Yahoo Japan and East Ventures want Code Republic to be the Y Combinator of Japan

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Yahoo Japan, home to Japan’s most popular web portal, and East Ventures, a pan-Asian venture capital firm, are teaming up to create a new accelerator in Tokyo. Code Republic launched today and is the brainchild of Ryu Hirayama, managing director of YJ Capital, and Batara Eto, co-founder of East Ventures.

The structure of the three-month program is straightforward and more than a little reminiscent of Y Combinator. YJ Capital and East Ventures will collectively invest US$63,000 for a 7 percent stake in the company. It is possible to apply prior to incorporating your business and even before launching a beta version of your product or service. However, teams without at least one engineer will be ineligible.

Japan already boasts a number of accelerators and demo days from top telcos like KDDI and Docomo as well as tech firms like Recruit and Digital Garage.

Aside from the usual slate of high-profile mentors and speakers, batch dinners, and individualized support, Code Republic offers something unique from the other Japanese accelerators: a wide door into Southeast Asia.

Teams without at least one engineer can’t get in.

East Ventures is one of the most prolific investors in Southeast Asia and counts Tokopedia, Redmart, Traveloka, and 99.co among its portfolio companies. And Tech in Asia. The Japanese market is large and pays well, but few investors can provide meaningful support for startups looking to expand internationally.

Code Republic will be equally appealing to founders content to stay focused on the domestic market as well. East Ventures has a portfolio of hits in Japan (Mercari, Gumi, FreakOut) and YJ Capital shows a knack for scoring prominent deals with startups like Raksul, Whill, and BizReach. It doesn’t hurt that it can also draw on the resources and experience of its parent company, Yahoo Japan aka the de facto homepage for Japanese netizens.

Code Republic might seem like just another accelerator story, but it is actually quite significant. Japan’s startup scene produces a significant number of billion dollar companies and private firms valued over US$100 million.

Southeast Asia appeals

Of the top funded companies in Japan, at least half have started or are intending to start overseas operations in Southeast Asia. When considering companies missing from that list like Gunosy (2015 IPO for US$263 million), Gumi (2015 IPO for US$890 million), or Line (anticipated US$3 billion IPO), the trend becomes even clearer.

Unlike the US, Japan’s startup darlings rarely falter between informal coronation and actual exit. If the current trend holds, the majority of Japanese startups with exits larger than US$100 million over the next 10 years are going to be active in Southeast Asia. Their founders are going to need investors and corporate partners who can substantively assist those expansion plans.

Multiple Japanese VCs and corporates have local and international influence, but the battle for globally-minded founders is limited to just a few firms like CyberAgent and Global Brain, which have track records of excellence inside and outside of Japan. With Code Republic in hand, East Ventures and YJ Capital are angling to be the top choice for ambitious founders.

Code Republic is accepting applications (JP / EN) from April 25 to June 17. The first batch of 10 startups will be selected by early July and the inaugural demo day will take place on October 31.

Converted from Japanese Yen. US$1 = JPY 111.17