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Time to Change? Director of the most vibrant startup community in Japan reveals signs of Japanese venture trends
What does 'starting a business' mean in Japan?
Until just a few years ago, the words 'entrepreneurship' or 'startup' were unfamiliar in Japan. The economic recession that followed the burst of the bubble economy in the 1990s was enough to extinguish Japan's entrepreneurial engine. Various statistics support this.
According to a Statista survey, only 12.7% of Japanese respondents ranked Japan among "the world's most fearless entrepreneurs", saying that 'now is a good time for entrepreneurs.' 6.2% stated they had no plans to become entrepreneurs.
When considering that 41% of Korean respondents saw opportunities to start a business and 7.5% were 'not afraid of failure,' it provides insight into how conservative the atmosphere in Japan is.
Similar sentiments were revealed in the GEM survey spanning 2022-2023. Only one-eighth of Japanese adult respondents aged 18 to 64 believed 'business opportunities would arise within six months.'
Can this trend in Japan change?
There are those who say the rules of the game are changing. Ryusuke Komura, a director at Venture Cafe Tokyo, is one of the prominent figures who says, "Japan needs entrepreneurship".
Venture Cafe Tokyo, which hosts 'Thursday Gatherings' where entrepreneurs, investors, corporate executives, and university officials all come together, was established in Japan in 2018 with the aim of fostering innovation within Japan through connections.
Can the atmosphere around entrepreneurship and startups in Japan be reversed? Has the change already begun? What are the signs that it is changing, and where should we start if change is needed?
Asia Tomorrow had a video interview with Director Ryusuke Komura to hear about the changes in the business ecosystem in Japan and the current status of entrepreneurship taking root in Japan.
Q. Hello, could you please introduce yourself first?
Hello. I am Ryusuke Komura, working as Executive Director at Venture Cafe Tokyo.
Venture Cafe Tokyo is a community where diverse individuals such as entrepreneurs, students, researchers, and investors can gather. Venture Cafe Tokyo is the first location in Asia within the expanding ‘Venture Cafe’ global network that started in Boston in 2009 and was established in Tokyo in 2018.
Q. What path did you take before working at Venture Cafe Tokyo?
I have three major identities:
- Entrepreneur: My first job was an intrapreneur in a major Japanese corporation. I was involved with a project of launching a SaaS software service. I also initiated two nonprofits in Boston and Japan with team members.
- Supporter: For the past ten years, I have played a role in helping people live as entrepreneurs. I joined Venture Cafe Tokyo as an initial member and program manager in 2018.
- Educator: I worked as a consultant at a company called Globis in 2015. Currently, I am also part of the faculty at Hosei University, mainly conducting education on entrepreneurship in the MBA programs.
Reasons to emphasize that Japan needs entrepreneurship
Q. It seems most of your identity is related to 'entrepreneurship.' Do you have a particular reason for being so interested in it?
I believe that entrepreneurship is necessary for the transformation of people's lives. It's not just about starting a company; anyone can enjoy a different lifestyle through the way of life as an entrepreneur.
I was born and raised in Japan. Similar to Korea, students in Japan go through competitive exams to enter university and then aspire to work in large corporations. I was no different. After graduating from university, I started my career in a traditional Japanese company.
Around 2013, I decided to pursue an MBA degree abroad.
At that time, it wasn't so much about a passion for 'entrepreneurship' itself but a reasonably rational decision I could make as I was working on a project to launch a new business .
While researching various MBA programs that could benefit me, I encountered Babson College, which had a tremendously good reputation in entrepreneurship education and ended up going to the school after being accepted there.
Q. Living and studying in a completely different cultural environment must have led to a change in your thinking.
Indeed, American culture and education emphasize interaction through discussion. Until I realized this, it seems I was trying to speak perfectly like a "good student" even during debate classes, accustomed to striving to be a model student and to be praised.
However, during classes, I frequently encountered other students’ responses like "So what?" or “What do YOU think?” for my reasonably modest arguments.
