lot in the last 20 years, but still a huge number of Japanese startups are really firms that have one major client and no hope of scaling. They have a relationship that guarantees a certain level of orders, but they have no product that can stand on its own in the marketplace.
Don’t get me wrong, although way too much importance is placed on relationships in Japan, it’s great to have those relationships. Knowing the right people can give you a huge head start in getting your first customers and in getting distribution. But, your product has to be more important than any single customer you have or things are going to break down eventually.
Relationship Companies vs. Product Companies
Now, it can be hard to tell if a company is truly a product company or if it’s a relationship company in the early stages. And, nearly all companies with a product will insist that they are product companies. But, a few giveaways are:
If you are still, or if you are planning on doing custom development work after you receive funding, then you’re almost certainly a relationship company.
If your product requires extensive customization and you’re the only company doing that customization, than you’re probably a relationship company.
If your product started out as a project you did for one customer and then you decided to turn it into a mass market product, then you are most likely a relationship company.
If losing your two biggest clients would put you out of business, then you are certainly a relationship company.
There’s nothing intrinsically wrong with relationship companies of course. In fact, in the early stages, relationship companies often see traction sooner and grow faster than product companies. But, relationships don’t scale and growth will eventually be limited by the strength of the CEO’s industry connections. Of course, relationship companies can still make a lot of money. And, powerful, well connected CEOs can even take a relationship company public, but they can never scale to be a global player.
Actually, relationship companies are fine, if you have strong relationships and want to leverage those into a company, do that. More power to you. The real problem is that this relationship thinking is holding back Japan’s startup community.
The tendency to value relationships over products, is probably the single largest obstacle preventing Japan from really developing a pay it forward startup culture. I see it constantly. Far too many people view their connections and their network as something to be jealously guarded, as some kind of competitive advantage. And, people who think along these lines are unlikely to make introductions without trying to extract value from them.
Advice for Japanese startup founders
Of course, there are plenty of Japanese who have, or at least try to, embrace the idea of open networks and paying it forward. But, we’re in the minority. At least, for now. But, we’re going to change that. So, advice number one for Japanese startup founders comes in two parts.
Part A, never pay for an introduction of any kind. Never agree to let an organization take a percentage of financing that might result from an introduction to a VC or from coaching you on how to present to them. Most of these people are trying to scam you anyway. Likewise, never give someone a percentage of a deal that might result from introducing you to a potential customer. Of course, affiliate programs and reseller programs are powerful tools. Use them when appropriate. But, as a startup founder, if someone ever tells you that they know a prospect that you should approach, but will only make that introduction if they get a percentage of the deal, politely walk away. You’re dealing with a gatekeeper or a parasite and their opinion is probably not highly valued by the person that they are promising to introduce you to.
Part B, let’s all start making a conscious effort to pay it forward. Promise yourself that at least once a week, no matter what, you’ll introduce two people who would benefit from knowing each other. Or, recommend another startups product to a potential customer. Now, I’ll warn you in advance, if you do this right, it will feel unfair. You’ll feel like you’re making five times as many introductions and ten times as many recommendations as you receive. But, that’s fine. It means you’re doing it right and you’ll greatly benefit from this in the long run. I promise.
And, best of all, if all of us commit to this, open networks will win and we can put the gatekeepers and the parasites out of business.
Now, I sometimes get accused of being a cheerleader for Japan and it’s true. I’m quite optimistic about the future of Japan in general, and Japanese startups in particular. I suppose part of the reason it looks that way is because so many people, including the Japanese themselves, are often hesitant to point out all the things that are going right in Japan. People also tend to ask me about top down ways of improving things for startups in Japan, but top down things are going pretty well. The trends are all moving the right direction and there’s only so much you can do top down anyway.
The real power for change in startups is and will always be bottom up.
