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Tokyo-based startup Photosynth, developing and offering  smart lock Akerun as well as SaaS to manage entrances and exits, announced earlier this month that it raised funds from Globis Capital Partners, Daiwa Corporate Investment, and YJ Capital. The funds raised this time around total about 1 billion yen (about $9.1M US) when added to loans procured from the Japan Finance Corporation and Orix, and brings the cumulative amount of funding to 1.5 billion yen (roughly $13.7M US).

Details such as the payment date, investment round, and share ratios were not disclosed, and Globis Capital Partners’ Emre Hidekazu Yuasa was appointed as Outside Director.

In addition, the company also revealed that Akerun Pro, a smart lock for businesses, has been introduced by 2,500 companies since its launch in July 2016. In particular, industries which handle personal information such as recruiting, finance, and social work, in addition to companies with multiple offices, and coworking spaces have adopted it.

The company will use the funds raised to double the current team of 50 members (this number is based on full-time employees) within two years. Specifically, it plans to strengthen its sales and support systems in order to respond to the increase in inquiries, and its goal is to be introduced in 10,000 companies by 2020.

Amendments to the Personal Information Protection Law Prove Helpful

Since its inception in September of 2014, Photosynth, which has often been featured on The Bridge, succeeded in raising a large-scale sum. By attaching Akerun Pro to a door handle, it is possible to lock or unlock the door using a smartphone or IC card. It is also linked to the cloud and can issue keys and manage a log of who enters and leaves through the door. There are no introductory costs as the company uses a monthly subscription model for renting the equipment and using web services. It is set at 15,000 yen (around $137 US) per month.

If we take a rough look at the domestic market for this smart lock, there are many uncertainties due to regulations with regards to Airbnb and the like, which the business model favors, and we get the impression that the company is working towards more reliable business development, evident in its partnerships with real estate and other companies.

As mentioned above, Photosynth is using a monthly subscription model, as opposed to selling the product until there is no more. On the business side, if the company does not have a revenue model that can anticipate new business, as the vacation rentals business does, it would definitely run into the problem of the product selling out.

However, right now, the business couldn’t be better. When I asked the company’s CEO Kodai Kawase the reason, it seems that the revision last year of the Personal Information Protection Law had a surprising effect.

According to the amendment of the Personal Information Protection Law in May 2017, roughly speaking, those who do business through memberships are supposed to take entrance and exit logs, but the introduction costs of existing entry and exit systems cost around 1 million yen (about $9.1KUS), including security services.

There are a multitude of small and medium sized businesses that take the personal information of their members. According to Kawase, it is necessary that the companies maintain “entrance/exit logs”, and with the advantage of no introductory cost, inquiries into Akerun keep coming one after another.

And there’s more.

Because of the entrance/exit log, it is possible to keep track of who is entering and exiting, so who is working or not working. Yes, that is one way to respond to the problem of overwork. Solutions for overwork, which has become a social problem in recent years, have garnered much attention, and there are many requests for ways to link them to attendance.

Naturally, if such solutions become a part of the service, the argument for monthly subscriptions is strengthened.

On the day of the interview, Kawase gave a demo of how to attach Akerun to a door, but it was easy to complete from installation to registering the key by smartphone in a few minutes. It may take time to set up the cloud service and various onboarding, but this hurdle is low compared to services that require actual alterations to a door.

I feel that Photosynth’s transformation from selling smart locks to taking on the challenge of the “entrance/exit log” is the reason behind its large-scale fundraising.

Translated by Amanda Imasaka
Edited by Masaru Ikeda