Elise Hu (@elisewho), reporting for NPR earlier this month, outlined how the startup scene in Japan is now beginning to gain momentum in an economy still centered around traditional companies that made it big in the latter part of the last century. The Japanese government, however, is now funding its own startup incubator with an aim to focusing on a future economy where the current dynamics of traditional employment are waning. With these trends in mind I sat down in Tokyo’s Harajuku district with Nikola Pavesic (@nikpavesic), a former international lawyer now helping to lead Justa, a digital hub for the Japanese startup community, to discuss these trends and what he sees currently happening in the Japan startup scene. Here’s the text of that interview:
What is Justa and Redbrick Ventures?
Redbrick is a small but focused venture incubator in Tokyo and has been involved in helping to form incubated startup teams. One of such teams is Justa. We provide recruitment to startups
in Japan, placements are not easy to make so commissions are lucrative. Startups don’t have the resources to do this work themselves, so we can do it for them. We help bring in unique talents and strengthening the local startup community with our work.
Justa is the leading initiative of Redbrick Ventures. It’s a digital platform dedicated to the Japanese startup market with the aim of connecting employers and talent in the startup sector here in Japan. We’ve created in Justa a streamlined system to do just that
What is the current state of the Japanese startup sector?
Fragmented. Not small but huge. There are thousands of Japanese startups supported by venture capital. We try via Justa to bring the entire Japanese startup community together. IPNexus is one legal startup that I can think of – they are building a platform for IP consulting. There are others focused on consulting services with legal help, including foreign startups incorporating themselves on the ground in Japan.
What’s the venture funding community like here versus the Silicon Valley?
Most of the venture deployed in Japan capital comes from Japan. But here, as opposed to Silicon Valley, venture capital is not as diverse as that in the Silicon Valley. Here in Japan, VC’s stay very close to their investment, seeking quick exits without M&A activity. Some one-off products in Japan utilize crowdfunding, but not many. There’s no large angel investor or Micro VC community here. I would say Japanese investors are careful, way too careful.
Where do Tokyo startups get their talent?
The market is very closed and comprised of mostly Japanese nationals. Large Japanese companies and the government tend to be the venture investors, by contributing to the funds. Traditional industries give money to people well connected in the economy and have them deploy the capital. Funding terms are worse than they would be in Silicon Valley. There, most investors used to be entrepreneurs, not bankers. And they often start funds or invest as angels. Here the sector is more driven by traditional forces so less nimble than the Valley.
What led you to the Tokyo startup scene from a background in law?
I got involved in project management and systems here in Tokyo working for the United Nations after a career in private practice in my home country, Croatia and a brief excursion into international criminal law at the UN ICTR in Tanzania. At the UN in Tokyo, I saw the impact we could make and then ended up marginally in IT without a technical background. But I believe you can do whatever you want from learning things. I love law and miss it – but I like the IT sector because you can build anything from scratch. After my time at the UN, where I handled a large yearly budget – a co-worker joined Red Brick Ventures. I too was interested in the private sector, where competition is challenging. But I liked it – the branding, seeking attention, listening to clients and what they really want and asking for feedback, and especially connecting people. It’s how we started Justa. So far, we’ve helped a lot of startups recruit and have helped a lot of people find jobs.
What’s the opportunity in Japan for foreign venture investors?
It’s an excellent opportunity and would stimulate the local market to improve. Silicon Valley should expand – but as the market over there is already big and competitive to start with – it’s a challenge as so many opportunities go to them, are brought in, and turned into a Silicon Valley startup versus a local startup from wherever it might be internationally.
What’s your advice to college students or young professionals interested in a startup career and who is an inspiration for you in your own startup career?
My inspirations include Elon Musk, Larry Page, Peter Theil, Alex Karp – most of them part of the “PayPal mafia”. Elon Musk has remarkable vision. Seemingly incomprehensible. He wants to bring over a million people to live on Mars by 2100. It seems crazy, but when people see his operations – and that none of it existed a decade ago, they think that it may be all possible after all.
In terms of advice – Japan is interesting for the culture aspect: “Career for life”. It still has a hold in Japan and is changing more slowly. Not everyone needs to work in startups, but exposure to startups is a unique experience. But students in final year at university in Japan in most cases already have jobs. And in most cases those are big, traditional Japanese companies. We often bring startup entrepreneurs and talented people together and it creates creative friction and opportunity.
Travel, work and intern in startups. If you have an idea, go for it. But going from idea to execution is hard. Even if you fail – it’s terrible, but you’ll learn a lot that you wouldn’t have learned in a traditional corporate environment – so just go for it.