The Japanese startup ecosystem through a bi-lateral perspective

On the first days of December 2021, I was invited to join a digital 'Fam Trip' organized by?Invest Tokyo?&?Tokyo Metropolitan Government, together with some influential people from Europe & Israel. It was a very well-organized, 3-day-long online journey to learn about the?Japanese/Tokyo startup ecosystem.

I met Phillip, CEO of Plug and Play Japan, being one of the speakers, and decided to do an interview with him, as he has spent half of his life in Japan and the other half in the US, so he can really see the innovation scene of Japan both as an in and an outsider at the same time.

What is your personal story? Where are you coming from (professionally)?

I am of Japanese and American background. Born in Santa Clara, CA (Silicon Valley) and raised mostly in Japan while going to an international school. This dual cultural background led me to take a job at a Japanese trading company (shosha) called Uniglobe Kisco (a subsidiary of KISCO in Japan). My role was business development and part of my responsibility was to find and connect startups from the US to clients in Japan. We discovered Plug and Play as a hub for meeting startups which was my first interaction with Plug and Play. Eventually, the opportunity at Plug and Play was exciting enough for me to switch?companies.?

From when I started at Plug and Play in 2014, I spent the first 3 years at Plug and Play leading two programs (IoT and Mobility industry programs). I also managed a lot of our Japanese accounts and activities as the resident Japanese speaker at the time. As Plug and Play were expanding its presence overseas I began to strategize and build our Plug and Play Japan office. I eventually took the role of the country manager in early 2017, set up the entity that summer, and have been in Japan since leading our office here. I also now oversee our Korea operations as well.?

How do you see the Japanese / Tokyo startup ecosystem, being half American / half Japanese yourself? What are the biggest challenges/opportunities? How do you see the next 5-10 years?

Even though Tokyo and overall Japan have been recognized in recent years as a top-quality startup ecosystem, there are many challenges left in order to truly reach its potential.?

Challenges: Overall startup quantity and quality are low compared to other top ecosystems. Open Innovation and startup urgency are still low as the corporate ecosystem dominates and the economy, while stagnant, has been thriving for some time. Language and culture continue to be a hurdle to globalizing the startup ecosystem. Investment quantity is very low and IPO is very easy to do, making it hard for Japan to produce unicorns.?

Opportunities: The potential! Japan is known for taking its time to ride the global wave trends as it needs to first assess the risks before making its calculated move to grow. But once Japan catches on, the country almost always does an amazing job of perfecting the various crafts. The startup ecosystem should be the same. Startups are starting to get more and more recognition. Corporations are starting to feel the necessity to partner with startups and focus on open innovation. The government is starting to become more active in awareness and support. There is beginning to be a foreign investment in Japanese startups.?

The next 5-10 years are crucial as Japan faces an immediate need to digitalize the many legacy systems that dominate Japan. If the country can embrace major shifts in mindset towards fast and big actions, it can maintain its place as a global leader in innovation and startups.?

What are your / Plug and Play's?role in the Japanese?startup ecosystem?

Plug and Play at the core are changing the mindset and culture of innovation in Japan. We help startups through accelerator programs and corporate introductions to?scale their business both domestically and eventually, globally. We help corporations with their open innovation strategy as well as connect with the right startup from around the world for them to achieve faster innovation. We hope to create the largest community and platform for all things innovation that not only connects startups and corporations but all stakeholders in Japan who are involved in innovation.?

What are the?startup success stories Japan can be the proudest of?

If you mean for Japan overall, a few of the unicorns who have had global success are Mercari (previous unicorn), Smart News, TBM (LimeX), and Spiber.?