Signature Series: The Archipelago of Innovation: Navigating Japan’s Startup Landscape | LSI Asia '25

Amanda Way  0:04  
Thanks Shinya for joining us today. How has the conference been for you? So far.

Shinya Yamamoto  0:08  
Thanks so much. This is good. So far, so good. Then this is first time to join LSI for me, but I'm really honored to be here LSI Asia, which is our first event in the Asia Pacific region this year. Yeah, congratulations. Thank you.

Amanda Way  0:27  
Quick background on both of us. My name is Amanda Wei. I'm the Global Program Director here at LSI and chinyu. I'd love to learn a little bit more about you, and I know you have a presentation. So really excited to jump into it,

Shinya Yamamoto  0:39  
sure. So I'm going to talk about the Japan current situation, about the startup ecosystem. But first of all, I am currently angel investor based in Tokyo. But also I am a serial entrepreneur over several startup companies. So my startup portfolio is currently around 20 in Japan, and then more than 20 startup companies outside of Japan. So I am, I have been, you know, trying to make a synergy among my startup portfolio. Currently, originally started from a health tech startup company, including a biopharmaceutical but I'm currently expanding to other industry, like entertainment, you know, to make you know better, community to make more. You know, innovation with people from industry, academia and, you know, government, too. So today I would like to show our short video about, you know, I'm not not yet about my private incubation located in Shibuya city, Tokyo, because I am a professor and a researcher at the three medical schools in Japan. One is a Tohoku University. Another one is Osaka University, then Kobe University. Those are all national university as a medical school, and then two more business school in Japan. Then, of course, my students are medical students and business student, business school students, MBA students for Master degree and a PhD degree. But it's quite difficult to make a startup company deep tech from our universities, so I actually tried to make my private incubation as small as possible. And then my first research question was, how we can make a better strategy for startup creation or for ecosystem. I mean, how we can make, you know, optimize innovation management. Then I received the government grant from central government, Cabinet Office and also Ministry of Economy and the Tokyo Metropolitan Government. Then I started my private incubation three years ago. So the video we playing soon, but this is talking about my private incubation, but this is currently expanding to the, you know, university startup ecosystem and a government and also lots of industries, including from outside of Japan. So today, Matt from Meditech actuator here I am actually one of startup mentor based in Tokyo, of a Meditech actuator. So they are also one of our, you know, collaborator in Japan. So could you kindly play a video first? Okay, would you like us? 

Amanda Way  3:58  
Let's go for it. Okay, pop right in. 

Shinya Yamamoto  4:01  
Do you know Toji? This is a sake factory in Japan. So we have a culturally such type of decentralized autonomous organization since long, long time ago. This organization is a very flexible only one season as one team to make sake in the winter season. Then I tried to create such type of decentralized autonomous organization for the startup ecosystem. So phase one is a management 1.0 I tried to be a dictator. So this is a dictatorship to manage everyone as a community owner. So this is my startup incubation. Then Phase Two was management 2.0 this is origarohi stage. I had, fortunately, you know, several my origarohi to be delegated everything. From my side. Then now in this year, we are on in a phase three, which is called the management 3.0 this is a totally democratic phase to make all you know startups find out here. So discussion three is a formulation of the economic circulation in my community, including the University, government. So coin store is actually crypto exchange company based in Singapore. So we created the dicto token last year for our fundraising, which is called the token token financing from crypto space. So this is actually last year I was panel speaker at the panel on the session for the event. This is in Dubai. That was Singapore. So to let people know in the world, what we created from Tokyo, Japan, and then how we have been collaborating with, you know, people, industry, government and university. So this is a dicto token based circular economy in our community. We have a lot of actually projects here, so, but first of all, of course, we didn't have a collaboration with the University or health tech or metal tech industry, but now a lot of medical doctor, physician, researcher scientists are joining in our community. So this is a hotel accommodation business at the like, a mount of Fuji area, mountain area. This is all the, you know, type of Japanese house at the local area. We have, you know, music live. We have a program with the kids. This is a my talk University. And then we had, like, you know, incubation related event. And then we created a three startup company from Tokyo University with our community. And then Kobe University, Jose University, which is a business school. Nakanoshima Cross is one of huge health tech incubation in Osaka. So this is a logo of worldwide partner. So middle tech actuator is here, actually. So it's quite, quite quick and easy to manage for the innovation from, you know, not only industry, but also academia, government, we are like a community for the innovation management. So we, I'd like to, know, start our, you know, discussion today from my current activity like this,

