One of Tokyo’s oldest commercial quarters is reinventing itself as a startup hub.
During the Edo period (1603-1868), Nihonbashi developed as a center of trade, flourishing due to its strategic location at the intersection of major roads and waterways. Its namesake bridge was first constructed with wood in 1603, and its stone and steel incarnation built in 1911 remains one of the capital’s landmarks — albeit somewhat obscured in the shadows of the Metropolitan Expressway running directly over it.
Now the financial district home to the Tokyo Stock Exchange and the Bank of Japan is undergoing a makeover, luring dozens of life science and space technology startups in a project led by Mitsui Fudosan Co., one of the nation’s largest real estate developers.
The area historically owes its prominence to the Mitsui family — powerful merchants of the Tokugawa shogunate who based their wholesaling business in Nihonbashi and eventually opened Japan’s first department store, Mitsukoshi.
Mitsui’s grip on the district remains strong — Mitsui Fudosan, the real estate arm of the Mitsui Group conglomerate, announced in 2019 that for the third phase of what it calls the “Nihonbashi Revitalization Plan” it would be working with relevant parties to redevelop 1.22 million square meters of facilities in the district, including commercial and office buildings as well as hotels covering 6.7 hectares of land. The massive project is slated for completion in 2040, by which time the unsightly expressway running over the iconic bridge is planned to be moved underground to make space for a vibrant waterfront promenade.
As part of the endeavor, Mitsui has been providing office space for startups in a bid to transform the district into a cutting edge technology hub on par with those in Tokyo’s major commercial centers such as Shibuya — home to internet firm DeNA Co. — and Roppongi, where well-known tech companies such as flea market platform operator Mercari Inc. and social media service operator Gree Inc. are headquartered.
Unofficially dubbed “Nihonbashi Valley” in a nod to Silicon Valley, the project has also attracted venture capital firms including Belgian VC fund Newton Biocapital to nurture a sustainable ecosystem.
“Nihonbashi has historically been home to many wholesale drug stores, and major pharmaceutical companies still base their headquarters in the area,” says Yumi Sakai, a senior associate at the life science innovation department at LINK-J, an incubator established by Mitsui Fudosan along with industry and academic bodies. “We believe the area’s history will offer fertile ground for life science startups.”
To date, 77 startups have opened offices in the 10 life science facilities, complete with conference rooms and laboratories, that Mitsui Fudosan manages in Nihonbashi. Before the pandemic, frequent networking events were held to promote collaborations between the firms — gatherings that have since moved online.
The area’s close proximity to the Tokyo Station is a big draw, Sakai says, while Mitsui Fudosan supports the ventures through limited partner investments.
Biomedical Solutions Inc., a startup producing neurovascular intervention devices for stroke patients, moved into one of the offices in 2016 as its business expanded and more floor space became necessary.
Founded in 2013 by brothers Kazuya and Yasuhiro Shobayashi, the firm created a device for removing blood clots based on technology developed by Yasuhiro, who has a Ph.D. in engineering from Keio University. After receiving funding from the trade ministry, the product was given government approval in 2018 to be distributed in Japan.
In partnership with medical device manufacturer Terumo Corp., the device, named Tron FX, went on the market in 2019, with plans in place to expand sales overseas. The company is now part of Otsuka Holdings Co., having been acquired by the pharmaceutical giant in 2017.
“Our stent retrievers are designed to remove thrombi (blood clots) to restore blood flow in patients’ cerebral blood vessels,” Kazuya Shobayashi says. “The market has been dominated by products made by foreign companies. We became the first Japanese firm to conduct clinical trials of cerebrovascular treatment using a domestically produced device in around 20 years, and now it has a market share of around 15% in Japan.”
Shobayashi says his startup worked out of a room inside an accounting firm in its early days, but soon they needed more space to conduct trials. “That’s when we learned about the life science laboratories and offices available in Nihonbashi,” he says.
“There aren’t any other properties in central Tokyo that accommodate firms in the field of life sciences. The office is also very close to Tokyo Station and has easy access to Haneda Airport,” Shobayashi says.
“Our job entails maintaining close communications with medical professionals, and having an office near a major transportation hub is a big advantage. It’s also a plus when attracting engineers — many would rather work in a big city than somewhere out in the sticks. And being based in Tokyo allows us to stay up to speed with what’s happening in the fast-paced medical industry.”
Mitsui Fudosan has also been attracting aerospace startups to Nihonbashi under what it calls the X-Nihonbashi project. So far seven startups and six organizations have moved into facilities on the seventh floors of two buildings in the district, including the Nihonbashi Mitsui Tower — home to the Mandarin Oriental hotel.
“The market for the space industry is one of the most lucrative in the world, estimated to be worth around ¥40 trillion globally and projected to triple in size by 2040,” says Takashi Watanabe, a project leader at Mitsui Fudosan’s Nihonbashi Urban Planning and Development Department.
“Satellite data is useful in fisheries and agriculture, for example, while robotics is essential in space exploration when it comes to unmanned missions. In short, this area has very strong potential to grow and can be applied in various other fields,” he says.
Ispace Inc., a lunar robotic exploration company, has opened a mission control center in one of the offices in preparation for its first two lunar missions in 2022 and 2023. Space BD Inc., a general service provider for the space industry, also has an office. These firms have free access to conference rooms, co-working spaces and a video recording and broadcasting studio.
And in February, Mitsui announced that it will be working with the Japan Aerospace Exploration Agency to create opportunities for business matching among players in the field.
Mitsui also operates 31ventures, an outfit that’s part corporate VC firm, part workspace provider and part networking facilitator.
“We rent out office space in six locations in Nihonbashi for startups, but that’s not all. Our aim is to collaborate with these firms, invest in them and support their business through events,” says Tomohisa Shiohata, project leader at the venture co-creation department at 31 Ventures.
Ultimately, Mitsui hopes some of the startups it invests in will become the next big thing.
“When conducting interviews with prospective tenants, we emphasize vision and innovation in the service and products they have to offer, and whether they can work with Mitsui,” Shiohata says. “Our goal is to gather promising startups with the potential to scale in Nihonbashi.”
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