Japan’s economy stands at a precarious crossroads. Still recovering from the 2008 financial crisis, its central bank refused on Tuesday to print more money – or do anything really – to crawl back to a supposed 2% inflation goal. At the same time, steel tariffs set by Donald Trump’s White House are set to rock Japan, the second biggest producer on earth behind China, and have a knock-on effect on the country’s huge auto industry. And that’s not to mention a population that is getting older, and shrinking.
But Japan’s tech sector is still flying the Nishhoki high. SoftBank, NTT, KDDI and Canon are among the world’s most valuable tech companies – with the former ploughing a VC path across the world with its gargantuan Vision Fund that CEO Masayoshi Son says has returned 60% on its first year of trading alone.
It is giant multinationals, not startups, that give Japan its strength on the global tech landscape – the economic layer that rejuvenated the country post-war, known as keiretsu. But many of the big brands stopped innovating decades ago. And that is scaring investors.
Mid-sized firms, which comprise 54% of the Japanese workforce, are beginning to pick up the mantle. Startups, meanwhile, still lag far behind: the number of startup-dedicated VC funds may be a reported 1/50 of that in the US. But some small tech names are breaking into Japan’s mainstream – and it’s a trend that’s set to rise significantly in the coming years. Here are five young firms making waves in the Land of the Rising Sun. Check them out.
First launched in 2013, Mercari was founded by former Rakuten employee Shintaro Yamada – and has become one of Japan’s most recognizable e-commerce platforms. It is currently worth almost half a billion dollars, and has offices in the US and UK.
Over 100,000 items are listed on Mercari each day, which has been described by some in the media as “the new eBay”. Last year it hired former Facebook VP John Lagerling as its American CEO – and has been steadily increasing market share ever since. “If Mercari can make it in the US, I’m sure we can make it elsewhere, too,” he said upon his arrival. “It forces companies to go up to global standards quickly and I think the US is one of the most competitive markets globally. That will basically build muscle to be competitive elsewhere.”
One of Japan’s startup old guard, Cookpad – a Pinterest-style recipe sharing platform – was founded in 1997 by Tokyo-based entrepreneur Akimitsu Sano. So successful was the company, that Sano took it public in 2009, and stepped down as CEO in 2012 to invest in other startups like Japan’s Minnano Wedding, US food blog Cucumbertown and, most recently, Lebanese site Shahiya.
The company’s fortunes have plateaued of late. But Cookpad is still one of Japan’s most popular apps. In 2014 it used a $9 million funding round to scale, and offers recipes in Japanese, English, Spanish and Indonesian, and has a staff of several hundred.
3. Seven Dreamers
Capturing the Japanese spirit of invention perfectly, Tokyo-based Seven Dreamers Laboratories, Inc. was founded in 2014 with the goal of “creating things the world has never seen.” It has certainly done that, making breakthroughs in the fields of healthcare and robotics.
The company’s more recent headline-grabbers, however, have been far more consumer driven. Take its $1,200 golf club shafts, for example – or the Laudroid, a clothes-folding robot for the home. Little wonder the company is backed to the tune of some $95m, and continues to branch into ever more cutting edge fields like developing
4. Connected Robotics
Not that impressed with the clothes-folding robot? How about one that cooks? Connected Robotics, based out of Toyko (yes, most of Japan’s tech firms tend to be based in the world’s most populated metropolis), is making an automaton skilled at crafting takoyaki, a battered octopus ball that is one of the country’s most popular street eats.
Whether the idea of robot-made street food seems anathema to the genre is moot (especially when the process itself is so hypnotic): Connected Robotics is on the case, and has raised $580,000 to do so, from VCs including 500 Startups Japan. Founder Tetsuya Sawanobori even thinks his company is an ideal panacea to Japan’s dwindling labor market. “Right now, especially in the food service industry, they have a serious lack of labor because people tend to avoid these kinds of jobs, doing daily, repetitive (jobs),” he said recently.
5. Hachi Tama
Just when you thought this list wouldn’t include any IoT, Hachitama is here with its smart pet feeding device, equipped with a camera, which can monitor a pet while its owner is out of the house. Frankly some things should be left an eternal secret. But if you really must know what Fido or Fifi is up to at all hours, this is the product for you.
Hachi Tama, owned by “cat healthcare toilet” company Toletta, is currently backed by $1m in seed funding, and expects to do very well given there are over 22m domestic pets in Japan, and hundreds of millions more in the developed world. With it, according to Hachi Tama’s management team, you can now “enjoy the best moments with your pet,” so long as those best moments are not when you are physically with it.