Amanda Way  7:51  
yeah, let's, let's dive in. So something I think our audience will be really excited to dive into, since we have people coming from all over the world at the conference today, you have this exposure to all these different universities, students who are med students, students who are business students, as you've navigated working with these students and bringing them to some of the these partners, what what has been the general feel of how these Japanese students think about innovation? Are they coming to you wanting to innovate? Are you approaching them saying, Hey, you're working on something really interesting. You should think about taking more of this entrepreneurial past. Yeah, maybe just what? What does being an entrepreneur mean in this Japanese community?

Shinya Yamamoto  8:33  
Okay, so this is good question, actually. So the reason why I try to create such type of flexible. You know, community is a, as probably you can imagine. Japan is a very like conservative, sometimes slow, not you know, open minded to expand to global, for example, always working together within Japan, you know, market or organization, so people are currently very much, you know, encouraged by government and, of course, university too, to to to create a startup ecosystem or startup company too. But it's quite difficult. And the very typical type of accelerator program, like a lecture, you know, they are not so much, you know, flexible, like, you know, global people. So I wanted to create like this, you know, club activity to discuss, to have a party or networking, meet up, and then easy to connect to the for example, Professor, researcher, medical doctor, physician, and then government people. So this is the place, actually. So this is actually workable currently, rather than other typical. The type of incubation accelerator program in Tokyo Osaka, because people have been, like, happy or enjoyable, like, as a hobby, you know, after 5pm or in the weekend, and then our result actually 15 companies, one five have been created from my incubation, and then three of those are collaborating with Tohoku University. And then another three startup companies have been joined from Osaka University, medical school, and then Corbett, three companies, still, three startup companies are also joining to our community.

Amanda Way  10:46  
And these companies that are coming from universities, I think the culture, I mean, even across the US, where I'm based in San Francisco, every university has a different culture, I'd say, very relevant for med tech, health tech, biotech, when you have IP that's been created within the university. Are these universities friendly to, you know, we're going to craft a company around this. We're going to spin it out. And is there a variety amongst the universities, or is there it sounds like there's excitement to actually have the technology spin out? Yeah, it's really exciting.

Shinya Yamamoto  11:15  
Yeah. So, Amanda, you know, you are from Stanford, but I often, you know, visit the bay area to visit the researcher or professor at the Stanford University, too. I know your culture, very entertainment place. Yes, easy to connect the people. You know, no need to be formal, right? And then not like a hierarchical community organization, right? So it's not common in Japan, actually, we are sometimes very hierarchical and then sometimes very solid, you know, organization, this is sometimes good, but this is sometimes no good. So maybe for manufacturing solid organization or hierarchical management model is a very good probably, like we did in 20th century. But now is a more decentralized era. We need to be more autonomous, you know, individually, something like this. So I think this trial is, you know, making Japan startup ecosystem to follow, like, Stop, you know, like a Bay Area. Well, maybe Singapore, yeah,

Amanda Way  12:32  
since you're pulling different elements from different countries, and when thinking about that innovation process, it's like, Okay, we have the talent across these universities, these universities are actually really excited to work with these students, to spend to spin this technology out. So now you have these students. You're bringing them together in this group. You're just one person. I'm curious like as you think about building out this portfolio, and we're continuing to bring these these students together, how do you think about scaling your work, who and really thinking about almost your advisory board that you build around you, and who you bring in for these companies. I think it's a common question folks think about as if they're emerging manager early funds to those that are trying to build communities in the area. You can start off with one, one person with a vision. But what is that your path to really scaling this work, to continue building

