Business | Regional voices: Chubu

Better known as a manufacturing center, Chubu region is turning its talents to nurturing startups

Chunichi Shimbun

The Chubu region, with Nagoya at its center, has never been known as a land of startups. Although the area is recognized as one of the nation’s largest manufacturing hubs, few IT startups have been established and many students in the region tend to prefer joining big companies to becoming entrepreneurs.

In recent years, however, the region has seen an increasing number starting their own businesses or support other entrepreneurs, leading to the rise of a new community of startups with cutting-edge technology and products.

One of them is Kamejima Garage. It’s located in a two-story coworking space for entrepreneurs that opened in March in Nagoya’s Nakamura Ward, under a viaduct that supports the Tokaido Shinkansen line and other train lines near Nagoya Station.

The cafe-like space on the first floor, with exposed light bulbs hanging from the ceiling, can be used free of charge by entrepreneurs and students seeking to start their own enterprise.

The second floor has 10 rooms, with sizes ranging from 7 to 30 tsubo (a tsubo is 3.3 square meters), that can function as rental offices for a monthly fee of around ¥6,000 per tsubo.

“We want to establish a startup hub in Nagoya, by supporting the creation of 50 startups within three years,” said Kenta Okumura, 35. Okumura is the head of Nagoya-based Midland Incubators, one of three firms based in Nagoya and neighboring Gifu Prefecture that set up the coworking office.

The firms have said they will offer advice to entrepreneurs on starting businesses and raising funds, with the ultimate goal of building an entrepreneurial “ecosystem” in which successful startups then go on to nurture the next generation of entrepreneurs.

The logos of seven companies established with the help of Kamejima Garage are displayed on the wall of the coworking space.

Masaki Wakameda, 25, operates Nagoya Startup News, an online media platform that introduces venture firms in Nagoya, and uses the facility about once a week to hold business meetings. When Wakameda started his business in 2016, there were no more than 30 startups in Nagoya that he was aware of, but now they have increased in number to about 200.

Many investors from outside the region have started visiting him to gain information on startups in Nagoya and surrounding areas, indicating growing interest in entrepreneurship there, he said. But he pointed out that, despite the growth, the number of startups is still small. “There should be about 1,000 of them considering the size of the region’s economy,” he said.

Wakameda himself is planning to set up his third company this summer. “I want to start a job placement agency for young people with skills in the region,” he said.

Entrepreneurship is not just for younger people. Some have quit major companies midcareer to start a business even though it has meant giving up job security.

Fumikazu Tanaka and Naoyuki Hasegawa are both 42 and former managers at Aisin AW Co., an automatic transmission supplier for the Toyota group. Together they founded 3G Support, a startup in Anjo, Aichi Prefecture, in 2017.

“I had a stable income, had been promoted steadily and had a good relationship with my colleagues,” said Tanaka, who serves as president of the firm. “But I wanted to have more fun working.”

Their business services vary, from offering consultations for personnel training to developing and selling truck operation control systems and parking lot ticket machines that use factory control systems.

Tanaka says the five-member firm can make decisions quickly, and be flexible in doing business. Tanaka and Hasegawa both said they decided to start their own business because they wanted to try something to which they could devote their lives.

University support

In Nagoya in June there was a lot of energy around a business plan competition for college students, where they presented their business ideas on stage.

A panel of judges made up of investment professionals offered feedback like, “It would be difficult to earn money with that idea.”

The contest was organized by the Tokai Network for Global Leading Innovators (Tongali), an entrepreneurship support program joined by six universities in the region including Nagoya University.

The June competition was the third such contest, featuring 10 teams from universities including Gifu University and Nagoya Institute of Technology — which won the preliminary rounds.

The top prize was shared between a Nagoya University team, which presented a service where people can enjoy cultural events for a fixed fee, and a Nagoya Institute of Technology team that suggested a new method for manufacturing seismic isolators.

Prize winners will be offered funds and the rights to use office space.

“At first many of the prize winners were Nagoya University students, but recently other universities have been doing well too,” said Yasushi Kawano, 50, a professor at Nagoya University who is in charge of the contest’s secretariat.

According to statistics from the Ministry of Economy, Trade and Industry on the number of existing startups launched with the help of universities, Nagoya University ranked ninth in the nation. As of fiscal 2018, it had supported the launch of 76 firms.

Within the Chubu region, Nagoya University is followed in the ranking by Nagoya Institute of Technology, in 19th place, Shizuoka University, ranked 22nd, and Mie University, placed 26th.

Although Nagoya University tops the ranking for the Chubu region, it was only in recent years that the institution became serious about nurturing startups. Because there were many big-name companies in the region, students had focused on joining existing companies rather than starting their own businesses.

In 2014, when the central government set up a public-private investment fund with some national universities to support venture firms, Nagoya University was excluded.

Threatened by the move, the university set up its own fund in fiscal 2015 to invest in venture firms launched at universities in the region, and began holding seminars for students. As a result, the number of startups launched at Nagoya University increased by 27 between fiscal 2016 and 2018, with the university ranking fifth in terms of the increase in the total number of venture firms — topping Keio University and Osaka University.

Rewards outweigh risks

Harmony For Inc., a company in Nagoya that supports foreign students seeking jobs in Japan, is one of the startups launched with assistance from Nagoya University after winning a prize at the business plan contest.

Masahiro Tsukamoto, 28, a graduate of Gifu University, launched the firm together with Nagoya University students because he wanted to do something for foreign students who faced difficulty securing jobs at Japanese firms, due to differences in the way hiring is conducted.

Tsukamoto was already working at a major IT firm, after graduating from college, when he launched the firm. He wanted “to make Japan a diverse society like other parts of the world,” he said.

The firm operates a job-seeking website, and conducts interviews with students to connect companies with nearly 1,000 foreign students registered with Harmony For.

Optimind Inc., a Nagoya-based startup which boasts top-class, world-leading AI technology for selecting the best delivery truck routes, was established by Ken Matsushita, 26, a doctoral student at Nagoya University’s graduate school.

“I want to support delivery systems so that they can be sustainable,” said Matsushita, who launched the firm in 2015 to commercialize research he had been conducting since he was an undergraduate student.

The strength of Optimind’s system is that it facilitates a smooth “last mile delivery” — the final step of the delivery process from a distribution center to the end user — by analyzing truck driving routes in a way that immediately reflects actual conditions.

Optimind is now collaborating with other companies, including Japan Post Co. and liquor retailers, to use the system to cope with Japan’s serious labor shortages.

Looking back at his experiences of financing and organizing a company to make it grow beyond a student startup, Matsushita said, “I think I’ve grown at a thousand-times higher speed by launching a business.”

Although there are a lot of risks involved in starting a business, Matsushita’s comments show they are far outweighed by the rewards.

This section features topics and issues from the Chubu region covered by the Chunichi Shimbun. The original articles were published on June 26 and 27.

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