While the rest of the world is copying Silicon Valley, Tokyo is looking at Paris.

Today we sit down with Mark Bivens and Matt Romaine, the co-founders of Shizen Capital to talk about Japan’s new startup policies, the changing role of M&A, the main force behind the changing attitudes about startups in Japan.

It’s a great conversation, and I think you’ll enjoy it.

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Show Notes

  • Why Japanese startups need to start buying other startups
  • The root of Japan’s odd attitudes towards M&A and the forces changing it
  • Structuring investments into foreign startups making a Japan market entry
  • Why the Japan’s angel investing tax-break is not really about taxes
  • What Japan plans to import from the French startup ecosystem
  • The best way to win the hearts and minds to change startup culture
  • What’s driving the recent explosion in startup events, and will it last?
  • The best Japanese startup ecosystems outside of Tokyo
  • Can authenticity scale?

Links from our Guest

Transcript

Welcome to Disrupting Japan, Straight Talk from Japan’s most innovative founders and VCs.

I’m Tim Romero and thanks for joining me.

Everybody wants to be Silicon Valley.

Regional and local governments the world over proudly announced that they will be the Silicon Valley of, you know, whatever. We’ve seen Silicon Glen, Silicon Beach, Silicon Harbor, and countless other less publicized variations. Now, politicians calling out to Silicon Valley works fine as a metaphor, but you know, it’s not really a plan.

Well, the Japanese government has a plan and they are not looking to San Francisco, but to Paris.

And today we’re going to talk about that plan and so many other things as well. When we sit down with Mark Bivens and Matt Romaine, the co-founders of Shizen Capital, an early stage fund focused exclusively on Japanese startups.

Now, Matt and Mark are both startup founders who became VCs, and that’s still pretty rare in Japan. These VCs tend to be overrepresented on disrupting Japan because I don’t know, it’s a small group and I’m friends with a lot of them. But founders turned, investors are critical to the success of any startup ecosystem, and they’re playing an outsized role in shaping what’s happening in Japan right now.

Mark, Matt and I talk about what’s driving the changing attitude around M&A in Japan, which part of the government efforts to support startups are actually working and Japan’s potential advantage in becoming a startup powerhouse in the coming years.

But you know, Matt and Mark tell that story much better than I can. So, let’s get right to the interview.

Interview

Tim: We’re sitting here with Mark Bivens and Matt Romaine, the two founding partners of Shizen Capital. So, thanks for sitting down with me.

Matt: Delighted to be here.

Mark: Yeah, pleasure. Tim. I think I mentioned this privately to you before, but I’m pretty still relatively new in Japan. Seven years ago I moved here and you were my first source as I wanted to learn about the Japanese startup ecosystem.

Tim: Well, thank you.

Mark: Somebody introducing me to your podcast, so thank you.

Tim: Well, no, thank you. It’s been a great project and I’m glad this has kind of come full circle and I get a chance to sit here and interview you on it.

Mark: I also have to say, in a past life I was a radio DJ. You have a great radio voice, Tim.

Tim: Thank you. It’s funny, people tell me that all the time, but this is just the way I talk, like normally. Well, thank you. So, let’s get into it. So, tell me about Shizen Capital. Who are you investing in and why?

Matt: Yeah, well, so I first met Mark in 2015 at a conference in Fukuoka. It was the B dash conference. We were introduced by one of Gengo’s investors. Mark and I, hit it off and eventually just sort of flying forward a couple years, we reconnected and I was ready to sort of think about post acquisition, a new adventure.

Tim: Let’s back up a little bit. Long time listeners will know what Gengo is and who you are, Matt because you were on the show seven years ago.

Matt: Would’ve been eight years ago. 2015, yeah soon after we raised our series C.

Tim: Wow. That was a while ago. However, some of our newer listeners who have not absorbed the entire back catalog yet could deal with an explanation. So briefly, what was Gengo and what happened to it?

Matt: We were a crowdsourced human translation platform, founded in 2009, and over the course of about 10 years we raised $26 million from both local and overseas VCs. And in 2019 we were acquired by a company called Lion Ridge.

Tim: After that acquisition, because I remember you and I were talking about this over coffee a couple of times. Did you want to start another startup? Did you know you wanted to get into VC after that exit, or was it just this kind of synchronicity of meeting up with Mark and Fukuoka that led you to this?