It was a mind-shifting experience for me. Learning to express my own thoughts rather than others' while learning about business changed my way of thinking. That's how I became passionate about entrepreneurship.
"'Japan needs entrepreneurship. It's important…!"
The underlying causes of Japan's atmosphere toward entrepreneurship
Q. Given that Japanese culture, especially corporate culture, is known to be conservative, isn't entrepreneurship still somewhat unfamiliar within Japan?
Until just a few years ago, even the term 'startup' was not common in Japan. However, I feel that this conservative atmosphere is gradually changing.
For example, major Japanese media outlets like Nikkei have started to feature news about startups on their front pages. Large corporations in Japan are also becoming more open to collaborating with startups.
The Japan External Trade Organization (JETRO) has stepped up as a supporter and advocate for startups, encouraging business cooperation between small enterprises and large corporations.
To be more specific, the Kishida government has embarked on a "Startup Enhancement Five-Year Plan" starting from 2023. This plan aims to increase the investment in startups to 10 trillion yen by 2027, with a long-term goal of producing 100,000 startups and 100 unicorn companies (privately held startups valued at over 1 billion dollars).
(Refer to : 2023 Japanese startup trends roundup (2024 Playbook))
The Tokyo Metropolitan Government has set a goal to increase the number of Tokyo startups tenfold within five years, particularly aiming to transform Shibuya into a 'startup city.'
In this context, Tokyo is fully supporting the entry of foreign startups into the Japanese market. Institutions like JETRO are facilitating venture accelerators, and there's a growing budget and demand for entrepreneurship and startup education in universities across Japan.
While it's not yet universal, there's a trend of graduates from prestigious universities like the University of Tokyo opting to work for startups. Traditionally, students from top Japanese universities prefer careers in civil service or large corporations. However, I've recently sensed a change in public perception regarding entrepreneurship.
Q. The atmosphere for venture business in Japan seems to be changing comprehensively. I'm curious about your opinion, Mr. Ryusuke Komura, on the fundamental reasons for this shift.
That's a good question. Please allow me to share my personal opinion on this matter.
Firstly, Japan has entered an era of super-aging society. According to data released by the Japanese government in 2023, 29.1% of the total population of 125 million were aged 65 and above, marking a historical high. It is said that more than 10% of the total population are aged over 80. Japan is indeed 'aging.'
As a result, Japan's GDP per capita has been continuously declining.
According to a 2023 report by the Cabinet Office of Japan, the nominal GDP per capita was $34,064, a decrease from the previous year's figure of $40,034. Consequently, Japan ranked 21st among the 38 OECD member countries. This decline in per capita GDP reflects the trend within Japan, with a shrinking productive population.
However, established large corporations face limitations in driving business innovation. Complex vested interests and revenue-centered structures make it challenging to undertake innovative endeavors, even at the expense of immediate losses.
Thus, the situation calls for entrepreneurs within Japan to take the lead in innovation. They are the engine of innovation. Large corporations can contribute to innovation in different ways, such as collaborating with startups or acquiring ventures.
However, one thing that we have to note is that still the number of M&A for startups by those large corporations is small compared to that of the US. This would be the next challenge for Japan’s innovation ecosystem.
Q. It seems that the structural characteristics of Japan's economy and business ecosystem are making venture businesses more noticeable.
Furthermore, it's worth noting the shift in values among the youth in Japan.
Certainly, the 21st century has brought about changes. When I was a college student, parents had the solemn duty of earning to feed and sustain their families, and they expected the same mission from their children. The value of securing a job at a reputable company and working hard to earn money and maintain a livelihood was strong.
(Although social poverty issues still exist) Compared to the 20th century, Japanese society has matured. The number of people worrying about their next meal has significantly reduced compared to the past.
As a result, the values of the new generation have begun to diverge from those of the previous generation. There's a growing consensus among Japanese youth that, beyond mere survival, pursuing personal happiness is essential.