Shinya Yamamoto  13:21  
out this? Yes, this is also good question. So only one person is impossible to manage. Of course, many of companies or organization, right? So I don't actually, I didn't want to focus on only one startup company as a co founder and the CEO. So I try to create such type of ecosystem as a professor, researcher and entrepreneur. So but my focus, my focus is currently as an angel investor, or maybe I can say business producer, to assign my community member or friend from university, like medical school or business school, and then I have been delegating to them CEO even I am 100% shareholder as a representative of this startup company. So this is the way to manage many startup companies and organization. And then my students from a medical school and business school, they are currently have been CEO of my startup company as a co founder. So this is like, how can I say a

Amanda Way  14:38  
bit of a venture builder style? Yes, flavors, and it's, you're, you're co founding these companies with them, yeah. And it sounds like, you know, having the exposure as a researcher working within universities. It sounds like you can almost do a bit of that early diligence, early vetting of if a company almost should exist from from your work before. We're writing that first check, and we have other investors at this conference that they're doing this at scale as well. And so seeing, I think what's nice about having it a little bit more intimate, and like you said, you can call up those in your community, bring them in, hopefully bring them to LS at some point, once they're ready to grow. But maybe, let's talk about those in between stages and maybe some of the blockers before they're ready to come to an LSI Asia. What are whether it's related to Japan or just early technology in general? What are you seeing right now as some of the blockers, or things that make it difficult to really start building a company in Japan, and you're an angel investor, but are there other angels that are looking to invest in Medtech, health tech is, is that a barrier looking to find financing outside of Japan is as a path you could go, or is it really around the talent?

Shinya Yamamoto  15:49  
Okay, good question. So the difficulty to, you know, create a startup company in Japan is we need a more diverse community. We do, like only within Japanese people. This is a no good situation, actually, for example, in Singapore, very diverse, right? Even in Asia, other countries as well, in Asia, Pacific region only, Japan is a very closed and not diverse community, because our market is actually big, so they don't need to think about to go to outside of Japan, for example, Singaporean local startup company. I have currently five companies here as a investor, when they start a business, they always think about the global expansion from Singapore, because domestic market is much, much smaller than Japan, right? But Japan is bigger, so people usually don't need to think about that. But I think we need to think, because no exit after that, right? So this is a one thing, not diverse the community. Then another point is, you know, finance, finance gap, from the scratch to maybe, you know, early phase, no angel investor, almost at all. Then several venture capital fund compared to other countries, very small. So I really want, really, really want to make involve global venture capital or angel investor from outside of Japan, because our science and technology service are really good, actually, but no one knows from outside of Japan, which Professor, which researcher, which entrepreneur has, what kind of product or technology IP they don't know, totally so we need to more promote, you know, Japanese, you know, startup opportunity. I think, yeah, I'm

Amanda Way  18:08  
starting to see, I mean, even recently, actually, a few weeks before coming to this event, I feel like only very recently have I started to see more of these Japanese ecosystem events happening in San Francisco, starting to build out the Japanese community in San Francisco, and it's figuring out how to cross these borders. And really, like you said, like, what? What does it take? Is it building out a playbook? Is it having some sort of platform that, you know, investors, innovators, that are interested in Japan? Is it bringing people and bringing them on a tour, showing them these innovation stories. But are there any success stories that you can think of that you're like, you know this? This happened once this is successful, or we had a company that was doing very well and then they left. But this is a Japan success story, and people may not realize it or not yet. And maybe we can discuss what it would take to have that, that success story?