Matt: Fortunately, I guess the latter half of my time with Gengo, I had a few opportunities to invest in sort of a new generation of founders, both in Japan and overseas. That kind of got me interested. So, I had already basically been dabbling in a little bit of angel investing. So, when Mark approached me with this idea of doing something, scaling it up, doing something a little bigger…

Tim: Kind of a natural next step. Well, Mark, I mean, you guys founded Shizen in 2016, but you’ve run funds for quite a while before that.

Mark: Real quick, if I leave out the naughty bits, my background’s pretty short.

Tim: Oh, don’t leave out the naughty bits.

Mark: But three startups in the nineties, born in Silicon Valley. My first two startups failed. The third one was acquired in 1999. This was the.com bubble period. Very lucky break in terms of timing.

Tim: 99 was a great time to be acquired.

Mark: It was a good time to exit. So, I became unemployed. I sold the company. I was unemployed. One of the VCs that had backed us, took me under his wing, hired me, taught me the business of venture capital, and I realized I loved it. So, I’ve been doing that since then, almost 25 years, I guess now. And approaching Matt with this idea of a fund, actually it was a no-brainer, understands things on the ground, native Japanese speaker. And I tell you, Tim, I would meet star entrepreneurs and maybe midway through the conversation it would come up that my partner is Matt Romaine. And then the tone of the conversation just was transformed. Oh, you know, why didn’t you start with that? Suddenly everyone’s friendly and nobody’s trying to pitch anyone anymore. It’s like, how much can you invest? What do we need to do to secure your capital?

Tim: So, was that reaction because of Matt specifically, or was it just the fact that there was people with startup experience and that was your differentiator from 99% of the VC firms in Japan?

Mark: The answer is the former, and I can confirm that with specific anecdotes. Because usually I would put that upfront that our differentiator is we are former entrepreneurs, we’ve built companies, and that’s at the point where they would say, well, who’s your co-founder? I mentioned Matt Romaine and then the conversation reaches this inflection point and suddenly we’re talking about a deal.

Tim: What types of startups you’re looking at? How does that inform your portfolio selection?

Matt: We’re fairly agnostic, there has to be a tech piece to it. We’re investing in companies that we believe can scale. So, we’ve done everything from FinTech to property tech, some Web3, some education tech. Our backgrounds are primarily in software, and so it’s more biased towards those types of investments. But we’ve done a few in hardware some in medical. They are really early stage. And so a lot of what we look at relies a lot on sort of the team and the interactions that we have with the founders.

Tim: Is your value proposition mainly, we’ve been through the struggle ourselves. We can help you, we’re going to help propel you globally. What’s the main attraction of Shizen to those ambitious founders who everyone is chasing down?

Mark: Obviously it depends on what is appropriate for their business, but indeed, we are often investing in founders who can take a business global. We don’t prescribe that every company we back needs to go global. In fact, ironically, many of the foreign founders in Japan that we’ve backed are focused on the domestic market.

Tim: Japanese VCs have a tendency to be very hands off. As former founders, is part of your value add being hands-on?

Matt: Maybe you’ve heard this from at least one other fund out there, but we’re more kind of a hands if we don’t put together a schedule where we have to be involved on some regular basis. So, for example, we do this Shizen workshop series. Today’s was on actually M&A. What’s interesting is the founder listening to it might be thinking like is that my exit? But actually it is also a way to think about how to grow, can grow a business organically, or you can also grow a business through acquisitions.

Tim: So, like startups acquiring other startups is common in the US where startups tend to be much better funded. I is that something we’ve seen in Japan?

Mark: This is a topic that we speak a lot about. And in our opinion, it is an essential ingredient of a healthy startup ecosystem. Still missing in Japan, improving, but still missing. So, I like to use France as a benchmark because France is an ecosystem that in 2000, it was a country of multinational companies, but very few startups. Entrepreneur is a French word, and the irony is very few of them in France at the time, the good ones would leave and go to Silicon Valley.

Tim: George Bush famously joked that the French have no word for entrepreneur.

Mark: Never mis-underestimate the wisdom of George Bush. The country, however, transformed. 44 tech unicorns today in France. This was not an overnight success. This was a 15, 20 year building process, but it was a transformation. If we look at the unicorn metric, we have 44 in France, those 44, over 70% of them, they have grown through M&A they have grown through acquisitions.

Tim: There’s two different paths I want to drill down on that. But right now, let’s just drive down the M&A path for a moment, M&A in Japan it’s kind of going through this transformation. So until, let’s say 15 years ago, strategic M&A wasn’t really a thing in Japan. It was distressed assets. Companies would buy assets at a fire sale or sometimes the government would broker deals. And it seems that the attitude towards M&A, internal M&A, Japan companies have always been very in acquisitive outside of Japan. But it seems to be changing, but it’s still relatively rare. And I think like all of your portfolio exits have been M&A, right?

