[Podcast] Foreign founders are changing how Japanese start startups (Part 6)

For the last 150 years Japan has made a science of borrowing the best ideas from the West and transforming them into her own.

The startup world is no exception. Japanese startup culture is heavily shaped by western ideas, but not in the traditional top down way where leadership chooses which ideas are introduced. Japan’s startup ecosystem is being shaped by bottom-up experimentation by both Japanese and foreign founders on the ground here in Japan.

Today we talk with Sandeep Casi, an entrepreneur and Partner at Antler. We talk about the challenges foreign founders still face in Japan and how they are changing Japanese entrepreneurship for the better.

It’s a great conversation, and I think you’ll enjoy it.

Welcome to Disrupting Japan, Straight Talk from Japan’s most innovative founders and VCs.

I’m Tim Romero and thanks for joining me.There is a truism in venture capital that states no one invests in an idea.

This references the fact that ideas are easy to come up with and they have very little value on their own. But it seems that this truism is not completely true.

Today we sit down with Sandeep Casi, the general partner at Antler Japan, and he explains how Antler does in fact invest in ideas. I mean, in one sense, the truism is still true. Antler only invests in companies. But if you come to them with an idea, they’ll invest a lot of resources to help get you from idea to startup.

We also talk about some of the challenges foreign entrepreneurs still face in Japan, the myth of Japanese founders not being able to speak English. And we dive deep into how foreign entrepreneurs are changing how Japanese founders start startups.

But, you know, Sandeep tells that story much better than I can. So, let’s get right to the interview.

(Continued from the previous part)

Tim : Well, listen, Sandeep, before I let you go, I want to ask you what I call my magic wand question. And that is, if I gave you a magic wand and I told you that you could change one thing about Japan, anything at all, the education system, the way university professors think about innovation, the general attitude towards entrepreneurship, I mean anything at all to make it better for startups and innovation in Japan, what would you change?

Sandeep: Government policies.

Tim: Which ones?

Sandeep: Many. So, I name a few.

Tim: Let’s pull out the list.

Sandeep: Let’s pull out the list. But we’ll be here for the next two days. One, it is extremely difficult for startup founders to open a bank account. Startups is about time to market. There are times that we actually provide a startup an investment decision, and it takes them three, four months to open a bank account.

Tim: Three or four months. Is that a foreign residency type issue?

Sandeep: Well, some of it, yes. It’s a chicken and egg issue. You don’t have a visa, so you can’t open a bank account. That is a completely solvable issue. So, that’s one thing. If I had a magic wand, I would fix that. Second thing related to that is founders cannot rent apartments. As a governmental policy in Japan we want like so many startups we want to create and we want to basically bring skilled labors into the Japanese market to make all of these companies. But then you basically have these roadblocks. It’s nothing real with startup. It’s actually a generic thing.

Tim: Wasn’t like the startup visa introduced to address some of these products.

Sandeep: Yeah. But it is not addressing those issues.

Tim: Well, why not?

Sandeep: Because the banking is banking, MUFG or SNBC doesn’t care if you have a startup visa. It’s still the same process of like going through — these mega banks, they basically have large customers. Why do they need small man? And then we have these online banks like GMOs and Azora and things like that. But here’s a problem with those banks. You’ll get an account quite easily with them, but you can’t have foreign transfers as a foreign investor. We can’t transfer money from Singapore into these banks.

Tim: Really?

Sandeep: Yes, they have no inbound.

Tim: Oh my God.

Sandeep: If I had a magic wand, I would basically solve many of these issues. Including, I think it’s a pet peeve of mine that there is a tremendous amount of money that’s being wasted with all of these grants and opportunities that have been afforded that KPIs are not aligned properly.

Tim: So, the grants meaning programs and events being run.

Sandeep: That’s right. So, the KPIs are how many people attended your event? How many times did you take this startup with Silicon Valley? So, that should not be the case.

Tim: No, I agree with you there. And I think like looking at, so the Japanese government went from like zero to a hundred in like two years. From like providing minimal, almost no support for startups to like really going over the top. And yeah, there’s a lot of money sloshing around. I tend to look at it, when you start looking at individual programs, sometimes it’s like, oh my God, who the hell approved this? But the overall impact of it as a whole is incredibly positive.

Sandeep: It’s positive only for Tokyo as you go into the tier one, tier two cities, like even Osaka for that matter, it’s not. For some reason the Japanese government have decided that Tokyo is the hub and I’m traveling to these ecosystems and I’m not seeing the same amount of supporting those ecosystems.

Tim: Well, I mean, to be fair, a lot of the startup money is coming from the Tokyo government, Sushi tech and all of these are funded from Tokyo.

Sandeep: I’m not talking so much about Sushi tech. I’m talking so much from places like METI, JETRO. JETRO is not region specific. It’s like country specific. But a lot of money that’s being poured in is, is very, very much focused in Tokyo and the saturation point here. Opportunities exist in the tier one cities in terms of universities, Osaka, Hansa area is much better because there have a lot more universities that are in the top 10 in that whole vicinity. But why is money not pouring in there as much as it’s pouring into Tokyo?

Tim: Yeah. Fair enough.

In Part 7, we will continue discussing the administrative and structural challenges in Japan’s startup support systems.

Top photo: Envato

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