Shinya Yamamoto  19:01  
Yeah, I think so. So, I hope you know which, for example, LSI, such type of event, can be connector of, you know, between, you know, global industry, or probably government academia too, and Japanese, you know, market or, you know, players, this is very important to discuss more. Yeah. And then one more thing, our startup exit strategy is only Emma IPO in Tokyo, growth market, which is like NASDAQ or something like that, for the very low valuation after IPO, compared to others, but all venture capital in Japan, I mean for Japanese stock. Companies are all Japanese venture capital. That means everyone, think about the IPO in Tokyo only so. But my, my startup portfolio outside of Japan, investors are very international, and then they are leading our business as a of course, stakeholder, right? But Japanese local venture capital is like a bank, banker, and then they don't need a business itself, like global investors. So ideally need, you know, invite, or maybe connect a global investor to Japan. And also, you know, incubation, like metal tech actuator, or like LSI to, you know, encourage more people on our organization. Yeah, maybe

Amanda Way  20:51  
let's take a shift to something a little bit more fun. Since, as you shared in that presentation, you have quite a breath to all of the areas that you invest in, I would love to tie in learning more about what areas are really exciting, you know, and maybe which have the most opportunity in Japan there. There are companies here at LSI actually coming from the US that are looking to countries for Japan, seeing opportunities that might not exist in the US quite yet. Market size, actually, one that stands out to me is been seeing in the fertility space, even if a company in the US were to sell their technology to every IVF clinic, that actually wouldn't be a venture scale, but with all of the incentives that exist in Japan, some of those companies that might have died out in the US just because they aren't able to reach Scale, aren't able to get reimbursement in Japan, an area like IVF fertility is actually something that is paid for covered. They're really looking to make investment in that space. Are there any other areas that are top of mind for you, areas that you have invested in, areas that you're looking to invest in, in areas that you know globally, people should think about coming to Japan to maybe build in because there's a unique opportunity there.

Shinya Yamamoto  22:04  
Yeah, good question. So related to Meditech or heuristic, it's really currently popular in Japan, because, as you know, in Japan is we have a huge population in the world, and also we have a lot of issue for the, you know, highly aging, you know, population, right, for example, like dementia, Alzheimer disease, and then senior care, you know, management issue, and the government pay a lot of money to those, you know, field. So the currently Japanese central government, like a Cabinet Office, Ministry of Economy and the health they have been strongly focusing on health tech industry. So they have huge government grant. Currently, 10 years ago, nothing, almost nothing, but 15, five or six years ago, government has had started to invest as a research grant, or, you know, startup ecosystem grant to university, to incubation, to, of course, each company, or, you know, entrepreneur. So I think healthcare, Meditech, biopharmaceutical industry, is a one of the attractive, I think, field for the investor, or maybe stakeholder from outside of Japan. So Maybe Matt from middle tech actuator knows about the like a movement in Japan now, a lot of people, government, government is really, you know, keen to collaborate with a global organization or people?

Amanda Way  24:03  
Yeah, I think longevity, especially is becoming a bit of a hot topic right now. I think some people think of longevity as more of preventative medicine to allow one to live longer, also as a way to think about the aging population. I think you made a good point. Like, especially for Japan, we're seeing this aging population. I think it's interesting that you work with these medical students, because they're going to be working with these patients directly in the in the health care system. Do you think that the health care system has the ability to handle all these patients? Is this an area that you're seeing a lot of these companies start to build around, or is there still a gap of you know, hey, as someone who's an investor, I'm seeing this need. These business students and healthcare students aren't seeing it yet, and that is your place to maybe guide them into areas, make those connections with grants. Or are you actually seeing the community be aware and connected with the government on like these are the. Areas we should be spending time in, just to clarify how that communication works within the ecosystem.

