Japan Innovation Ecosystem Highlights 2020–2021. Also, Happy Birthday NIH Tokyo!
Well, fair to say when we kicked off Nordic Innovation House Tokyo (NIH) last year, we didn’t exactly anticipate Tokyo to be in a (soft) lockdown still a year later. But looking back at how the innovation ecosystems have grown in Japan, our activities and future outlook, no doubt opening our 5th location in Tokyo in May 2020 was the right choice. And how many organizations can say they are “born COVID”, anyway? There has to be some street credit there 😎
So I wanted to take a step back and reflect on some of the highlights and thoughts for future for this post. It’s probably going to be way too long for a blogpost and professionals would surely recommend to pace it for 3–5 different posts, but hey — grab your coffee, we’re going for a ride! I’ll touch on these topics and provide links for future reading:
🚀 Japan Innovation Ecosystem Highlights 2020–2021
❄️ Nordic-Japan Connections, and NIH Activities
✨ What Excites Me about the Future
👀 A Few Painpoints I See in the Innovation Ecosystems in Japan
🎉 Cheers!
As a disclaimer, I’m director at Nordic Innovation House Tokyo, supporting Nordic startups and growth companies with Japan entry and expansion together with the 5 Nordic Trade Promotion Offices in Japan. NIHs are supported by Nordic Innovation.
🚀 Japan Innovation Ecosystem Highlights 2020–2021
Let’s start with looking into numbers. Investments into Japanese startups have been on a steady YoY growth since 2012 all the way until 2020. We had a dip in 2020 to 4,32 bill USD in Deal Value, which was still higher than 2018 value (4,16), but below the record year 2019 (4,82).
There were around 50 Startup IPOs last year, with some of the major ones being PLAID (real-time data analysis of web visitors), WealthNavi (asset management service) and Neural Pocket (photo and video analysis with AI). AI and SaaS kept their positions in the Top 10 Sectors by Startup Funding, but we saw some newcomers as well in top 10: Cleantech, Sharing Economy and Drug Discovery/Manufacture.
Check out all the rest of the interesting Japan’s startup funding data 2020 by INITIAL .
Let’s have a look at other innovation ecosystem players and initiatives as well. We celebrated the opening of the Cambridge Innovation Center Tokyo late last year, and ever since the CIC folks have been zealously arranging hybdrid gatherings, pitching events, connecting people and keeping the weekly Thursday Gatherings alive throughout the difficult times. We also had a chance to collaborate with CIC early 2021 — thanks! I cannot wait to have another physical Thursday Gathering again soon.
There have also been interesting governmental and regional initiatives to keep the innovation agenda alive. The government introduced the Startup City Project with big buzz and selected parts of Japan gained more authority to eg conduct PoCs otherwise difficult due legislative hurdles, as well as gain access to the Startup Visa program. Very early on we at NIH were approved to join the Tokyo Startup Ecosystem Consortium, which has been a good platform to connect. Many Japanese corporations are known for being notorously difficult to reach and you might get lost in the general inquiry boxes or your requests never get forwarded — therefore, being able to ping a decision-maker you have never met before on Slack, feels like a welcome change.
Wonderful initiatives are taking place also in other parts of Japan: do check for example Osaka Innovation Hub, Shibuya Startup Support, Ignite Sendai and Startup City Fukuoka. We’re also seeing activities in the north, for example Open Network Lab Hokkaido Seed Program is collaborating with the city of Sapporo. We’ve seen also other expansions of global accelerator programs, such as Plug and Play Japan’s new programs. Most of the other programs pivoted quickly remote as well— check for example Kobe 500 and Startupbootcamp Osaka. For a complete list of challenges and accelerators, we’ve got you covered here! Also JETRO has a super interesting table here which shows changes in amount of startup fundraising by prefecture (Aichi, Yamagata and Kyoto showing 30%+ average annual growth rates within the last 10 years). At NIH Tokyo, though Tokyo in our name, we’re not limiting ourselves in anyway just to the capital city 🗾
Needless to say that the pandemic has brought upon challenges, and the lagging of digitalization in multiple fields in Japan has truly come to light. Municipalities have had difficulties allocating financial aid, Companies have struggled with hankos (seals used for official documents) and turning a face-to-face business culture online, and Citizens have been frustrated by vaccination center booking systems coming crashing down. All of a sudden in Japan, known abroad for high-tech solutions, frustrations are popping up left and right.
What innovation needs is a sense of urgency — which is what we are feeling right now in Japan.
❄️🌸Nordic Japan Connections, and NIH Activities
Despite Japan being pretty much closed for regular business travel for over a year, some heroic Nordic companies have seized this opportunity and pushed forward their agendas.
We have been following the rapid expansion of the Finnish 🦄 company Wolt across Japan (story here), read about Nightingale Health’s (Finnish) cooperation with Mitsui, and heard about Softbank’s investments into Fishbrain (Sweden), AutoStore (Norway), Oda (Norway) and Kahoot! (Norway). Check the links for more stories behind the investments. A Danish startup for image analytics Grazper was also acquired by Yokogawa, and we introduced some innovative Icelandic solutions in carbon capture and utilization to the Japanese stakeholders at our pitching event with Plug and Play Japan’s Energy program. For more info about investments from Japan to the Nordics, do check out our friends over at Innovation Lab Asia.
We are also proud of our NIH Tokyo member company Bergen Carbon Solutions (Norway) for being selected at Tokyo 100 Challenge at the Innovation Leaders Summit (ILS) 2021, and later announcing an LoI with a Japanese partner 🙌
ILS is Japan’s largest open innovation event, and this year I’m happy that we expanded from 1 Nordic country to 4 countries nominating startups into this event, and we had +20 startups and growth companies participating. Before the event we had an online pre-ILS networking event with rapid speed-dating happening through breakout sessions (that was hectic!). By the way, there was also a lot of math involved at this event — Try solving this in the comments: If you want to maximize the amount of new people one person can meet during 3 breakout sessions, and you have 20 people in total, how many new people can 1 person meet in total?
