Meet Osaka, the third most populous city in Japan after Yokohama and Tokyo, and the capital city of the eponymous prefecture.
Osaka is also home to a growing number of hardware and Internet of Things (IoT) companies, according to Hiroyuki Tahara, Staff Officer for Innovation, Economic Strategy Bureau, Osaka City Government.
In his presentation to e27, he said that there is nothing Osaka startups cannot make, from toothbrushes to artificial satellites. However, few of these firms work together and many are struggling separately.
Tahara’s thoughts echo a 2014 Quora post by Tim Romero, who started the Disrupting Japan startup podcast series. “There are actually a lot of interesting startups in Osaka, and there are many there who would like to start companies, but it has not coalesced into a community yet,” wrote the Tokyo-based entrepreneur.
Romero added that while the community might still be a thing of the future, stakeholders like the government are putting in time and money to help entrepreneurs.
Osaka, meet ‘The World’
Case in point: Tahara and his team have been working hard to make Osaka the “gateway from Kansai to the world”.
They produce around 180 events in a year at the Osaka Innovation Hub. These events range from hackathons to workshops to seminars. There are morning meet-ups for early birds and tours to Silicon Valley as well.
Aside from Tahara, I also met up with Satomi Otani, Project Manager, Urban Innovation Institute and a few founders at the Global Venture Habitat Osaka (GVH Osaka) in one of the Grand Front Osaka complexes, located right next to the bustling Osaka Station.
GVH Osaka is an incubation facility established by SunBridge Global Ventures, a Japanese venture capital firm. There are about 30 startups being incubated out of that particular work space, said Otani.
One of the startups being based out of GVH Osaka is Boosters. Led by Juno Minamide, CEO, Founder and Producer, Boosters is a web company that intends to launch Qlass, a video-driven education platform, by the end of 2015.
Another startup is quatre Corp, which is building a cross-border e-commerce site called pukka.asia.
Takayuki Yokomachi, President, quatre Corp, said that pukka.asia will help local Japanese cosmetic makers, who might not be able to sell in big department stores, extend their reach to tourists with spending power.
These tourists will first receive samples from cosmetic makers while they are in Japan. If they like the samples and would like to purchase regular-sized products, they can do so via pukka.asia.
Safe to say, both founders are still in the early stages of building their companies and platforms. However, there are also quite a few other companies based in Osaka that have launched products and services. One would be Moff, a smart band company that was birthed out of a hackathon organised at the Osaka Innovation Hub.
The government’s role
Back to Tahara. Why is Osaka’s government interested in helping startups? What’s in it for them? “As far as the city of Osaka is concerned,” Tahara said thoughtfully, “as you may know, the economy of Osaka has been declining for a long time.”
While there are many big corporations in Osaka and the rest of Japan, the country desperately needs an injection of fresh, new ideas that will grow to become the next Nintendo.
This is not easy. There is more to it than giving the youths a place to work out of and giving them lots of events, workshops, and seminars. It is not just about giving them people to talk to and to help them with MVPs and public relations, or telling them they are superheroes and unicorn-makers.
Instead, the odds are against Tahara and his team.
Japan has an ageing population with parents who will rather that their children find stable jobs in reputable firms. Plus, success doesn’t happen overnight; most startups fail and very few actually make it big.
Compared to students in other Asian countries – like Korea or Hong Kong – Japanese students are “less inclined” to start their own business, said Tahara.
Although the government is extremely keen on helping startups build better products by providing them with events and mentors, it doesn’t really cater in terms of funding.
“Not for startups,” said Tahara, amidst bashful, knowing laughs from Otani and others. Otani added, “The government doesn’t take risks.”
Otani said that the private investors have the early-stage funding covered, so the government takes care of later-stage funding.
“You know the Mayor of Osaka City?” asked Tahara casually. “Mr. [Tōru] Hashimoto?”
Hashimoto has given a lot of support for the programmes carried out by Osaka Innovation Hub and other players. At HackOsaka 2013, the mayor spoke of how he would like there to be more startups in the prefecture, reported The Bridge.
The same article noted that the Osaka City government had plans then to start a fund with the help of private equity firms, and “develop more than 100 business through this effort in the coming three years”.
However, Hashimoto is stepping down as mayor this December, so everyone in the meeting room was a little worried about the city’s vision going forward.
Tahara concluded: “Of course, we would like to continue and persuade the new coming mayor.”
All images by Elaine Huang.