Shinya Yamamoto  25:06  
Okay, good question. Yes. So the current medical students, for example, they are all younger generation, so quite aggressive to make a startup business from their side, even, of course, professional physician or medical doctor has a great idea at the, you know, hospital or in front of a patient, right? So I have currently been collaborating with them how to make your idea to be business, something like this. So this is a good point. And then another thing is, Japan is good at the manufacturing, probably, you know, for hardware, robotics, maybe like Toyota or Honda, Nissan, for the automobile, you know, industry, but we are not good at or very weak at the software development actually. I mean, user interface is not, you know, user friendly compared to other countries. So, you know, this is very good opportunity, maybe for the companies or people from outside of Japan. A

Amanda Way  26:26  
lot of collaboration, collaboration with global world, with them. A lot can

Shinya Yamamoto  26:30  
get done, maybe people who are good at the manufacturing, but maybe you can support to develop, for example, application, user interface, something like this, and collaboration, because no good user interface in Japan currently. So actually it's blue ocean for maybe as your business probably opportunity. And then other, I think, another opportunity, if you getting into Japan market, you can also get the Japanese government grant. If you have, for example, Japan entity, or if you have a partner, like me, professor, it's a collaborator is fine. And then it's not small, like a several million USD we can get for clinical trial, for application development, I mean, Senior Care, dx, digital transformation, something like that. A lot of a lot of research topic from government so but no one knows at all as of now and then, they need a collaborator from academia, because this is a research topic. Power to startup company from, yeah, very similar to the US, yeah. So I know huge grant from US government. So this is good. How can I say budget to cover, you know, finance, finance gap from the scratch, right? So one of my startup company from corbeil University, medical school, the dean, my boss, Dean, is found the CEO. His strategy is very smart. He has been managing his biopharmaceutical startup company only with the government ground, no investment from outside.

Amanda Way  28:33  
Yeah, it's smart in today's world as well. A little instead of raising we're having all of that capital up front, really, getting that product market fit, really, we call it now, like seed strapping. Maybe you have a little bit of venture angel money, but really being able to prove out during this grant stage. And you know, if that company were to move to the US, they would actually be a bit further ahead than some of the companies that are purely grant funded, because you have to think a lot more thoughtfully survive with that less capital, and then also with grants. Normally, you're restricted to, well, what was the grant application? There's less of that room to pivot, which can be tricky, but also make sure that you know exactly what you're going for, milestone wise, when you start

Shinya Yamamoto  29:15  
true. So this Dean has received the totally 10 million USD from the government grant, which is still very good. And then he is currently starting a fund raising from venture capital with a higher valuation. This is a very smart, actually approach. So Japan is now good timing to have collaboration with such, you know, government grant or local researcher or professor, and also, no, very less, entrepreneur, founder and the CEO from outside of Japan, based in Tokyo, Osaka. So I think for them. For students from Stanford or other countries University, if they can move to Tokyo Osaka, it's good, I think a chance,

Amanda Way  30:09  
yeah, we're gonna bring the talent over, see, especially if they're working an area that is very relevant for the Japanese population, build out that initial product and then have that global mind to move forward. I love that. Well, let's spend some time. We have a few minutes left to do some questions from the audience. Would love to welcome anyone up to the mic. Ask shiny about the Japanese ecosystem? Yes, it's right here in the middle, about innovation his work. Yes, hello, say your name and then question,

Shinya Yamamoto  30:41  
yeah, hi, morning. My name is AJ. I'm from the Molly description. Thank you so much for your presentation. I'm really curious on the talent side. I work in talent and executive search, and Japan is one of the areas that I cover in APAC. But one of the things I notice is executives from large companies don't always like to take that plunge to work with young Medtech startups, right? I mean, culturally hierarchically, as you mentioned, there's a real dissonance on I've got this. I've got to build loyalty. How do we change that mindset? How do we encourage experts to take a chance on young med tech? A good question, and thank you so much for your good question. And this is really difficult. You know, actually point for Japanese people, but how to encourage them the I think one of the answer is, like my current activity, I believe so if, for example, if I can show Lora model to them, or example, or model case, case study, whatever they will be changing his or her mindset. So the reason why this is quite difficult is there is very less case study in Japan. Then many people are like decline or failed, so people don't, doesn't want to take a risk, right? As a conservative people. So this is like a festival, right? Like entertainment. So people are like, how can I say, coming to our community space? What are you doing? Something like this? Then I will connect them to the, you know, successful people as a case study, or I can show show them, as my case, too, or connect the global people or business person. So this is a very much, gradually, you know, activity, but quite effective, I believe. So, no government open, you know, how can I say government program operation is too much option, right? So more community driven is super, super important. So this is, yeah, actually, my point. I think