See the original story in Japanese. Tokyo-based HoloEyes, the Japanese VR (virtual reality) startup specialized in the medical field by developing surgical simulation content for doctors, announced today that it has fundraised 150 million yen (about $1.3M US) from Nissay Capital in a series A round. This follows a seed round in which the company fundraised 10 million yen (around $89K US) from Japanese VR-focused acceleration program Tokyo VR Startups (TVS) after graduating from its its 2nd batch. HoloEyes was founded back in October of 2016 by app developer Naoji Taniguchi (CEO and CTO), surgeon and visiting professor/associate professor at more than a few universities Dr. Maki Sugimoto (Managing Director and COO), and Kenichi Shinjo (Managing Director and CSO), who has previous work experience as the producer of AllAbout and COO of Appliya. In December of 2016 they won the Tech Lab Paak award at the Tech Lab Paak’s 6th batch Demo Day, and in January of 2017 they were awarded the Amazon AWS prize at the Demo Day of the 1st batch of “Brave”, the acceleration program by Tokyo-based life science-focused startup VC/accelerator Beyond Next Ventures’. Images used for medical diagnosis such as CT scans, MRIs, and X-rays, are…
Tokyo-based HoloEyes, the Japanese VR (virtual reality) startup specialized in the medical field by developing surgical simulation content for doctors, announced today that it has fundraised 150 million yen (about $1.3M US) from Nissay Capital in a series A round. This follows a seed round in which the company fundraised 10 million yen (around $89K US) from Japanese VR-focused acceleration program Tokyo VR Startups (TVS) after graduating from its its 2nd batch.
HoloEyes was founded back in October of 2016 by app developer Naoji Taniguchi (CEO and CTO), surgeon and visiting professor/associate professor at more than a few universities Dr. Maki Sugimoto (Managing Director and COO), and Kenichi Shinjo (Managing Director and CSO), who has previous work experience as the producer of AllAbout and COO of Appliya. In December of 2016 they won the Tech Lab Paak award at the Tech Lab Paak’s 6th batch Demo Day, and in January of 2017 they were awarded the Amazon AWS prize at the Demo Day of the 1st batch of “Brave”, the acceleration program by Tokyo-based life science-focused startup VC/accelerator Beyond Next Ventures’.
Images used for medical diagnosis such as CT scans, MRIs, and X-rays, are generally expressed in two dimensions. However, surgeons often assemble a three-dimensional image in their heads based on these images, perform diagnosis based on what they learn using their stethoscope, and then perform surgery. HoloEyes developed a VR content solution for medical use called HoloEyes VR with the idea that surgeons and other medical staff can understand more intuitively when they are provided with 3-dimensional images. Currently, the company provides cloud services that can convert patient-specific CT data into polygons and freely view them in 3D space via VR devices.
Collecting the data from CT scans, forming 3D human body models, and accumulating it creates a so-called medical VR database. For example, it could be possible by searching with the keywords “60s male prostate cancer” to retrieve 3D images of a similar case which can be used by a doctor for diagnosis, and then used for training for surgery. The possible use cases include pre-operative conferences (surgical planning), sharing surgical plans among medical staff, education for young doctors and students, and as explanation to patients, etc. They are assuming a business model that provides VR viewers to hospitals and sells the data gathered with patient consent to medical universities and pharmaceutical companies.
HoloEyes plans to use the funds raised this round to build the system and business base for HoloEyes VR and expand its staff.
Translated by Amanda Imasaka Edited by Masaru Ikeda
See the original story in Japanese. Campfire, one of leading crowdfunding sites in Japan, announced earlier this month that it has fundraised 600 million yen (about $5.5 million US) from JAFCO (TSE:8595) and SBI Investment. Details such as the payment date and investment ratio were not announced. The company also revealed that their total funding so far has reached 1 billion yen (around $9.1M US). See also: Japanese crowdfunding site Campfire secures $3M to launch social lending service Since the company’s beginning in 2011, they have seen over 6,500 projects, had 240,000 backers participate in crowdfunding while the total amount of deals transacted on the platform has reached 2.4 billion yen (about $22M US). In particular, they have experienced remarkable growth in the past year, and in 2017 the total value of transactions has increased to 12 times that of the period from January to March of 2016. With this funding, the company expands into cryptocurrency, P2P payments, and investment businesses. One year since founder’s return as CEO It has been awhile since the idea of crowdfunding appeared. Around eight years ago Kickstarter took the lead in 2009. If we look at the annual review published by them we can…
Campfire, one of leading crowdfunding sites in Japan, announced earlier this month that it has fundraised 600 million yen (about $5.5 million US) from JAFCO (TSE:8595) and SBI Investment. Details such as the payment date and investment ratio were not announced. The company also revealed that their total funding so far has reached 1 billion yen (around $9.1M US).