I believe entrepreneurship fits well with this change in values. Essentially, the demand for a fulfilling lifestyle, where one is the master of their own life, has increased in Japan. This alternative value system, realized through entrepreneurship, entrepreneurial spirit, and venture business, signifies a changing perception of startups and entrepreneurship within Japan.
What global startups need to know when entering the Japanese market
Q. What ultimately does Venture Cafe Tokyo aim to achieve amidst the changing landscape in Japan?
We believe that isolation is the enemy of innovation. By connecting innovators, we believe innovation can be facilitated.
Therefore, at a center called CIC Tokyo, Venture Cafe Tokyo hosts a community event called 'Thursday Gathering' every week. About 400 people attend this event each time. We pride ourselves on being the largest, most open, and inclusive venture event in Japan.
This event can also be utilized by overseas startups looking to tap into the Japanese market. For example, when the Korean AI startup Wrtn entered the Japanese market, they conducted their launch event through Venture Cafe Tokyo. We strive to be the gateway for global companies entering the Japanese market and to play a role in the local ecosystem.
(Refer to : If you're considering to startup a business in Japan, this community is a must to visit)
Q. Who typically attends the Thursday Gatherings?
Many attendees are stakeholders in the startup industry or entrepreneurs. The rest, about 25%, are professionals or corporate executives who are not startup employees, and another 10~15% are college students or researchers participating in Venture Cafe Tokyo's regular events.
Q. What should be the first thing a global entrepreneur considers when looking to enter the Japanese market?
Firstly, it's important to meet and network with industry stakeholders in Japan directly.
Japanese business customs tend to emphasize trust. Especially for serious collaboration, it's essential to keep in mind that the Japanese business ecosystem is 'cautious.' We recommend building personal trust with industry stakeholders through events like Thursday Gathering before proceeding with formal business discussions.
Furthermore, in Japan, stakeholders who prefer communication in Japanese still exist. Although the number of people who can communicate in English is increasing, speaking Japanese can be an advantage in important business situations like investor relations or sales meetings.
(Refer to : Increasing English Proficiency in Japanese Business: A Global Perspective [Entry to Japan 3])
In fact, the issue is not just about being able to speak Japanese. Ultimately, business localization is key. It's urgent to find local talent who can understand and execute both the Japanese market and your company's business strategy. You need a local manager who can balance the understanding of the Japanese market with your business model.
The role of Venture Cafe Tokyo and its future plans
Q. How can you hire a local manager who is knowledgeable about both the local situation and business?
To find good talent, you ultimately need to be part of the local community. (Of course, finding talent is still challenging!)
Therefore, Thursday Gathering plays a crucial role in connecting innovators and serves as the first step for global businesses entering the Japanese market. I believe now is the opportune time for Venture Cafe Tokyo to shine, as Japan's venture ecosystem grows and both domestic and international key players show interest in these changes.
Q. Please tell us about the future plans for Venture Cafe Tokyo.
We plan to continue the Thursday Gathering events consistently in Tokyo and expand our venture ecosystem's stage by organizing additional social events in major cities throughout Japan, such as Nagoya, Tsukuba, Gifu, Osaka and Fukuoka.
Also, we will host the "Rocket Pitch Night" again in 2024. The Rocket Pitch Night is one of the largest pitch events in Japan where startup founders in pre-seed to seed stage investments present their businesses.
Furthermore, we plan to introduce new educational programs. This is to broaden Venture Cafe Tokyo's role in entrepreneurship and startup education. Ultimately, we hope that Venture Cafe Tokyo will serve as an open infrastructure for the innovation ecosystem accessible to everyone.
Helping each individual find their happiness and dreams is also an important mission for me personally. I believe that entrepreneurship is a 'way of life.' I hope to see more individuals, not just startup founders, pursue 'entrepreneurship' as they innovate their lives and society.
Written by Jinny (Underdogs)
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