Amanda Way  33:16  
also with the more global community that you're building as well, it's like, well, maybe not even just looking at Japan as a case study, since, if there are limited cases, but looking having them find someone that they can connect with, be like, this is someone like me. Like, this person came from, you know, a medical background, or this person came from a city where entrepreneurship isn't, you know, as the validated. And so I think there's an opportunity as well to build. I mean, even connecting with the US, where I think everyone thinks of Silicon Valley as this area of innovation, if you look at the South in the US, and there's a lot of people who start there, and they're like, How can I is building a company actually the right thing? And the case study we've seen is it just involves a little bit more of that collaboration. And so Japan, I think, is, you know, unique, but also it's, it's not unique in being able to start from a maybe more, um, conservative ecosystem that that happens all over the world. And so I think it's finding those differences and using your platform to, yeah,

Shinya Yamamoto  34:17  
good point. So let me tell you one example. Sorry, for example, HR industry, IT industry currently are getting more founder or entrepreneur from outside of Japan, in Tokyo, Osaka. So there are. I many startup companies rather than healthcare or Meditech, but in the Meditech industry, almost zero entrepreneur or player from outside of Japan. So only Japan needs people. So we. Maybe, of course, this is a industry gap, it, or maybe HR industries, probably was easy to enter, maybe from outside, but Meditech, biopharmaceutical industry, health tech, I think it's time to start to make such place or community. So maybe next year, I really would like to invite LSI to Japan. LSI Japan 2026, so yeah, let's do that together.

Amanda Way  35:33  
Yeah, I'd love that maybe last few minutes, one last question before we wrap things up. Yes, hop on over to the mic. Adrian,

Audience Question  35:43  
Hi Professor. Thank you very much, and thank you for taking the question. You know, there's a there's been a lot of both in the biotech and Medtech space. There's been quite a lot of really, really good world changing innovations, right? That are invented in Japan. And yet, when you look at Japanese startups and Japanese ventures, it's hard to name that many that have that have been able to kind of scale globally. Yeah, right. Like, why is that? Like, do you need to be 100 years old in order to be to scale globally? Like, why are there not any 20 year you know, within these last 20 years, ventures have been doing well.

Shinya Yamamoto  36:21  
Thanks so much. Good. Good question. Great question. So this is a very clear reason I have been seeing no global investor or players are involved. So only Japanese people are doing right? So they don't know global strategy or case model, case or case study, how to make an IPO, how to make a M and A not only within Japan market, because only within Japan market. Of course, valuation is much, much lower than global, right? And then no investor here, no company who can acquire the Japanese local startup here. So the reason we need the more you know, diverse international market or environment. This is the reason so I have been seeing such, such type of startup or founder a lot, but all cases only within Japanese people. This is the reason why they couldn't but I am also totally agree with you that Japanese science technology is really good. So this is like, how can I say black stone, if we can make a diamond from this? But no one knows now, so I am now trying to find such founder or technology or IP to get more outside of Japan.

Amanda Way  38:04  
Thanks for the question. Adrian, well, thank you so much for attending. Thank you for sharing all of your insights. It sounds like there's a lot of potential. Excited to work with Japan as as LSI and continue to bring these startups, the LSI community, to Kentucky, connect them with global investors. So let's continue to work together and enjoy the rest of the conference, everyone.

Shinya Yamamoto  38:24  
Thank you. Thank you very much. Thank you, Amanda, thank you. Thank you.