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How up-and-coming Japanese FinTech/cloud startups are aiming at global market

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See the original story in Japanese. This article is part of our coverage of Microsoft Innovation Day in Tokyo. A couple of months ago, I had an opportunity to have four startup founders or executive members gather for a panel session held at Microsoft Japan’s office in Tokyo. To discuss topics rarely discussed at other places, I decided to feature startups that aim or have the potential to challenge the global market… this being one of The Bridge’s missions. Although we often hear the phrase ‘global startup’ it is not easy to create a service which is acceptable anywhere around the globe. This is not only because of differences in culture or languages, but because of the maturity of the market or needs from societies that vary by country (investors or entrepreneurs in English-speaking countries oftentimes express the requirement of some item for alleviation of ‘pain’ in society as a definition of startups). However, startups creating new concepts or values may be seen being likely to develop globally. As I invited a few candidates to consider such things, the discussion panel members unintentionally came to comprise fintech/near-fintech startup people. Since the values brought by these startups seem to be much…

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See the original story in Japanese.
This article is part of our coverage of Microsoft Innovation Day in Tokyo.

A couple of months ago, I had an opportunity to have four startup founders or executive members gather for a panel session held at Microsoft Japan’s office in Tokyo. To discuss topics rarely discussed at other places, I decided to feature startups that aim or have the potential to challenge the global market… this being one of The Bridge’s missions.

Although we often hear the phrase ‘global startup’ it is not easy to create a service which is acceptable anywhere around the globe. This is not only because of differences in culture or languages, but because of the maturity of the market or needs from societies that vary by country (investors or entrepreneurs in English-speaking countries oftentimes express the requirement of some item for alleviation of ‘pain’ in society as a definition of startups). However, startups creating new concepts or values may be seen being likely to develop globally.

As I invited a few candidates to consider such things, the discussion panel members unintentionally came to comprise fintech/near-fintech startup people. Since the values brought by these startups seem to be much needed anywhere in the world, they can be said to have a background acceptable to global companies or customers alone due to efforts upon localization.

I asked about their status thus far and their future strategies, and together mulled means of nurturing Japan into a global startup hub.

The entrepreneurs on the panel session were as follows:

  • Shirabe Ogino, CEO of Zaisan.net
  • Hiromitsu Kuwabara, CEO of Doreming Asia
  • Yuji Koizumi, COO of Knowledge Communication
  • Tomoya Kitayama, Head of Japan R&D, Alpaca db. Inc
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Shirabe Ogino, CEO of Zaisan.net

The mobile app named Kabuto Yohou provided by Zaisan.net informs one of economic news thought impacting stock prices. Once reported, economic analysts who participate in the app will vote on whether the news will impact stock prices or not. The votes are tallied in 30 minutes after reporting said to cause an effect on stock prices, and the vote results are fed back to users. The targeted users are day-traders monitoring stock prices closely. Although even experienced traders’ prediction accuracy for stock prices is said to be about 60%, the app succeeded in raising it to 81% by leveraging the aggregation of analysts’ knowledge.

Zaisan.net secured series A funding from Monex Ventures, Freebit Investment, and Waseda Investment in May, followed by launching an iOS app in Japan. About the possibility of overseas expansion CEO Ogino noted,

Since the service can be available in any country which has a stock market, we are going to consider possibilities for cooperation with overseas fintech companies or stock markets.

As part of this, he participated in the fintech conference Finovate held in San Jose earlier on in May.

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Hiromitsu Kuwabara, CEO of Doreming Asia

Fukuoka-based Doreming Asia’s mission is to reduce poverty and inequality in emerging countries. Although it is the poor who really require financial services for a stable life and security, not enough such services are provided in emerging countries. If low-income people with poor credit ratings can receive loans, the service plans will be limited to ones with annual interests of 100%, 300% or even 1,600% due to the high probability of these becoming irrecoverable.

Doreming Asia has developed a payroll system enabling calculation of the salary amount real-time before the closing date of companies. Counting the expected amount of work up to that time as security in return, workers can purchase products. The firm has a base in the co-working space called Rocket Space in San Francisco, as well as at Level39 fintech-focused accelerator in London.

