Japan’s Nulab gets first cash injection in 13-year history, poised for exponential growth

Masanori Hashimoto, Co-founder and CEO of Nulab
Image credit: Masaru Ikeda

See the original story in Japanese.

In an interview with The Bridge back in September of 2015, Nulab CEO Masanori Hashimoto told us that the firm was about to graduate from startup mode toward a sustainable growth but it seems like things were not going as expected. Offering three cloud services such as Backlog, Cacoo and Typetalk, Nulab had been exponentially growing since 2015 when they stopped entrusted system developments but started focusing on the SaaS (software as a service) business. He said jokingly:

We couldn’t graduate but still need to repeat years as a startup (laugh).

The Fukuoka-based company revealed today that it has secured its first cash injection from an external investor. It’s 100 million yen (about $884,000) funding from East Ventures, a seed round for the 13-year-old company. Nulab has a relatively long history but had been initially focused on entrusted system developments, subsequently making a total shift into the SaaS business in as recently as 2013. Quoting Chatwork (previously known as EC Studio) as an example which has also a 17-year history but shifted into the SaaS business several years ago, Hashimoto explained:

We (virtually) started as a startup back in 2013 when we made a total shift into the SaaS business. That’s why both our mindset and our team members are pretty young.

The company’s user base is currently comprised of 780,000 people across 50,000 companies in Japan using the Backlog project management and collaboration tool as well as 2.8 million people (86.2% of them are from outside Japan) using the Cacoo visual collaboration tool. They introduced a chat communication tool called Typetalk back in February of 2014, allowing users to complete various team work and remote work tasks within the Nulab platform. The Nulab Account single sign-on scheme enables customers to use all the three web services with a single user account.

The Nulab team
Image credit: Nulab

The company has now grown up to a 80-people team based out of Tokyo, New York City, Taiwan and Singapore locations in addition to their headquarters in Fukuoka City. In view of such a high number of users and employees, we can assume that they have less urgent needs in funding because they may generate ample cash flows from their business. However, it seems like that the latest funding at this time around is intended for strengthening global expansion and preparing for a future initial public offering. We can also see the reason behind their choice of East Ventures as a sole investor in this round, which is highly evaluated in terms of global investment and hands-on support.

Hashimoto elaborated:

Based on our achievement, we may create a tunnel that can carry Japanese SaaS products (including third-party products) into the global market. In a way like the global market adopting Japanese project management methods developed by Toyoda, Honda and others, I believe there are many spaces that Nulab and other SaaS companies can expand into.

Regarding the reason why Nulab is looking at an IPO while they used to be less aggressive about funding from an external investor, he added:

Companies and businesses are different. Nulab is a company, and has three businesses (like three startups): Backlog, Cacoo and Typetalk. Now that these so-called startups have further grown up than I thought, I turned to think I need to focus on stabilizing our management base. Otherwise they wouldn’t be able to concentrate on their business but might get up shit creek.

Since Nulab is focused on pursuing people’s diversity of both their in-house developers and user community, it employees many international staffers in the team (like a Canadian assistant to Hashimoto-san). As part of this effort, the company revealed that they will set up a new location in Amsterdam, the Netherlands.

There are not many Japanese startups looking at the global market yet, but it’s interesting to see a startup from Fukuoka seeing such an exponential growth. Encouraged by their progress, I really hope that more startups from across Japan will be motivated for aggressive global expansion.

Edited by “Tex” Pomeroy