Besides ILS, we co-organized well over 30 events within our first year, ranging from pitching sessions to industry introductions, fireside chats and matchmakings, both in English and Japanese. Do check out our YouTube channel to relive the moments and checkout the pitching companies!
✨What Excites me About the Future
BORDERS OPENING! No jokes. The Nordic team in Japan is eagerly waiting to welcome delegations and visiting companies to Tokyo and other parts of Japan for some good-old networking, business development and market validation. Luckily, we know that this will happen, and hopefully sooner than later, with the new mass vaccination centers being opened.
There are also a couple of really exciting things in the horizon:
- Web Summit Tokyo 2022: While details are TBA, we know that the event will happen in September 2022 and can expect great things from it. Japan has been lacking an internationally recognized IT, emerging tech and VC-focused event for a while, so this will be a welcome addition. The event has a strong support from the Tokyo Metropolitan Government, as well as from the Minister for Economy, Trade and Industry (METI). Stay tuned, and for Nordic companies’ information, NIH will definitely be part of the festivities.
- Some business as usual conferences: CEATEC, ILS
- Community events 👯♀️👯♂️! We used to enjoy Tokyo Tech Meetup, Tokyo Tech Startups, Thursday Gatherings, events at BLINK, Startup Grind Tokyo (and nowadays Osaka and Fukuoka as well), DevJapan and other events on a weekly basis in Japan, and while many greatly pivoted online, the lack of serendipity and physical showcasing opportunities has really hit hard on the community. However, there’s still the weekly Founded in Japan Clubhouse session hosted every Monday evening (JST) which I highly recommend (while you’re at it, check out also the Business in Japan LinkedIn group). Also another personal favourite of mine is the FuckUp Nights Tokyo, where people share openly their fuckups in life and business. If social issues are close to your heart, do join the Social Innovation Japan Facebook group , and keep an eye on Shibuya QWS Stage — events. At NIH we were able to host our monthly Nordic-Japan Innovation Gatherings a few times physically in-between the state of emergencies last year, and I cannot wait to get back to it.
- NIH focus area activities: We’re moving forward with our digital health and cleantech focus areas (expect reports and events coming up soon), and keeping a close eye on Japan’s Digital Agency (to be established in Fall 2021) and digital transformation opportunities. For now all I can say is stay tuned!
👀A Few Painpoints I See in the Innovation Ecosystems in Japan
I tend to be an optimist, but after a year of working closely with tech companies entering Japan, it’s easy to also spot the major painpoints of the innovation ecosystems in Japan:
- Fragmanted and siloed
There are wonderful initiatives as mentioned above, but more often than not these ecosystems and support centers are not interacting with each other. They say it takes a village to raise a startup, and while some level of healthy competition is great, too often the support from a particular ecosystem player literally stops after taking a step outside a certain ward. One of the reason why the Nordic startup ecosystems have been able to thrive is the cooperation between organizations, regions and even countries we have in place, and I hope we can push the envelope here a little bit by sharing our knowhow. Besides silos between ecosystems, we hear about different departments at larger companies being quite separate from each other as well. This has created some challenges for startups moving from successful PoC projects to actual new business development.
- Lack of globally recognized tech events and showcasing opportunities
Hence why I’m excited about Web Summit Tokyo. Also information available in English is still scarce, though there are a few diamonds, such as Disrupting Japan and Bridge. - Stereotypes and outdated perceptions outside of Japan 💭
There is a whole industry out there painting a certain picture of Japan — and that industry is probably making a decent living through doing that. And to be clear: one should not undermine the challenges regarding product & service localization (not just the language, but the whole UX), organizational differences (not the least complex decision-making processes), communication styles (is yes a no or yes a yes or no a yes or no a no or nothing at all?) and legislative hurdles in Japan. However, the thoughts that nobody speaks English, everyone is life-long employed, and if you don’t address your counterpart with the honorific suffix -san you are absolutely doomed, are, frankly, outdated. Particularly the tech, startups and VC world is changing, and more and more stakeholders have experiences working with global startups. Challenges remain, but there is also an increasing amount of support available. And most importantly: interest from the Japanese stakeholders to interact with global startups is increasing. I encourage to keep an open mind, take certain things with a grain of salt, and gain first-hand experiences yourself.
🎉Cheers!
Phew, some heavy stuff there! Lastly I wanted to give a huge huge thanks to all the support that we have received for our 1st year. Our wonderful NIH Tokyo Partners, the Nordic Trade Promotions Offices both in Japan and in the Nordics, Nordic Innovation for supporting us, our other 4 NIH locations globally for sharing best practices, our dear Mentors and friends, and, of course, our Member companies. An innovation ecosystem is all about creating meaningful connections and working towards a shared mission — and this is just the beginning for us.
Thank you!
今後ともよろしくお願い致します🙇♂️
About Nordic Innovation House Tokyo: The Nordic Innovation House Tokyo is a community platform accelerating high-quality Nordic startups, scale-ups, and growth companies to Japan. Via our strong community and network, we connect Nordic companies into the right ecosystem stakeholders.
ノルディックイノベーションハウス東京について：ノルディックイノベーションハウス東京は、北欧５カ国の質の高いスタートアップ、スケールアップ、そして成長企業の、日本進出を支援するコミュニティプラットフォームです。強力なコミュニティとネットワークを生かして、北欧企業と日本のステークホルダーを繋いでいきます。
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