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Quick overview of startup trends in japan

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A quick overview of startup trends in Japan. Hope it helps.

Quick overview of startup trends in japan

  1. 1. Quick overview of startup trends in Japan Yusuke Asakura Visiting Scholar at Stanford University Former-CEO of mixi, Inc. asakura@stanford.edu
  2. 2. 1 Japan as market Startup trend in Japan
  3. 3. Population) Japan has the 10th largest population in the world while aging society is going on 2 29 30 28 25 25 27 28 26 22 20 18 18 17 16 16 15 13 12 50 55 60 67 72 76 79 83 86 87 86 84 81 79 77 73 71 68 63 58 54 50 47 44 7 9 11 12 15 18 22 26 29 32 34 36 37 37 37 39 39 38 36 35 899101111 124 2015 127 2013 127 1960 93 2030 4 83 1950 5 89 117 2060 87 1955 5 97 2050 92 2055 112 2035 107 2040 102 20452025 121 20201995 125 1990 123 1985 121 1980 117 1975 112 1970 104 1965 98 6 2010 127 2005 127 2000 127 Under 14 Over 65 15-64 SOURCE: The national census, National Institute of Population and Social Security Research Actual Forecast Population of Japan (million)
  4. 4. GDP) Internet and Mobile sectors are key drivers of Japan’s economic growth 3 SOURCE: GLOBIS CAPITAL PARTNERS, Ministry of Internal Affairs and Communications Real GDP (%; Compound Annual Growth Rate; 2005-2011) -4.4 -3.7 -1.6-1.2 -0.4 0.40.60.9 7.6 13.5 -5 0 5 10 15 Retail -1.0 Other IT Electric machinery Transport machinery Mobile communication SteelInternet services Average Trans portation Whole sale Constr uction
  5. 5. Internet penetration) More than 90% of people over 13-59 use internet 4 100.4 96.596.194.694.190.9 88.187.585.3 79.577.3 0 10 20 30 40 50 60 70 80 90 100 110 2003 20052006 2008200920102011201220132004 2007 Number of internet user in Japan (million) SOURCE: Ministry of Internal Affairs and Communications 22.3 48.9 68.9 76.6 91.4 96.697.498.597.9 73.3 0 20 40 60 80 100 30- 39 20- 29 40- 49 13- 19 50- 59 60- 64 70- 79 65- 69 80- Average 82.8 6-12 Internet penetration rate by generation in Japan (%; 2013)
  6. 6. Mobile contents) Japan’s mobile contents market shows strong growth 5 0 5,000 10,000 15,000 20,000 25,000 2011 19,061 2010 16,550 2009 15,206 2008 13,524 2007 9,681 6,465 10,085 7,345 11,716 8,510 14,997 4,835 8,689 5,525 2012 5,641 3,150 4,074 7,329 3,666 4,272 23,507 11,601 2006 9,307 2005 7,224 +18% Market size of mobile contents and commerce (million USD; 1USD = JPY100) 1 Calculated based on global digital goods market size and U.S. market share among global mobile contents market SOURCE: Ministry of Internal Affairs and Communications, GLOBIS CAPITAL PARTNERS, Mobile Contents Forum, Deutsche Bank, ResearchMoz, ITU - ICT Statistics Mobile Contents Mobile Commerce US mobile contents market is estimated to be 6.8 billion USD1
  7. 7. Smartphone) Japan is the most successful market for Apple’s iPhone 6 Penetration rate of device in household (%) SOURCE: Ministry of Internal Affairs and Communications, IDC Japan, MMD 0 25 50 75 100 2008 2009 2010 2011 2012 2013 PC Tablet Smartphone Mobile Domestic shipments of smartphone by vendor (%; 100%=5.2 million; 2014/7-2014/9) Samsung 11% 4% Other 9%Sony 6% Kyocera 64% Apple 6% Sharp Smartphone device survey (%; N=18,182; 2014) Xperia iPhone 15% 13% AQUOS 44% 12%DIGNO ARROWS 7% GALAXY 5%2% Other 2% MEDIAS
  8. 8. E-Commerce) B2C E-Commerce shows steady growth led by key players and smartphone penetration 7 111,660 95,130 84,590 77,880 66,960 60,890 0 20,000 40,000 60,000 80,000 100,000 120,000 2008 +13% 201220112010 20132009 Market size of B2C E-Commerce in Japan (million USD; 1USD = JPY100) SOURCE: Ministry of Internal Affairs and Communications 1.79 2.08 2.46 2.83 3.67 Share of E-Commerce in Japan’s consumer Market (%) 3.11 Key E-Commerce companies/sevices