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Yuji Koizumi, COO of Knowledge Communication

Knowledge Communication, established eight years ago, originated in providing a community website in the educational field for local cram schools. Since experiencing increases in user traffic especially during the examination season, the firm had introduced Amazon Web Service, which newly started its service in Japan at that time in 2011, into the community website and coincidentally entered the cloud integration business.

Recently, the firm has launched a cloud service named Knowledge-Com AI for easy utilization of AI (artificial intelligence) and Deep Learning. Knowledge-Com AI has shortened the algorithm selection time for machine learning to two weeks, which is one-fourth that of the conventional one, and realized automation of the process by a round-robin method of algorithms and parameters. The firm participated in MUFG FinTech accelerator 2016, and its six months’ outcome will be shown on Demo Day of the accelerator being held in August.

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Tomoya Kitayama, Head of Japan R&D, Alpaca db. Inc

Alpaca has been developing the trading platform Capitalico with Deep Learning, as introduced so far on The Bridge several times. According to Kitayama, only 5% of the entire trader base can generate profit with general investment trading. By adopting the power of science to trading, Capitalico aims to maximize the possibility of generating profit. User traders can turn their trading idea into an algorithm without any programming knowhow. Speeding up the process of the back test, it will implement a function to inform the best timing for trading to the users’ smartphone.

Among the four firms introduced above, Alpaca may be most likely to show a movement toward global expansion. The firm started its business in Japan originally, but has been headquartered in Silicon Valley where CEO Yoshi Yokogawa and CTO Hitoshi Harada engage in daily operations.

‘Corporate Strength’ that matches global needs

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CEO of Zaisan.net Ogino called himself originally as a ‘man of IT, not of finance’ in referring to his work history, having been and engaged in business development department of Itochu Technology Ventures and Gree. He had been interested in bringing knowledge of people who’d been activated by the Internet into the financial field. In this field, a profitable service may be realized only with about 10,000 users due to the great volume of money entailed in transactions, unlike the game or some such field. The app Kabuto Yohou does not charge users, but monetizes by bringing users to stock brokerage firms.

On the other hand, Doreming Asia is a startup spun off from Kizuna Japan which has been developing HR (human resource) system which supports attendance management and payroll for 20 years. No capital relations exist between them, so Doreming Asia can be called a pure startup. The advantage of Doreming Asia is its solution based on knowledge which Kizuna Japan has cultivated for the past two decades.

According to CEO Kuwabara, when he showcased the product at TechCrunch Disrupt SF 2015, people from accounting firms in the US were simply astounded by the real-time payroll system according to task or man-hours. Since it is common in the United States to outsource payrolling, the function linkable to accounting and banking system was highly evaluated.

Knowledge Communication finds values in absorbing and retaining the latest technologies, then availing them to customers. As technologies are commoditizing very quickly, the firm makes returns to users through fast API developments and provision. To maintain technological levels and employee motivation, its technology team three years ago started a tech blog called ‘Knowledge-Com AWS recipe’ wherein the team investigates, arranges and distributes information about technologies on a sustained basis.

Head of Japan R&D, Alpaca db. Inc Kitayama, highlights Alpaca’s advantages:

Especially in the service field we are dealing with, performance results are recognized in figures. The competition in our field is just like ‘who is the first one to climb Mt. Everest (as top player in the field),’ so basic skills are strongly mandated.

Co-founder / CTO Harada is a professional as to Pivotal and a major contributor to PostgreSQL. In addition, Greenplum CTO Luke Lonergan, who is also known as a ‘speedster’ in the database field, works as an advisor for Alpaca. Thanks to luck and connections such brilliant talents came to be brought together.

He is convinced of success in a straightforward manner with these members. By being the top players, sometimes talents who had formerly worked at other startups contact when making a comeback and seeking their next job. From such a viewpoint, staying at the leading edge of technology is important when hiring excellent human resources.

How expanding globally?