Since the company’s beginning in 2011, they have seen over 6,500 projects, had 240,000 backers participate in crowdfunding while the total amount of deals transacted on the platform has reached 2.4 billion yen (about $22M US). In particular, they have experienced remarkable growth in the past year, and in 2017 the total value of transactions has increased to 12 times that of the period from January to March of 2016. With this funding, the company expands into cryptocurrency, P2P payments, and investment businesses.
One year since founder’s return as CEO
It has been awhile since the idea of crowdfunding appeared.
Around eight years ago Kickstarter took the lead in 2009. If we look at the annual review published by them we can get a general feel for their numbers. About 580 million dollars is invested in nearly 58,000 annual projects, and since the numbers published by Campfire are cumulative it is difficult to compare the two.
In February of last year Kazuma Ieiri returned as CEO of Campfire. At that time he expressed a feeling of crisis.
It’s been five years since we began Campfire out of love for crowdfunding, but honestly if Campfire itself and crowdfunding as a whole is left as it is, I’m worried about shrinking.
At the time, Ieiri was grappling with a 5% cut to commission fees.
I want to launch 1000 individual projects for 50,000 yen (about $460 US) from one large project totaling 50 million.
This train of his thought lead to the concept of the “democratization of funding.”
His next move was swift.
They made a rapid fire succession of announcements about use cases leveraged by the crowdfunding platform: Local businesses that promote local initiatives, fan clubs that are allowed to charge on a subscription basis, in addition to music performance supporting projects currently showing great growth.
In addition to cutting fees, the company also gradually removed hurdles so that more people could participate in crowdfunding, for example, adding the “All-In” function that allows projects to receive funds even if they do not reach their target. As a result, the total transaction amount will increase greatly, and after seeing an increase in capital, etc. via external funding, they will once again be on the path to growth.
Breaking away from crowdfunding
So, what are Ieiri’s views on crowdfunding and the future?
First, it is easier to understand by organizing the new business expansions announced this time around. The business will be comprised of the FireX cryptocurrency exchange (recently launched), a P2P (peer-to-peer) payments service called Polca (scheduled to launch in June), investments, and their major existing business area dealing with crowdfunding projects.
What they all have in common is the matching of people who intend to start something and those who wish to support them. Of course, their cryptocurrency business is not solely for trading; an even bigger incentive is likely that they are more easily able to decide rules based on comparisons with legal currency.
Polca is an extremely personal support/financing project, and Campfire a slightly larger project, with the businesses that could stem from them bringing investments and loans. Through the use of crothe ghosts of transaction fees that haunt them at every turn can be exorcised.
To tie it all together, the hazy picture the company paints of their platform, with people connecting at the center and the goal of support through distribution of their own money effectively creates an economy.
The next stage of the “Democratization of Funding”
In an interview conducted in November of last year, Ieiri confided his thoughts on expanding the scope of the project from crowdfunding to a social and money lending business. He reiterated those sentiments this time around.
He said:
Japan is full of challenges–so much so, that they even say we’re a developed country with problems. […] A redistribution of wealth, I think is what it’s called–I believe it’s necessary to create a system to circulate money from private citizens who have it to those who do not. However, it remains, how to do it through a steady business scheme rather than charitable activities.
Crowdfunding was supposed to be the ideal democratization method for Ieiri. However, as the beginning numbers show, the wall remains high to make it even bigger and turn it into a financial method anyone can access. The announced funding appears to be a way to break through the wall.
At the time of this news was revealed, I was able to get in contact with Ieiri in Kobe during the invitation only conference, Infinity Ventures Summit. He had this to say on the funding:
It’s been about one year, February of 2016, since returning full-scale to Campfire, which had 3 employees at the time. Now that number has increased to nearly 70, and we moved offices just the other day. In regards to finance, as we announced, we have earned nearly 1 billion yen cumulatively.
In terms of the total transaction voume, this year it’s expected to be around 3.5 billion yen, bringing the total to 5 billion. We’ve seen some growth, but we still have a ways to go. Until now we were ‘Campfire for Crowdfunding’, but from here on out we will evolve into Campfire–aiming for a world where anyone can raise their voice for any funding needs, including crowdfunding. I intend to use the funding to advance our new image, one that goes beyond the framework of crowdfunding in order to advance the democratization of funding.
I plan to continue checking the trend of how the crowdfunding model evolves in Japan.
Translated by Amanda Imasaka Edited by Masaru Ikeda