  9. 9. SNS 1/2) Line is the most commonly used service in Japan. Japanese users prefer to communicate anonymously 8 59.6 52.0 39.3 21.7 16.4 13.5 10.3 13.7 11.4 20.8 5.96.8 3.4 4.8 2.7 3.7 4.1 Twit Casting 4.4 Google+ Twitter Line 5.0 Tumblr 5.2 Facebook Viber Instagram 5.2 mixi Pinterest 5.3 Kakao talk Using now Used previously Survey on SNS/communication service (%; 2014; N=562) Survey on anonymous use of Twitter by country (%; 2014) 75% 36% 31% 45% 32% 40% 19% 56% 60% 42% 55% 48% 13% 14% Real name Korea Singapore 9%UK 539 France 13% 100% 6% US 498 402Japan 8% 278 Anonimity 494 569 Both SOURCE: MMD, Ministry of Internal Affairs and Communications
  10. 10. SNS 2/2) People in their 20s is the most active users 9 Mobage mixi Twitter Facebook LINE GREE 14.4 8.6 22.3 39.6 70.5 14.4 Survey on web service use by generation (%; 2013) SOURCE: Ministry of Internal Affairs and Communications 16.6 57.0 80.3 34.1 22.9 47.1 65.4 19.2 16.4 16.4 42.0 13.3 11.8 13.9 9.8 12.5 20.3 42.6 2.7 3.9 7.0 3.5 15.2 22.3 1.0 0.7 1.7 3.0 5.0 4.3 10-19 20-29 30-39 40-49 50-59 60-
  11. 11. 10 Japan as market Startup trend in Japan
  12. 12. IPO in Japan activity surged in 2014 11 Number of IPOs on TSE Mothers1 Quick Facts 44 32 24 12 6 4 13 22 40 37 2013 201420122008 2009 2010 2011200720062005 1 Market of the high-growth and emerging stocks SOURCE: TSE, Nikkei, GLOBIS CAPITAL PARTNERS, NASDAQ, Bloomberg • Median Market Cap at IPO on TSE Mothers is US 55 million in 2013 • 70% of newly public companies are internet-related business in 2014
  13. 13. Aggressive economic growth policy triggered cash inflow to J startups 12 SOURCE: Incubate Fund 922 (36%) 501 (19%) 1,158 (45%) Financial Independent CVC 6 (16%) 18 (49%) 13 (35%) Newly launched VC funds (2013-2014/10) Size of raised funds (USD million) Number of GPs Financial support through government- backed investment funds Organization for Small & Medium Enterprises and Regional Innovation; • has invested 580 million USD in more than 90 funds since 1999 • invest in VCs upto the half amount of fund size The Innovation Network Corporation of Japan; • Capitalized at 3billion USD Sizable private finance cases (USD million; 2014) Game 100M+ Commerce 42M Commerce 33M Game 25M+ C2C market 42M News apps 41M News apps 28M Game 29M USD 2,581 million Utility 21M
  14. 14. More Japanese startups are going global 13 Mercari Smart News gumi Metaps Moi Mobile C2C shopping app. Opened US office and launched US version in 2014. Android monetization platform and credit card processing service. Focusing on Asian region. News curation apps for smartphones and tablets. Opened US office and launched US version in 2014. Ranked #1 on App Store Providing TwitCasting, realtime video broadcasting platform. Opened US office in 2013. Social games provider for smartphone and feature phone. Subsidiary companies in 8 countries. Listed on TSE Mothers in 2014. SOURCE: TECH IN ASIA
  15. 15. Given the current GDP, the volume of acquisition deal in Japan is lower than expectation 14 Number of deals in 90s Number of deals from 2000 to August of 2013 GDP (USD billion; 2013) 12,411Germany US Japan 72,111 2,198 117,666 18,563 19,532 3,730 4,899 16,768 Japan X Japan X Japan X 32.8 5.6 1 6.3 1.1 1 3.4 0.8 1 SOURCE: Industrial Growth Platform, Inc.
  16. 16. But acquisition of startups are accelerating little by littele1 15 Announced Acquirer Target2 Business 10/2014 10/2014 9/2014 9/2014 10/2013 9/2013 7/2013 Peroli. Ladies fashion curation service. Home-design curation service. Japan's largest lifehack media site Smartphone camera apps Rewarding app for customers who visit participating stores C2C market place for coaches and people who seeks lessons Service allows anyone to quickly get into the online selling business1 Picked up only notable cases. Not meant to be comprehensive 2 Target name is based on service name. Not corporate name.

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