Japan through the eyes of local startups

For a country that spends 3.39 percent of GDP on research and innovation, Japan scored an impressive second place in the ranking for best countries for entrepreneurship.

One might think that the startup ecosystem is blazing in the land of the rising sun, but other reports paint a different picture.

Japanese cities were sorely missing from Compass’ global startup ecosystem report of 2015. Venture capital (VC) in the country, while doubling to US$2 billion in 2015, is still a far cry from the United States’ 2015 VC investments of US$59 billion. Moreover, none of the 174 top unicorn startups in the world hail from Japan.

It seems that most of the entrepreneurship (or rather intrapreneur) activity is still being generated from the traditional multi-national corporations.

Despite these facts, surely the startup scene of the world’s third largest economy is still worth a look. We asked startups operating out of Japan for their insights.

Opportunities in the market

The allure of the Japanese language and culture

More than 99 percent of Japan’s population prefer to communicate in Japanese, making the English language standards far below government targets.

However, it isn’t all doom and gloom. In fact, the situation creates a lure for international students who are eager to learn the Japanese language and culture. Over 208,000 international students studied in Japan in 2015, on track for the government’s target of 300,000 students by 2020.

To support this initiative, Shota Morikawa set up STBooking. The platform provides international students with relevant information on Japanese institutions and lodging.

The co-founder and CEO explains, “Our mission is to solve the uncertainty and asymmetry about the information related to studying in Japan and increase the number of foreign students coming to the country.”

Low online credit card penetration opens to alternatives

Ecommerce is huge in Japan. The sector is expected to make US$122 billion in revenue, with 80 million users in 2018. According to Russell Cummer, Co-founder and CEO of Exco, only 60 percent of online purchases are made using a credit or debit card in Japan, compared to the United States’ 90 percent.

Only 60 percent of online purchases are made using a credit or debit card in Japan, compared to the United States’ 90 percent.

Challenges faced in the business environment

The startup scene in Japan

Advice from local startups