Tokyo is becoming an incubator of venture businesses as many young people — seeing the success of other entrepreneurs, who in turn have created a network of mentors and investors — are taking on the challenge of having their own business, aided by an improving economy buoyed by Prime Minister Shinzo Abe’s economic measures, dubbed Abenomics.
“My message to the world’s young entrepreneurs, engineers and tech investors is this: Forget that old ‘Japan passing’ story…. Come and be part of ‘New Japan,’ ” said Yoshito Hori, a Davos regular who is president of Globis University and managing partner of Globis Capital Partners. “Come and build the next Silicon Valley right here in Tokyo.”
Hori has a reason to be upbeat.
Out of five initial public offerings that Hori’s venture capital company has done in the last five years or so, three founders were from the University of Tokyo, and one from Kyoto University. The CEO of a company Hori is planning to take public later this year is a Japanese who has recently moved his base from Tokyo to Singapore.
“As the dean of a business school and a venture capitalist, I’m up close with what’s going on in the Japanese economy — and it’s all good news,” Hori said. “In ‘Old Japan,’ the best and brightest young people went from top universities straight into government or big firms. Now they’re setting up their own ventures.”
As an example of the excellence of Japanese entrepreneurship, Hori cited Yoshikazu Tanaka, the founder of Tokyo-based mobile social gaming company Gree, Inc. who is the world’s youngest self-made billionaire except for the founding members of Facebook Inc.
Tanaka quit a stable job at a large company to set up Gree when he was 27. He is now 36 and estimated to be worth $1.9 billion as of April, according to Forbes magazine.
For the world’s most successful IT female entrepreneur, Hori cited Tomoko Namba, the founder of Web services company DeNA Co., also based in Tokyo.
Namba was a partner at McKinsey & Co. when she left the consulting company and founded DeNA. She was in her late 30s then.
Famous female IT executives today such as Facebook COO Sheryl Sandberg, Yahoo CEO Marissa Mayer and former eBay CEO Meg Whitman are great leaders, but in a different category because they themselves did not start the companies they work for, Hori said.
Hori said that Tokyo is somewhat similar to Silicon Valley in that it has social environments friendly to the incubation of venture companies.
Hori cited a solid network of mentors and investors, more Fortune 500 headquarters than any other city in the world, a GDP almost double that of Los Angeles, a huge metropolitan population of 37 million, compared with, for example, New York’s 20 million, and fixed-line and mobile broadband connectivity second only to South Korea.
In another reason of Hori’s optimism, Abenomics is expected to promote deregulation and take other measures to activate economy.
Abe’s administration announced in June a growth strategy, the third of Abenomics’ “three arrows.” The comprehensive economic measures range from expanding the opportunities of women in the workforce and promoting green energy use, to bold deregulation.
The first and second “arrows” are aggressive quantitative easing and proactive fiscal policy, both of which were announced prior to the announcement of the growth strategy. Since then, share prices have surged, gross domestic product has risen and unemployment has edged lower.
Hori complements Abe’s determination to “fix” the Japanese economy, which had been stagnant since the global recession in 2008.
“Personally, I believe Abe is deeply committed to ‘fixing’ Japan,” said Hori, the head of Japan’s largest business school operator by the number of students. Hori can feel Abe’s determination in the prime minister’s frequent use of the phrase “TINA,” or “There is no alternative,” he said.
Pundits say success in the growth strategy is a key for sustainable economic growth.
Hori believes Abenomics is going in the right direction. He particularly has high expectations on the effects of deregulation.
Deregulation in key sectors will probably have the most positive impact, Hori said.
“Medicine, agriculture and the labor market are called the industries with rock-solid regulation,” Hori said. “Deregulation in those areas will definitely activate the Japanese economy.”
Hori also favors a move to make it easy to shift investment funds to risky capital, such as stocks of unlisted companies, instead of safe capital, such as government bonds.
Hori’s expectations may be mirrored by the Japanese public. Abe enjoys strong support from the public, another sign that Japan as a whole is likely to be united in following Abe’s measures.
Abe maintained an astonishing approval rating of 70 percent. By contrast U.S. President Barack Obama’s support stands at 45 percent.
“I genuinely believe that the mindset of the Japanese people is becoming more positive,” Hori said.
Another bright side of the Japanese economy is the increasing number of foreign students.
Globis University, which has a full-time MBA course taught in English, currently has students from 20 different countries.
“I have a real sense that more foreign students are opting to study in Japan. They say they like manga, anime and those subcultures,” he said. “After graduation, some of them remain in Japan to work. That is quite a gift to Japan.”
Hori stressed the point that those who stay on to work in Japan become valuable human resources for companies that want to expand their businesses outside the country. As an example, Globis University employs foreigners from eight different countries.
Hori is trying to achieve globalization of Japanese human resources in many ways, such as by providing international business education, incubating new international businesses and welcoming foreign students in his school as well as company.
In one such effort, Globis is holding the G1 Global Conference in the university in Tokyo on Sept. 16, under the theme “A Stronger Japan: Impact on Asia and the World.” The conference will feature prominent business figures such as company executives and economists, all speaking in English.
The G1 Global Conference discusses various global agendas with leaders from politics, businesses, media and other fields. It is an opportunity for participants to expand their global networks and have in-depth discussions about various fields and industries with distinguished experts. Hori said, “I believe that this will be ‘the fourth arrow’ to get the New Japan go forward.”