Tokyo's Innovative Startups Showcased at Demonstration Event
Helping Startups in Japan
December 19, 2024, saw the first Demo Day at Alchemist Japan, the local arm of US-based Alchemist Accelerator, in central Tokyo's Otemachi business district. An "accelerator" creates a nurturing environment for startup companies, explained Manabe Ryoko, Managing Director of Alchemist Japan. "Instead of buying you a fish, we will teach you how to fish," she said, referring to their method of coaching and mentoring. It is not a passive learning process, nor is it easy, noted Laurent Rains, Director of Global Access at Alchemist Accelerator. "We expect startup founders to do a lot of things in a very compressed amount of time," he explained. "The challenge for founders is time. Every moment the market is moving, and a startup has to run instead of walk. An accelerator is designed to get you up to that running speed in a short amount of time."
The Demo Day attracted about 200 investors and spectators to see 9 companies which recently went through Alchemist Japan's inaugural class. The companies, all with a presence in Tokyo, have founders who come from all over the world, including North and South America, Asia, Europe, and the Middle East. Every company is expected to have the potential to launch from Japan and go global, serving overseas as well as domestic markets. The event started with a socializing session, followed by a panel discussion by select participants discussing Tokyo's startup environment, and finally, an introduction and pitch session from each of the nine companies involved in the event.
Japan's Evolving Startup Environment
So, what is making Tokyo such an attractive hub for startups? The assessment among panelists during a forum discussion at the event is that money has begun to flow into new business ventures. Many participants shared the sentiment that Japan currently boasts one of the most accessible capital markets in the world, giving Tokyo a significant edge over its competition as obtaining initial funding is easily the most difficult hurdle for a startup to begin operations.
The Tokyo Metropolitan Government (TMG) developed a strategy to appeal to startups in November 2022. The approach includes a "10x10x10 Innovation Vision" which aims to increase the number of global unicorns, startups, and collaborative practices in Tokyo by 10-fold in the span of five years. Putting plans into action in order to achieve this goal, since 2023, the TMG has invited global accelerators, such as Alchemist, to come to Tokyo, and has implemented programs in collaboration with The Japan External Trade Organization (JETRO) and other organizations.
The TMG is implementing a range of initiatives, including the program mentioned above, under the concept of "SusHi Tech Tokyo (Sustainable High City Tech Tokyo)," which promotes "sustainable new value" and advocates deploying cutting-edge technology to overcome global challenges. Last spring, the metropolitan government held "SusHi Tech Tokyo 2024," which was one of the largest startup conferences in Asia. The event brought civic leaders from Tokyo and other communities together with startup founders to encourage investment, cooperation, and growth. A sequel exhibition is planned for this year, too.
Evidence seems to indicate that the efforts to promote Tokyo as a global startup innovation hub have worked. Since ranking first in the Innovation Cities Index in 2021, beating out such competitors as New York City, Sydney, Singapore, and San Francisco, the capital has garnered more and more attention from the global startup community. The SusHi Tech Tokyo 2024 conference drew 434 startup exhibits and attracted over 40,000 attendees. The TMG, meanwhile, has outlined a goal of making Tokyo the world's most startup friendly city, redesigning some business regulations and rules to be tailored to the needs of startups. "There are things more important to startups than money," agreed Rains. "Making the things that are key to startups—the rules, the regulations and so forth—is so important."
Manabe has also noticed the difference. "When we tried to establish a startup around 2007, very few VCs existed in Japan. You had to get an individual investor or someone like that. Now, it is so different, the environment is much better for startups." Startups are becoming attractive career choice for some of Japan's brightest new engineers coming out of college, a dramatic change from the days of when the ideal new graduate job was to land a place at a large and established company.
Japan Has Plenty of Upside to Offer and Attract Startups
Alchemist believes in the potential of Japan. "We have hubs all around the world," explained Rains, "and we saw a lot of great founders here in Japan who we thought we could help." Other hubs in the Alchemist network are focused on a specific industry or sector. Japan, however, said Manabe, is much broader. In addition to being a tech hub, there are many more areas of opportunity. The startups on display at the Demo Day focused on such wide range of technologies as AI data analysis, retail supply chains, agronomy support, and even biotech research.
During the Demo Day, Rains made clear the expectations of companies accepted to Alchemist's program. "We expect startups to go through certain steps. Going from pre-seed, a startup needs to develop POCs (proof-of-concept) to get real feedback about your product." Some additional value of the Alchemist Accelerator approach is that the coaching programs are customized to each company. "Every company is different," noted Manabe. "We encourage startups in our program to get the true voice from the customer, and we teach our startups how to use the feedback and fix problems." Being an entrepreneur and building a company from scratch is a challenge, and Alchemist Accelerator gives startups a community to help with the process.
"Being a founder can be lonely," explained Rains. "We provide a community setting for new companies, not only for the startups of today, but the connections that get built will dramatically amplify."
Rains predicts the startup environment will continue to grow in Japan. "It's not about more companies competing for the same pie. It's all about creating a larger pie for more startups."
Manabe Ryoko(left), Laurent Rains(right).
Manabe is a managing director (MD) of Alchemist Japan and based in Tokyo. Before Alchemist, she worked as MD at Endeavor Japan. She started her career as a strategy consultant and has experience in a wide range of businesses. Currently, she also serves as a committee member of JST START program where she evaluates and selects R&D based tech pre-seed startups. Manabe holds a BS degree in Engineering and a BS degrees in Agriculture and Life Sciences from Cornell University.
Laurent Rains
Laurent is Director of Global Access at Alchemist Accelerator, leveraging his experience as a founder and corporate leader to drive success of international startups entering the US Market. His broad experience includes being a co-founder a consumer bicycle light company, working as an early operator at CarboCulture, and sitting in corporate roles at Google Maps and Autodesk.