Mark: All of the Shizen capital exits and all of the exits are precursor fund to Shizen capital made in Japan have indeed been through M&A.

Tim: And this pretty unusual.

Mark: When I arrived in Japan, all the VCs said the bulk of their exits, if not all of them, were through IPO, usually on the mothers that TSE growth. In Europe for small cap companies, there was really not a functioning IPO market. The volumes were too low. It was difficult to exit.

Tim: Well, yeah, but even if you look at the US markets, which are much more liquid and much larger than Japan, you still have a much higher percentage of M&A. So, it’s not just liquidity. It’s an attitude.

Mark: Yes. This is what I believe too. This attitude needs to change. There’s a perception that M&A is kind of the plan B, that it was secondary.

Tim: When I was raising funds for my second startup. So my first startup, I sold through M&A and I remember having one investor meeting and this guy was ripping into me saying, well, your last exit was an M&A and we want to know that you are serious and plan on doing an IPO this time. And as if that was some kind of a failure. And of course it’s like, oh no, absolutely. I mean, that was the goal. But you know the.com crash and da da, he didn’t end up investing anyway, but yeah the attitude.

Mark: It would benefit the Japanese ecosystem and the country for this attitude to evolve.

Tim: So, why are things changing now, do you think? Because they are, they definitely are.

Mark: We do see some positive signals that things are changing. In fact, a year ago, I want to say I made a bold prediction in the FT where I said M&A in Japan is about to go intergalactic or so bold.

Tim: Yes. Yeah.

Mark: Part of it was to grab the headline, but part of it was, what’s the value of M&A for the ecosystem? A healthy startup ecosystem has an army of serial entrepreneurs. People that have built something and sold it for a modest sum and they want to go back and do it again and aim in order magnitude larger.

Tim: It’s an incredibly beneficial to the ecosystem, but like the investment bankers don’t care about the ecosystem. So, I’m curious with the boom and M&A are VCs stepping up to kind of help broker these deals? How are they getting done? Are other VCs and investment bankers kind of adding this to their portfolio of services on a practical level, how is this changing?

Mark: So, a few theories take the founder who goes the IPO route. The IPO, and they still retain a big stake in the company and they’re still managing the company and they have an obligation to all these retail investors who backed them and they have to keep running their business. And maybe things evolve, but they’re stuck. They can’t leave. And maybe their passion is coding or building, but their job now is relations with regulators and shareholders. And we have direct stories of people who are depressed that are in this. They’re stuck. These stories are starting to circulate. So, among the founder community, there’s discussion and they see a few role models. Pedi, great example, fantastic M&A exit for Japan. The founders are now one of them building a new company. The other angel investing, both fantastic for the startup ecosystem. Another is Japanese corporations I saw, according to the economist, 3 trillion US dollar equivalent of cash on their balance sheets profitable and years of arguably under investing. Things are changing now. More activists, shareholders on their cap tables who are advocating for something, share buybacks or dividends or more investment and inflation is here, So this 3 trillion is eroding. And there’s a sentiment shift at that level too, among corporate CFOs that now this doesn’t make sense to just sit in cash on our balance sheet.

Matt: Let’s not forget that we’re in Japan where one in three people are 60 years and older. And so you have this aging demographic and Japan has one of the largest number of small medium businesses, so there’s this generational shift. So, you have a lot of businesses, over half a million businesses that have no succession plan. But then you have one of the bigger, if not biggest IPOs that happened last year, a business that helps M&A transactions. And so it’s not just within the VC space, it’s also just more macro with here. And so it’s kind of feeding on each other. A business called Borist, they acquire their niche e-commerce businesses. That’s one of their way that they’re growing. And so there’s sort of a normalization around M&A and that’s sort of making it more acceptable.

Tim: It has really been like a missing component. I mean, it hasn’t been missing, but it’s been an underdeveloped component of the Japanese market for a long time now. I want to dig into the France connection, but before we do that, I want to jump back to our portfolio in your thesis again. So, you said some of your portfolio is strictly focused on the Japanese market. Some have global ambitions, and you’re also investing when in some companies overseas are those ones that are planning on coming to Japan?

Matt: Yeah, so as one of our requirements is that we can only invest in Kabushiki Kaishya. So, they have to be Japanese entities. What ends up happening is we will structure an investment where we will do it through their local subsidiary.