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Zaisan.net is seeking Chinese analysts upon looking toward the Chinese market. Also it plans to establish a joint venture with an overseas fintech company in any country within this year. The targeted countries including the US, UK and possibly France, Germany, Australia and China.

Doreming Asia explains the reason for headquartering in the US; its investment amount into intellectual property rights is quite larger, and there are many payment settlement companies. Also as mentioned above, it makes active use of its UK base because of businesses related to refugees and the preferential tax system, in addition to the four megabanks positioned closer to startups.

Knowledge Communication has located its development base at Japan’s western city of Kumamoto now, but is considering overseas development in the future. Already performing business by connecting Kumamoto and Tokyo closely, one day the firm may come to hire international engineers and realize a workstyle not influenced by location.

Alpaca emphasizes that it aims to grow in harmony with the world while using Japan’s advantages. Although it was natural to set headquarters in Silicon Valley due to the premised global competition, the reason for not leaving Tokyo office is accessibility to Japanese financial institutions with a huge market and the capture of excellent engineers.

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We often hear an expression that ‘global’ is a general term for aggregation of locals. Various conditions differ by countries and places: market environment around clients and users for service, existence of investors for fundraising and hiring conditions of engineers for development. When building up a global startup, it is vital to gather knowledge of the global startups scenes.

We hope that our gathering much information using The Bridge will help support startups, imaging an international future upon threshing out global strategies.

7 Japanese teams awarded at this year’s Microsoft Innovation Award

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See the original story in Japanese. This article is part of our coverage of Microsoft Innovation Day in Tokyo. Under the theme of ‘innovation by software,’ Microsoft Innovation Award had been established to award a software or service which had achieved realization of innovative ideas. Previous award winners include AgIC (electronic circuit printing technology using conductive ink), Opect (gesture control for surgeons during their operation), Shikumi Design (new-gen music instrument), and TVision Insights  (effective TV rating measurement technology). See also: Japan’s AgIC, circuit board printing startup, raises $1.5M for radiant heating technology Japan’s AgIC launches Kickstarter campaign for enhanced version of circuit pattern maker This year, 16 startups covering hardware, AI (artificial intelligence) or IoT (internet of things) had given pitches as finalists. Eventually, the University of Tsukuba Artificial Intelligence Laboratory, developing BioSync which enables synchronous kinesthetic interactions among people, won the Best Team Award and Japan Airlines (JAL) Entrepreneur Award. The following were the jurors for the competition. Yoshiaki Ishii, Director, New Business Policy Office, Ministry of Economy, Trade and Industry Katsura Itoh, Developer and Evangelism Lead, Microsoft Japan Fumihiko Nakajima, Senior Director, Business Development, Dentsu CDC Ken Nishimura, Chief Editor, TechCrunch Japan Shumpei Fukui, Principal, Archetype Tomonori Yako,…

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See the original story in Japanese.
This article is part of our coverage of Microsoft Innovation Day in Tokyo.

Under the theme of ‘innovation by software,’ Microsoft Innovation Award had been established to award a software or service which had achieved realization of innovative ideas. Previous award winners include AgIC (electronic circuit printing technology using conductive ink), Opect (gesture control for surgeons during their operation), Shikumi Design (new-gen music instrument), and TVision Insights  (effective TV rating measurement technology).

See also:

This year, 16 startups covering hardware, AI (artificial intelligence) or IoT (internet of things) had given pitches as finalists. Eventually, the University of Tsukuba Artificial Intelligence Laboratory, developing BioSync which enables synchronous kinesthetic interactions among people, won the Best Team Award and Japan Airlines (JAL) Entrepreneur Award. The following were the jurors for the competition.

  • Yoshiaki Ishii, Director, New Business Policy Office, Ministry of Economy, Trade and Industry
  • Katsura Itoh, Developer and Evangelism Lead, Microsoft Japan
  • Fumihiko Nakajima, Senior Director, Business Development, Dentsu CDC
  • Ken Nishimura, Chief Editor, TechCrunch Japan
  • Shumpei Fukui, Principal, Archetype
  • Tomonori Yako, IoT Innovation Center Chief and Executive Consultant, Ufuru

The following introduces seven startups which won the Best Team Award and sponsor awards. Incidentally, every finalist team was provided prizes from accounting software maker Yayoi as well as Microsoft.

