Tokyo-based Josys, the Japanese startup offering outsourced corporate IT service to manage employees’ IT devices and SaaS accounts, announced on Wednesday that it has secured 13.5 billion yen (about $91.7 million US) in a Series B round.
This round is led by Global Brain and Globis Capital Partners with participation from Jafco (TSE:8595), Raksul (TSE:4384), SMBC-GB Growth Fund (managed by SMBC Venture Capital Management and Global Brain), 31 Ventures (managed by Mitsui Fudosan and Global Brain), Norinchukin Capital, Z Venture Capital, WiL (World Innovation Lab), NTT Docomo Ventures, Value Chain Innovation Fund (managed by Seino Holdings and Spiral Innovation Fund), and Yamauchi-No.10 (owned by Nintendo founder’s family office).
Global Brain, Yamauchi-No.10, and WiL followed this previous investment in Josys’ previous Series A round. The latest round brought the company’s funding sum up to date tp 17.9 billion yen (about $120 million US). Most of the investors are not operating company-backed but purely investment companies, which means that they are expecting business growth rather than business synergies with enterprises. Josys will use the funds to expand its global presence and diversify the company size of their targeted potential users.
The service was initially launched in September of 2021 as the fourth business of Japanese online printing and on-demand logistics company Raksul (TSE:4384). Earlier this year, it was spun off from and incorporated as a subsidiary of Rakusul. In March of 2022, Josys increased its capital through a third-party allotment to undisclosed investors to become an equity-method affiliate from a consolidated subsidiary of Raksul (35.6% of voting rights at that time). Raksul’s voting right ownership in Josys has been apparently diluted after the Series A round.
The service allows companies to integrate and outsource management, procurement, and kitting IT devices and SaaS accounts for their employees. It aims to improve the operational efficiency of a company’s IT management department, expecting to reduce the workload of corporate IT departments by about a quarter through cloud computing and outsourcing. The company expects it may help companies reduce the turnover rate of staff in charge of IT systems.
The company’s new global expansion effort includes their service launch in 40 countries in the North America and Asia Pacific regions. The entire Josys team is about 120 people. Of these, 30 are in Japan, 70 in India, 10 in Vietnam, and the rest of the team are based in San Francisco Bay Area. Many of the systems required have been developed in India while the overall service design is being done in the Bay Area. Sales and on-boarding processes in the Asia Pacific Region are provided by their teams in Singapore and Malaysia.
Josys has been focused on small and medium-sized businesses with less than 300 employees but will now target larger enterprises going forward. In some large enterprises, SaaS is not centrally managed by the system department (so called ‘shadow IT’), and the collapse of IT governance is becoming an issue. The company believes that the integration of employee-based information ledgers will contribute to the reconstruction of the Single Source of Truth (SSOT) for IT management.
To strengthen the team, the company appoints Kiyomitsu Takayama, former Japan head of Pendo.io Japan, as Japan SVP at Josys; Mikito Hayashi, former Executive Officer and General Manager of Enterprise Sales at ZVC Japan, as VP of Japan Sales at Josys; and Michibumi Serizawa, former General Manager of Major Account Sales at Palo Alto Networks, as Japan Sales at Palo Alto Networks. In addition, the company will launch the Josys Academy to share knowledge and insights to help Japanese companies adopt digital transformation.
Josys initially introduced the concept of its business in September of 2021 and subsequently launched it in 2022, seeing a 10-fold increase in ARR (annual recurring revenue) over the past year (specific values not disclosed). The company attributed the growth to the management burden of IT devices and SaaS, the increase in IT deployment in each department, and the dispersion of IT managers, while many companies have massively adapted work-from-home and SaaS as the new normal after COVID-19.