Tim: Oh, okay. So, you’re investing in the KK the market entry vehicle. Do you have some kind of a buyback clause in there? Because I mean, you don’t want to end up being the minority shareholder of a foreign subsidiary.

Mark: That’s exactly right. There are basically two ways to do it. A swap agreement that converts subsidiary shares into the foreign parent.

Tim: Based on like percentage of revenue or something?

Mark: Or just based on next financing round. Just like a J kiss converts into equity. Yeah, actually maybe that’s what we should start to call it. Some kind of global J kiss. There you go. And then the other way is a put option where we have the right to sell and they usually have a call option. So, we have the right to sell our stake in this subsidiary at a future point for a predetermined value or for a predetermined definition of how that value is calculated. Based on milestones that you mentioned or multiple sort of things.

Tim: I’m assuming this is a result of the Angel Zeisei structure. When you set up your fund, you had a really interesting offer in that all your investments would be compliant with the Angel Zeisei tax break. So, has that resulted in a lot more like individual LPs as opposed to corporate LPs?

Matt: So, the tax benefit that one gets in participating in our fund is just for individuals. And over 95% of our LPs are individuals.

Tim: Is it difficult managing so many LPs?

Mark: It’s deliberate. No, it’s not difficult. And on the contrary, it’s probably biggest asset that we have. All this vision is a coherent package. And it started with looking at how did France, who culturally, in terms of attitudes around risk and failure was not too dissimilar from Japan 20 years earlier. How did they transform into one of the top three to five startup ecosystems worldwide? In my opinion, most significant component of that transformation was the French tax break VC fund structure. Call it the French Angels Zeisei, it was launched just before I arrived in France. I received it as a skeptic, but then I witnessed it in action over 17 years. And it was genius. And it not only brought capital to early stage risky projects, but more importantly it changed the mentality of the French people. So, you would have French citizens who would invest in a VC fund, they would receive a tax break for doing so. Most of them were doing it for the tax break first and foremost. They didn’t necessarily understand what a VC fund did, but over time they learned, they realized that VC funds invest in risky projects. Some of those risky projects go bankrupt. Some of them turn out to change the world.

Tim: So, rather than the flow of capitals per se, it was the change in attitude, the ability to get people to start seeing entrepreneurship as more socially acceptable.

Mark: Exactly this, I moved to Japan. I see a lot of the similarities culturally, like I mentioned, around risk. And I then by accident, discover that there was an existing tax break in place called Angels Zeisei.

Tim: Thank you for bringing us back to France because I wanted to head back there. So, my understanding that the Angels Zeisei system was specifically modeled on the French tax break is that the case?

Mark: Well, we like to believe that a lot of what the Japanese government does is modeled on our input. And we’ve certainly been…

Tim: So, it’s your idea?

Mark: …preaching it, but it’d be a little too arrogant to take credit for it.

Matt: Kind of causation or correlation.

Mark: Yeah. But put it this way, that we have very close relationships with the Japanese government, especially METI and the Tokyo Metropolitan government. They are incredibly supportive. And I’ve never felt this degree of interest and ability to listen from regulators than I have here in Japan.

Tim: METI’s talked quite openly about their admiration for what’s happened in France and the policies that have been put in place. And it just seems that they are drawing a great deal of inspiration from the roadmap that the French regulators and the policymakers put in place and much more so than what’s happening in Silicon Valley.

Mark: I know we’ve joked about this privately, but there was a phase and every country went through it, of we need our own Silicon Valley. Let’s create a Silicon Valley. And I come from Silicon Valley, I felt like this is unrealistic. Doesn’t make sense. Silicon Valley is completely different. And that’s when I started thinking, if we’re going to draw inspiration from other venture ecosystems, the French model is potentially pretty relevant to look at.

Tim: Well, it’s certainly a success story, not just in terms of like unicorn counting, but just in terms of how far, how fast the French have made progress. So, I think it’s a good place to be taking inspiration from.

Matt: And it’s more recent. So, the Angels Zeisei has actually been around for over a decade and it’s gone through some transitions. And then Silicon Valley been around for decades. The French venture ecosystem, its development, its growth has been a bit more recent. And so the Japanese government finding it a little bit more, I don’t know tangible to identify sort of the beginning and how it progressed.

Tim: So, digging in a little deeper to sort of like the Japanese government support of startups. So Matt, I know you’re incredibly active in mentoring and speaking at startup events, both government sponsored and private. So, the number of those events are just skyrocketed in recent years. So, is that more going out and waving the flag and supporting the ecosystem? Or is do you view that as deal flow or as a combination of the two?

