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

1. Quick overview of startup trends in
Japan
Yusuke Asakura
Visiting Scholar at Stanford University
Former-CEO of mixi, Inc.
asakura@stanford.edu

2. 1
Japan as market
Startup trend in Japan

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. 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. 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. 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. 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. 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. 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. 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. 10
Japan as market
Startup trend in Japan

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. 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. 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. 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. 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.