Deloitte Tohmatsu (Deloitte), a “Big 4” accounting and consulting firm most recently reported annual revenue of US$32 billion, good for a respectable 89th showing on the list of national GDPs. That cash flow is generated by a worldwide network of corporations who pay Deloitte’s army of consultants and accountants consultants and accountants enormous hourly rates for business support. But what can a company get from Deloitte for free? If it is a startup located in Japan, the answer is everything.
Deloitte’s little known subsidiary, Tohmatsu Venture Support (TVS), is making an offer that seems too good to be true. It will provide startups with support in:
- Improving sales (introducing potential clients, suggesting possible alliances)
- Public relations (explaining the basics, helping a startup stay on message)
- Raising money (advising on the pitch and who to talk to)
- Hiring (introducing potentially helpful staff or temporary hires, particularly lawyers and accountants)
- Overseas expansion (making a connection to local venture capitalists and industry contacts)
- Staff education (training for first-time CFOs)
Deloitte actually offered such services – for a price – starting in 1997. The business was shuttered after Japan’s tech bubble burst in the wake of the Horiemon scandal of 2006. TVS was dormant until it was was revived three and a half years ago. The current incarnation is completely free and with a mission to jumpstart the Japanese economy.
“Many people thought it might be over for the Japanese economy”
TVS offers its expertise and services for free because it believes that startup growth will boost the Japanese economy. As Fumiaki Sato, a leading member of the TVS business development team told Tech in Asia , “[When we started] many people thought the Japanese economy was stagnating…we wanted to do our part to kickstart the economy.”
Sato’s team believes that startups need top-level support so they can survive long enough to reach an IPO. That support often comes from venture capitalists but TVS stresses the importance of being a neutral third party. Sato points out that many startups can become trapped in an unequal power relationship with VCs. He warns that startups can become overly dependent on their VCs, ultimately limiting their business strategy. If they tap into TVS’ network however, their business options will likely multiply due to their access to the worldwide Deloitte network.
This argument has persuaded over 2,000 startups headlined by a rock star group of Japan’s latest tech darlings. Freee, Crowdworks, Sansan, Uzabase, Pixta, MoneyForward, Kaizen, and Manabo have all reached out to TVS in the past and used the company’s weekly Morning Pitch to meet investors and expand their client base.
Monetizing a free service
TVS does not charge startups a fee because it places greater value on the knowledge gained in the process. The know-how of starting new businesses and identifying strong entrepreneurs is sold to large corporations who are looking to establish new verticals or get a positive ROI from a corporate venture fund. Revenue is also gained from Japanese city administrations outside Tokyo. Smaller cities have many of the same problems as Tokyo but are lacking the technical wherewithal to properly address them.
Kobe, a city in western Japan where famous cows (not basketball players) come from, came to TVS with such a request. It wanted to upgrade its digital health care capabilities but did not know where to start. TVS stepped in and created an event where city officials could meet relevant startups from around Japan. As Sato explains, “We are like Google. With Google, the search is free but the ads are paid. We can create a startup network for free and then large companies [or cities] will pay us to access it.”
TVS – not just a Tokyo operation
Sato believes the work TVS does has been paying off. He sees a rise in IPO filings and a stronger feeling that the country is on the road to economic recovery. For that recovery to be sustainable, however, TVS must reach outside Tokyo. “I came to Tokyo for work and when I arrived I realized that there was a big difference in their economies. There were so many people and things in Tokyo, that sort of ecosystem does not exist in the countryside. In the future, if Japan’s countryside does not strengthen, the country cannot strengthen,” he said.
TVS is actively trying to find entrepreneurs outside of Tokyo. Its services might prove to be invaluable since the average first-time entrepreneur can only come up with a solid idea that has a market fit. Even the really good first-time entrepreneur probably only knows how to find a scalable idea. They need advice on the sundry aspects of building a business. Getting reliable advice on essentials like raising money, handling PR, or hiring can be hard to find in Japan’s nascent, at times opaque, startup ecosystem. For a new entrepreneur, going to one of TVS’ many event held around the country might be a good place to start.