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Business

Investors opening the taps for Japanese startups

TOKYO -- Japanese 3-D printing service provider Kabuku announced last week it had raised 200 million yen ($1.93 million) through a third-party allocation of new shares, a respectable sum for a company established only in January 2013.

     Kabuku lets anyone become a "maker" by connecting people who have a vision with companies that have the 3-D printers to make it a reality. People can sell their 3-D creations on Kabuku's website, with the company even handling deliveries.

     "We want to democratize manufacturing," said Masahiko Inada, the company's president and co-founder. "We are aiming to make an initial public offering."

Big-time interest

Three companies, including an investment company affiliated with Japanese online advertising agency CyberAgent, saw the potential in this business model and acquired a stake in Kabuku. The most notable of the three stakeholders is the investment arm of Fuji Media Holdings.

     The Japanese media group, which has been struggling to attract viewers, set up a venture capital firm January 2013 with an investment budget of 1.5 billion yen. So far it has invested in 10 startups, including Kabuku and Smarteducation, a child education app developer highly acclaimed in the industry.

     Japanese blood pressure monitor maker Omron plans to establish an investment arm targeting Japanese and U.S. startups in July, with an eye toward investing a total of 3 billion yen over the next three years.

     According to Venture Enterprise Center, venture capital investment in Japan totaled roughly 160 billion yen last year. That figure is still less than one-tenth what it is in the U.S., but it is steadily increasing.

     Koichiro Yoshida is CEO of CrowdWorks, which operates a job-matching website. The company last year raised over 1 billion yen from an investment fund affiliated with Japanese advertising giant Dentsu and others. That is not an uncommon figure for Japanese startups these days, but it is still a far cry from the $100 million or so startups in the U.S. are often able to raise.

     "We want to procure at least 10 billion yen for medium- to long-term growth," Yoshida said during Infinity Ventures Summit 2014 Spring, which attracted more than 600 entrepreneurs to the Hokkaido city of Sapporo in May. His remark reflects not only professional ambition but also a desire to close the gap between Japanese and U.S. venture cultures.

Good for all

The growth of startups also has a positive impact on the stock market. Speaking at an earnings briefing in February, SoftBank Chairman and CEO Masayoshi Son reflected on his company's IPO in 1994: "It seems like yesterday, but then again, it feels like we've come pretty far."

     SoftBank's market capitalization has swelled to nearly fiftyfold since then, making it the second-largest Japanese company by that measure.

     Fast Retailing, which runs the Uniqlo casual clothing chain, also debuted in July 1994 and currently ranks 16th on the list of market capitalization. Once startups themselves, these giants now lead the Tokyo Stock Exchange.

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