Traverse City Record-Eagle

Business

August 27, 2013

Startups gain appeal as some Japan Inc. names fade

(Continued)

“These people are searching for their place. For those with talent, they would rather go where they are wanted than endure suffering where they are,” he said.

The office of Terra Motors is a tiny room in a building in the crammed slummy Shibuya district known as “Bit Valley,” Japan’s equivalent of Silicon Valley for housing startups.

Recently, Terra came out with an electric scooter targeting emerging markets that connects to smartphones to gather location-based and electricity-consumption data. They charge from a regular plug outlet.

Terra, set up in 2010, received investment capital from top funds, including one run by former Sony President Nobuyuki Idei. It already has top market share in electric scooters in Japan, and is eyeing overseas markets including Vietnam, India and the Philippines.

Its success so far is against the odds.

The World Bank, in ranking the ease with which a new business can be started, scored Japan 114th among 185 economies. New Zealand was at the top, and the U.S. was No. 13. Singapore was fourth, while Ghana was 112th.

Japan’s initial public offerings, at 36 in 2011, make for a fraction of the numbers in the U.S. at 134, according to PricewaterhouseCoopers.

Adding to the obstacles, the prevailing message for the past decade in Japan was that startups were not to be trusted.

The ones that used to get attention tended to be video-game companies such as Gree Inc., which got slammed over the alleged anti-social addictiveness of its games, and the wayward, such as Net services company Livedoor, whose founder was arrested in a securities fraud scandal.

It is only recently that some vigor has returned to ventures. Part of the explanation may be the renewed focus on manufacturing.

Japan’s four decades of industrial success after World War II were followed by more than two decades of stagnation, mainly because of the absence of innovation, said Masazumi Ishii, managing director of AZCA Inc., a California consulting firm specializing in international corporate development.

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