Matt: Now that we’re a couple years into when former Prime Minister Kishida launched his five-year plan, government’s move kind of slow, especially the Japanese one. Former Prime Minister Kishida announced that he wanted to support investment and innovation. They finally sort of announced it. That took some time and then budgets were starting to be formed. That took maybe another, at least eight to 12 months. And then the budgets were allocated to the different ministries and then the ministries had to come up with a plan to how to actually spend those budgets. Yeah, I think it’s our fourth year into it. Now we’re starting to see the actual capital being used in some form. And they’re trying many different strategies. I think their heart is in the right place and directionally it’s up into the right. Sponsoring thought leaders in overseas startup ecosystems to come to Japan, share their knowledge. They’re also funding initiatives to send entrepreneurs overseas to experience other environments and be inspired. I mean they’re just trying lots of different.

Tim: I think you make an interesting point because it is a whole lot of money flowing into, not necessarily into startups, but into ecosystem support. And these agencies are fairly constrained in how they can use the money. They can’t hire staff because they’re government agencies, you can’t just staff up. So, they end up, they’ll hire Deloitte to run programs or hire Techstars to come in and do things. The program to send a hundred or how many?

Matt: Like a thousand.

Tim: A thousand that’s right. A thousand entrepreneurs to various cities to learn entrepreneurship via osmosis. I mean, you could argue whether any one of these programs is the best use of taxpayer money, but do you think it’s having the effect and Mark, back to your point of this visibility and publicity kind of changing the opinions of the Japanese population about entrepreneurship. Is it having the hearts and minds effect?

Matt: On some level, yeah, I mean, I was down in Fukuoka in October for an event the local government there was running.

Tim: That was the ramen tech.

Matt: Yeah, it was. And in fact the event itself had been running earlier under a different name and then took inspiration from sushi tech in Tokyo.

Tim: These are really strange. So sushi tech was like sustainable high tech city, Tokyo. And Ramen tech. I had to look it up, but it was revolutionizing Asia merging ecosystems and networks tech

Matt: I didn’t even know that.

Tim: They worked for that acronym. I mean it’s a back-acronym. It’s an acronym for sure.

Matt: But even down there, I mean you have station AI, right? And look, there’s no one sort of like silver bullet thing that’s happening. I have a couple different shifts going on. You have the generational shift that we spoke about a little earlier. You’ve got global macro tension and then you’ve got these carrots by the Japanese government sort of trying to support more entrepreneurship here. You’ve got Shibiya city startups. You’ve got the entrepreneurship visa that Fukuoka, I think, I’m pretty sure they tried years ago and then Shibya city trying to do their version of it and should be launching soon. And I think in some sense it is starting to seep outside Tokyo. Tokyo being perceived for a long time as like where all the startup act happens. But actually…

Tim: I know like Fukuoka has always been, I mean I’ve always got a soft spot in my heart for Fukuoka, but Fukuoka has always been kind of, they had that a startup ecosystem before Tokyo did really, I think.

Matt: But you can go to fairly remote parts of Japan and start to find like co-working spaces, shared office spaces.

Tim: So, outside of Tokyo I mean Fukuoka is exciting. What other startup communities in Japan stand out outside of Tokyo and Fukuoka?

Matt: Well, there’s the station AI that we spoke about. Osaka has a fairly vibrant ecosystem. I have not been, but I’ve heard good words about the Sapporo environment. Also, actually OIST in Okinawa, the research institution down there. So, it’s percolating outside.

Tim: Yeah. I’ve got to give a shout out to like Kyoto as well. It’s a very small ecosystem, but a really good one. And in fact, a couple of years ago I was going to give a speech at the Hako Osaka event, and I posted on Facebook or LinkedIn or somewhere that I was going there. And no one from Osaka got in touch with me, but like four different founders from Kyoto. I was like, oh, you’re going to be in town. Why don’t you come by? We’re having this event. I wasn’t even going to Kyoto. And so I extended it a day and went to Kyoto and went to these events. It’s a very supportive dynamic small group of people there. I love that ecosystem.

Mark: There are some treasures of Japan that, and innovations or crafts that could make for good startups that are coming from some of these remote regions. One of our favorite investments is from Arita near Nagasaki. Not a tech company, but a very high potential interesting business making espresso cups out of Arita Yaki in partnership with these centuries of tradition craftsmen from Arita.