The Best Team Award winner / JAL Entrepreneur Award winner: BioSync by Artificial Intelligence Laboratory, University of Tsukuba

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BioSync is a device for next-gen rehabilitation by “hacking” human bodies. It consists of a sensor device which measures changes of myogenic potential changes and a device which receives these signals for transmission as potential changes. By linking into / being linked by another person with general cable used for earphones, the device enables an understanding of kinesthetics for physically-disabled people, or realize effective rehabilitation by sharing healthy people’s sense of muscle activities with handicapped people. As an example of use, the team had succeeded in development of feeding spoon for people with neuromuscular disorders.

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Jury’s Special Award / The Bridge Award: The Voice by Hmcomm

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Hmcomm had started as a technology transfer venture from Japan’s National Institute of Advanced Industrial Science and Technology (AIST), and has been developing cloud-based voice recognition engine called The Voice. Although voice recognition R&D has been continuing for many years, it is still far attaining a fully practical level. However, thanks to the rapid progress in hardware or network since 2010s the environment to dramatically improve the processing performance of voice recognition has been set, with the market expanding along with the advance in communication robots. The team is also seeking a solution for problems as to conventional voice recognition technologies, like recognition difficulties during crosstalk or in noisy locations.

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Jury’s Special Award: AI-based life science image analysis system by LPixel

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Although 90% of the academic papers are publicized with images in recent years, most of the author researchers did not learn about image processing. LPixel analyzes a large quantity of data with high accuracy, outputs images then enables pasting of images onto papers by easy operation which even children can do. It was developed under the concept of having AI as a research assistant. The team has acquired three patents, and LPixel ImageJ Plugins has exceeded 30,000 downloads.

Audience Award / PR TIMES Award: Secual by Secual

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Secual is a smart home security service linked to the Internet. It provides WiFi-connectable intruder detection sensors and a cloud service at a low price, and allows users to recognize irregularities in their own house from outside locations via smartphones. The team had obtained the seed fund from Will Group Incubate Fund in June 2015, subsequently fundraising 60 million yen (about $550,000) from lease property agent Ambition and vacation rental startup Adventure in December 2015. In March 2016, it agreed to a strategic capital alliance with Investors Cloud.

Audience Award: Bioelectric-controlled prosthesis by Meltin MMI

Meltin MMI, born from the Incubation Center of the University of Electro-Communications, showcased the robot hand / bioelectric-controlled prosthesis. The team had fundraised from Euglena-SMBC Nikko-Leave a Nest Capital and Glocalink this January, following by winning the prize in the startup category at Real-Tech Venture of the Year 2016 organized by Leave a Nest this March.

Samurai Incubate Award: Kagura by Shikumi Design

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Kagura is a next-gen music instrumental platform enabling music to be played just with physical movement, based on distance and gesture recognition technologies. Adopting Intel®RealSense™3D, the app had been launched for Mac in July 2015 then subsequently for Windows. The Shikumi Design team had won the top award in Intel® Perceptual Computing Challenge 2013.

See also:

Tech in Asia Award: Milbox Touch by White

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Various kinds of cheap VR (virtual reality) goggles that allow feeling a sense of immersion by inserting smartphones into cardboard box cases have been appearing. However, a major defect of these products is that users cannot touch smartphones’ screen directly to control apps by swiping, scrolling or tapping. Milbox Touch is an electrode seal with high sensitivity for transmitting current change to smartphones, enabling control of apps by touching the surface with the seal.

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The White team is applying for a patent on the seal, and aims OEM (original equipment manufacturer) supply to other VR goggles such as Google Cardboard. Currently, the team has been developing a PacMan game for VR as well, also provides a SDK (Software Development Kit) embeddable in games, free of charge. The SDK is available for Unity, Xamarin, iOS and Android. The team plans to start OEM supply of the seal and launch of PacMan at the end of April 2016.

Translated by Taijiro Takeda
Edited by “Tex” Pomeroy