4 Reasons Israeli startups should look at Japanese corporates
Japan is the world’s 3rd largest economy, producing 10% of the world’s GDP, and Over 10% of the fortune global 500 companies are Japanese. This economic giant has been showing an increasing interest in Israel of late: according to the Times of Israel, the number of Japanese investments in Israel hit an all-time high in 2019, with 53 new deals, totaling 815 million dollars.
The majority of the investments were made by multinational conglomerates such as SoftBank, Mitsui Group, and Nippon Telegraph, with the amount invested ranging from 36 million to 1.1 billion dollars. Clearly, these corporate entities feel there is something to be gained through investment in Israel.
But the interest shouldn’t be one-sided. These large corporates hold a lot of influence and could be the key for Israeli entrepreneurs looking to make an impact. Here are 4 reasons for Israeli startup companies to look at Japanese corporates for funds and collaborations.
1. Extensive business networks
Japanese corporates commonly have wide distribution networks. Partnering with them could give one access to large, pre-existing, business networks, and a large supplier and customer base. This network often spans globally over a variety of sectors, as demonstrated by Toshiba and Sumitomo corporations.
TDK partnered with the lithium-ion battery company, StoreDot in 2018, to manufacture a quick charging battery for mobiles. As a multinational electronics company, TDK’s incredible manufacturing capabilities were a huge help accelerating the introduction of the startup’s flash battery technology to the market.
2. A brand you can trust
These giant conglomerates, sometimes called “keiretsu”, once dominated the Japanese market, and to a smaller extent, still do so today. Such large spheres of influence can provide quite the challenge for outsiders trying to penetrate the market. However, with their support, one can gain easier access to their desired audience. Market penetration is much easier when you are backed by a brand people know they can trust.
Viber was acquired by the e-commerce giant, Rakuten, in 2014. Rakuten is Japan’s largest e-commerce platform, the acquisition expanded its already large customer base from 200 million to 500 million. By acquiring the Israeli call and messaging app, Rakuten gained an edge that assisted them in the fierce competition with other e-commerce giants, such as Amazon and E-bay.
3. Multiple Resources - Taking things to the next level
Thanks to their size, Japanese corporates have access to a large, diverse resource pool. A small company has much to gain in terms of manufacturing power, IoT, Big Data, etc. these large pools of data are a gem waiting to be polished, and large scale optimization and new breakthroughs can be achieved in little time.
Inuitive Ltd. and SoftBank Corp., a subsidiary of SoftBank Group Corp announced in 2017 that they would be entering into a collaboration agreement in which chips developed by Inuitive will be integrated into Softbank’s IoT products. The leap forward in IoT access would allow Inuitive to take their chips to the next level of development, with Softbank enjoying the fruits of this leap.
4. Localization in the 3rd largest economy
There is much to be gained by partnering with local companies who have an in-depth knowledge of the Japanese environment. They can help startups tune their message and their services to a Japanese audience. Also, they can help one navigate the numerous Japanese regulations and provide support in various forms. These large corporates have an innate advantage when it comes to bringing new technologies and ideas to the Japanese market.
In 2018, BriefCam was acquired by the Canon corporation, a startup providing video synopsis and machine learning solutions. Canon has announced they will continue to engage in innovation activities with BriefCam in the future. They believe that through this partnership, they can expand their range of technology and solutions in the fields of network cameras, video management, and video content analysis software to their wide base of customers.
For more on the advantages of partnering with a corporate, see Samurai’s article It’s Not All About the Money.
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