Tim: Wait a minute, is this…

Mark: You’ve had Peter on your podcast in his past venture? Well, he’s also repeat offender now.

Tim: Okay. That idea sounded familiar to me as Peter’s startup. That’s right. That’s awesome. Well listen guys, before we wrap up, I want you to kind of gaze into the crystal ball here and tell me what does the Japanese ecosystem look like in five years? What does Shizen capital look like in five years?

Matt: I feel like we’ve sort of seen a hint of that in a space tech startup that I read about that has been making and launching satellites out of wood. If anyone’s been sort of following Japanese craftsmanship, Japan for a long time has been excelling in woodworking and interlocking wood pieces. And you can build an entire house with no nails and no screws. And so the space tech venture actually found and recruited woodworking craftsmen and Kyoto, I believe. And so my crystal ball capitalizes on a lot of this Shokuhin culture and brings it into sort of a next generation environment.

Mark: It’s a perfect example of where now thanks to innovations in AI, content is becoming commoditized. You can make an image that looks professional or a brief or a commercial or a song, everyone will have access to that. So, we predict that we will enter a world where authenticity is prized. Japan has a tremendous role to play in this world. The Shokuhin culture, the craftsmanship of centuries of tradition. Japan arguably is best positioned to capitalize on this age of authenticity.

Tim: I want to see that. Like I want to believe. But this is a really contrarian play because authenticity, craftsmanship doesn’t scale, and scaling is everything. So, how do you square that circle?

Mark: With experiences. Product is part of an experience. How do people spend the bulk of their discretionary income? So, what do they value?

Tim: So, do you see it as kind of a luxury play or just a mass market of new unique quality items with stories and experiences surrounding them?

Mark: Well, there’s two parts. There’s where do we look to invest and then there’s what is Japan’s future competitive edge? In terms of our investment it really is about financial returns. So, it could be luxury goods. But then more broadly, how can Japan play a role in this and scale?

Matt: Trust is a big piece of authenticity as well. And in Japan, as you know, there’s a lot of trust and respect built into Japanese culture. In fact, what takes 15 to 20 pages in legal documentation in the US you can do in one page in Japan.

Tim: Because there is a societal expectation that norms will be enforced and people will stand by their promises. But I do think that is an interesting idea that Japan will play off its strength/weaknesses of doing things that don’t scale. Where perhaps there has been an over scaling of lower quality products and experiences over the next five years, we might really see an increasing market for extremely high quality, extremely unique, not necessarily luxury per se, because it could be in engineering as well, extremely high quality unique goods. So, that’d be an interesting thing to see. Well, listen guys, I want to thank you so much for sitting down with me. I really appreciate it. Thanks so much.

Mark: We’re honored to be able to do this with you. Thank you, Tim.

Matt: Yeah, we just barely scratched the surface.

Tim: I know. I feel like we could go on forever

Outtro

And we are back.

It’s fascinating to see how startup ecosystems are developing outside of Tokyo. At first glance, it seems like there is dynamic startup activity all over Japan traveling the country. You see co-working spaces, pitch events and startup workshops in every major city and university, and quite a few minor ones as well.

At second glance, however, you start to get a little cynical, a lot of this activity is just spending budget allocated from government funds. Prefectural government stand on stage and announce that their prefecture will be the Silicon Valley of Asia, but they won’t actually change procurement policies to enable them to buy from startups.

So, will all this startup support disappear when the budget ear marks go away?

Yeah. Yeah. A lot of it will.

But as Mark and I discussed, these startup workshops and tax breaks and co-working spaces and political speeches do change the public perception of startups in a way that should survive any future funding reductions. These activities also prime the pump by providing would be founders with the resources and confidence they need to launch their new startups.

Of course, priming the pump only works if there’s actually water in the well.

And although there’s still some debate about that, I think the numbers speak for themselves. Even with the startup slowdown in other parts of the world. Japan’s startup formation and investment continues to rise. And more and more of Japan’s best and brightest from industry and universities are looking at changing the world by starting a startup.

I think Japan is tapping into a very deep well indeed.

 

If you want to talk about the future of startups in Japan, and I know you do, Matt, Mark, and I would love to hear from you. So, come by disruptingJapan/show227 and let’s talk about it. And if you enjoy disrupting Japan, share a link online or just tell people about it. Disrupting Japan is free forever and letting people know about it is the absolute best way you can support the podcast. But most of all, thanks for listening and thank you for letting people interested in Japanese startups and VCs know about the show. I’m Tim Romero and thanks for listening to Disrupting Japan.