״Israeli startups and the Japanese market״
״Israeli startups and the Japanese market״ is a sentence that most Israeli startups and Israeli VCs do not say or sometimes say it is just a far-fetched dream, but Japan has changed in the past years thanks to key players in the market.
Most Israeli startups are looking for markets they know they can start with relativity low cost (the resources are limited and there is high pressure from the investors to show initial key indicators fast) and less factors of uncertainty like:
· Language — For primary research and working with local players.
· Innovation (including the risk factor) driven culture.
· Market readiness for the specific startups.
· Competitive landscape.
Those are just few main ones, but the overall picture explains why most of the Israelis usually heading towards the US and sometimes to the UK.
Those markets are big, many different users/corporates to sell to, information is relativity easy to get in order to decide your next move and they have (if they want) local players in the VC market for its next funding.
In my opinion this approach has to change and fast if the Israeli startups wants to continue scale up in the world. I don’t mean that it’s the end I just mean the competitive landscape is getting stronger by the hour in today’s speed of new emerging technologies.
During the past 10 years and so, the Israeli startups (which has no local market to scale into) has enjoyed the pleasure to be very unique in the worldwide tech industry that gave (and still do) much respect, but taking the Japanese market as an example of “winds of change” and after visiting a friend that lives in Berlin and talked with him about the startup scene in Berlin and seeing it with my own eyes, I’m sure that like Japan the startup scene as well as the willingness of those markets together with all the players in it will become more understanding towards startups which brings big opportunity to the Israeli startups but yet to all startups as well, especially to the local startups.
Of course, the Japanese market is still having many challenges (and which market don’t) but from my point of view after working closely with top executives in big Japanese corporates in many industries and players in the local startup ecosystem, helping them see their own barriers along-side with hearing their problems I can say that many has changed and the Japanese market is ready today to work with startups more than ever which gives the Israeli startups and the local startups new opportunities as said.
Here are some of the reasons why:
· The Japanese market — Japan is one of the 4 big economies in the world with vast traditional industry and 127M people population. This is a market that cannot be ignored if you as a startup need to scale up.
· The local Japanese user — If you give him a great product he will be willing to pay 3 times and more than the average user in the world.
· Early adopters — The Japanese people have lived with innovation most of their lives and are (comparing to other places in the world) considered as early adopters.
· Competitive landscapes — The traditional Japanese corporates have huge challenge to rejuvenate themselves due to Chinese, Korean and other Asian competition that is moving rapidly towards innovation.
· The synergy between a startup and a Japanese corporate — This is a very complex thing and will need a whole new other article about it but the point is that when a startup reaches a point where his startup has been optimized, the Japanese corporate infrastructure can help it scale to the Asian market more easily regardless to the fact that it can be a local partner in Japan.
· The next 4 years — As someone who works in the investments industry I know that you cannot predict the future even if there are key indicators, but in the case of the Japanese market, there are a few indicators that will drive the market in the next 4 years (unless a crises will arise) and it sums up to 2 main points, the Olympics in Tokyo in 2020 and the American military withdrawal from its Okinawan base.
To summarize my perspective in a massage to the startups out there in 2 main points:
1. The Japanese Market — you should look at the Japanese market as a potential market for your startup but you should do in depth research before that in order to understand that this is the initial market for you like you would have do to every new market you should want to tap into. Find local players that could help you tap in, if you want to do it by yourself like in the US the chances of success decrease.
2. Tapping into new markets challenge — The local startups scene in the big economies are evolving and even though they are not like the US and Israel they are moving fast and there are more and more success stories of local startups and they will make it harder to tap into potential markets, requiring more resources in order to scale, so startups (especially the business model based ones) will need to move faster and with more killer instinct.