Base, Japan’s answer to Shopify, snags $14M to strengthen payment solutions unit

Base CEO Yuta Tsuruoka

See the original story in Japanese.

As per some media reports, Tokyo-based Base, the Japanese startup behind an instant e-commerce platform, recently announced it has fundraised a total of 1.5 billion yen (about $14.4 million) from SBI Investment, SMBC Venture Capital and Suneight Investment. The details of the plan concerning the investment ratio or the payment date were not disclosed. The secured money will be spent upon hiring additional personnel in order to expand business for the e-commerce platform Base and the payment platform PAY.JP.

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Currently 300,000 online stores is open on Base and the number of PAY ID which works as customer ID reached 200,000. Therefore, the annual transaction amount now totals at tens of billions of yen (hundreds of millions of dollars) according to Base CEO Yuta Tsuruoka.

There has been plenty of topics in this arena, such as one of the rival companies unveiling its new development to become a private-held company again; overseas competitor The Stripe’s entering the Japan market in the financial sector including payment, investment and remittance; Coiney’s expansion into online business from its offline field; or, the appearance of AnyPay led by a serial entrepreneur Shinji Kimura.

The Bridge interviewed Tsuruoka about how Base which has succeeded in large-scale fundraising will compete in this era in a “warring nations.”

The Bridge: First of all, I would like to ask you about Base’s development plan. I am wondering if the pace of growth will become modest soon and whether you have any ideas such as strengthening sales promotion which targets enterprise merchants?

I assume you mean to ask if we are going to make something like a Rakuten (TSE:4755) or not. This is the same situation I think for Regarding this point, we came to a crossroads about a year ago.

Sales promotion is a must-do in acquiring stores with hundreds of millions of yen sales, but it is more efficient to automatically acquire small stores with sales of less than millions of yen. I think that style befits the situation. Since the stores acquired through sales promotion could be stolen away by sales promotion, I do not want to compete in such a field.

From the perspective of being a technology company, I would like to take on the creation of a good product in order to form an ecosystem semi-automatically and make people happy through the power of technology.


The Bridge: What was the purpose of launching a mall app?

It was to challenge selling products as Base. The way we were going, we could estimate where we would end up businesswise, so we decided to enhance the budget and human resources at that point in time. It is not still clear if that answer is the mall or the media but we will continue to strengthen those parts too.

The Bridge: Is it a method to attract a lot of customers?

It aims to gain customers who purchase products on the web once a month but could purchase them twice or thrice in a month because we cannot become a Rakuten or an Amazon. Rather, we provide a system of helping stores instead of us gathering people easily. Although the mall has an image as proactively gathering customers in general, I look upon our mall as a method of supporting management of stores after gathering customers.

The Bridge: I understand it is the policy to increase LTV (Life Time Value) under the current growth situation. On the other hand, Mercari — which invested in your company — has succeeded with the style of expanding its body size anyhow. It there any possibility of doing like that?

I think that it is a good idea to expand the body size eagerly as a challenge. Since it has become quite common recently for a customer who purchased a product to purchase it again at other stores, I think that is worth trying.

L to R: Kazuma Ieiri (Co-founder of Base), Shintaro Yamada (CEO of Mercari), Yuta Tsuruoka (CEO of Base), Fumiaki Koizumi (CFO of Mercari)

The Bridge: What did Shintaro Yamada of Mercari advise you?

He told me to be on the offensive (laughing).

Based on the fact that Base is growing modestly and that there are only a few platforms grasping merchants as much as we do, he told us to take on as much challenges as possible. I received a lot of advice through information exchange using Mercari’s data that could be disclosed.

The Bridge: What was the advice especially helpful to you?

About organization. We had fully changed our company’s organization. Since initially any organization did not exist, we started reforming from this spring and have become a company capable of having a report line or more staffers.

My work content has also changed drastically. Although I had been in the very middle of the creation process until last year, I have moved to a more “upper” (executive-like) position now. I am not working as a communication hub by leaving responsible persons with the power of discretion to some extent. But I still cannot act like Shintaro who keeps staying in US for a long time (laugh).

The Bridge: What is the priority for your company?

Although the priority of recruitment was lower until last year, it has become a top priority now. With Mercari’s style spreading to us, we intend to form a new employee-friendly work environment. I had not been aware of the importance of recruitment well because I had been involved in our business since university. Mercari was the first external company for me, so that it was easy to absorb the culture.

The Bridge: How have you been with co-founder Kazuma Ieiri?

We meet three or four times a week even now, but he mainly tends to discuss his current project CAMFIRE rather than Base (laugh).

Base CEO Yuta Tsuruoka

Competing in the financial vertical

The Bridge: What is the most valuable number for you now?

Of course we make much of the total transaction amount which is growing to the hundreds of million dollars in scale annually, so we aim the next digit.

The Bridge: In the stage of the next digit, Mercari stands as a Goliath. Do you have any ideas about expanding business into the C2C field as a management person?

The business characteristics between us and them are completely different; the culture is different from the player in the SME (Small and Medium Enterprises) arena, and the customers differ too. There are some elements in their products which can be a useful reference for us. However, originally we started our business with a theme how much we can optimize the exchange of value. Of course, it is no doubt that a drastic increase in the transaction amount is better, but it is highly doubtful whether it would lead to our company’s mission directly.

Some people say the C2C market has a higher potential growth than the SME one, but I do not agree with that. Look at Rakuten. It is huge enough.

The Bridge: As for payment business, the service directions are gradually being clarified, such as short-term loans, payments and remittances. What is PAY.JP especially focusing on?

Maybe I would start from payment service first. PAY ID is available for 300,000 stores and is linked to 200,000 users now. This is the situation I was looking forward to and I think it is a good timing as a whole.

The Bridge: Is there any rival company to watch out for?

Thankfully, we are faced with many rival companies in all time-periods (laugh).

The Bridge: I feel Mr. Kimura (of AnyPay) has a philosophy which seems close to ours. I suppose their direction is to replace trading with money to that using the Internet, so that could lead into the remittance and financial areas in the future.

We had focused on how much we can increase the number of merchants over the past three years. Now the team has separated into Base team for gathering stores and PAY.JP team for gathering consumers, and I think we have entered a new phase focused on increasing the number of consumers.

The Bridge: Thank you for your time today.

Translated by Taijiro Takeda
Edited by “Tex” Pomeroy