2014 in review – Japan’s biggest startup deals

The premier of Softbank’s Pepper, the emotionally intelligent robot, was a major storyline this year.

Tech in Asia said konnichiwa to Japan in 2014, setting up shop and holding Tokyo’s very own Startup Asia conference. There were some huge tech stories this year – Mixi’s resurrection, Bitcoin’s fall and possible recovery, even long-awaited positive news from the likes of Sony and Nintendo.

But Tech in Asia‘s primary focus is finding the best of startups so today we are going to look back and highlight some of the biggest news to hit Japan’s startup ecosystem (and be reblogged endlessly on Facebook and Twitter).

Though I firmly subscribe to the notion that all entrepreneurs are winners and all investors are fine examples of noblesse oblige, for this line-up I had to make some tough choices and omit a lot of worthy candidates.

Are you a fan (or an owner disguised as a fan) and angry that I ignored your favorite company? Talk about it in the comments!

Best domestic investment?

Seed money was plentiful in 2014 but it was series A and B investments which made the biggest headlines. In Japan, where series C is often substituted for IPO, securing US$10 million or more in funding is a clear sign that the startup is becoming a notable player. Looking back, the top funding story of the year is not going to be worth hundreds of millions of dollars a la Flipkart or Tokopedia, but it’s still a startup well worth watching.

To be considered, a startup needs to have earned a big funding round or several sizeable rounds within the year. Money is not everything, however, and the company’s likelihood of overseas success was a big factor in determining who made the cut. Go global or go home.

Winner: Smartnews

With a hefty US$36 million investment lead by Gree and Atomico, Smartnews tops the list. The news curation app spent much of the year toiling as number two to market leader Gunosy. In reality, Nielsen is reporting that Smartnews now has more monthly users than Gunosy. Maybe that’s why it pulled in more cash too.

The company has just started international operations and is also moving into native ads to increase its revenue. There has been no whispers of IPO coming out of the company, making it a possible candidate for a huge round down the line.

Founders Ken Suzuki (l) and Kaisei Hamamoto (c) with chief journalist Rich Jaroslovsky (r)

Runner up: Mercari
Over the course of 2014, Mercari also raked in a fair bit of investment capital with US$14 million in one round and another US$21 million shortly thereafter. The C2C marketplace (users sell and buy each other’s clothes) is arguably the strongest of Japan’s alternative ecommerce startups. The ecommerce leader, Rakuten, is even taking notice, launching its own version of Mercari’s service last month.