What is La French Tech? French startups continue to evolve

Authors: Daiki Yoshioka, Yukine Yanagawa

What do you think of France? Many of you will probably think of cheese and wine.

It is true that France is famous for cheese and wine, but do you know startups are emerging in France? (See this article about the evolution and progress of the French startup ecosystem.) France, which has 26 unicorns, is gradually recognized as a startup nation in the world.

We invited executives who lead French unicorns in Japan and asked them about what was an advantage and disadvantages when they expanded their business in Japan.

Introduction of panelists

Sophie: I am Sophie Merali, president of La French Tech Tokyo. I am currently investing in Japanese startups as an investor. I think it is amazing that French startup companies are coming to Japan, and I want to support more from now on. My background, after I got an MBA from MIT, I worked for a local VC. I came to Japan last year after staying in the US for three years.

Tatewaki: I am Ryu Tatewaki from Exotech. Our company is the fifth unicorn out of 26 unicorns in France. Actually, we are the first unicorn company in the industrial sector and are called “industrial unicorn” in English.

I will explain what we do in Exotech. You may have opportunities to do shopping via e-commerce. Do you know there is a big warehouse after you clicked the buy button? After you order, people in the warehouse run and pick up your package and wrap it up. Exotec makes this process completely automated by using robots.

But we don’t just sell our solution. We do everything from consulting to implementation, and maintenance after implementation for clients who want to automate their warehouses. Since it is estimated that the marketing size of warehouse automation will be bigger, you will see more and more Exotech solutions.

According to global information, the global marketing size of warehouse automation is expanding by 9.2% per year

As far as my background goes, I joined Exotec this May. I am currently leading projects in Japan as managing director. Before that, I was in an American company, and I used to live in Germany for 12 years.

Nishitani: I am Hiroyuki Nishitani from DentalMonitoring. I joined DentalMonitoring two months ago and established a Japanese branch. We are preparing to sell our products this month now.

DentalMonitoring is a real-time monitoring system of the progress of orthodontic patients by using AI. We analyze it and report it to doctors.

In detail, patients who use DentalMonitoring, use their own smartphone camera and take photos of their dentition, then upload them to our platform. The data sent in the platform were analyzed by AI and doctors in France, and it sends to physicians in Japan.

It makes the doctor in Japan possible to see the progress of patients’ orthodontics remotely, and doctors can say when they have to come to the hospital. As a result, the burden of going to the hospital for patients is reduced.

For example, if it is aligner correction, you come to the hospital once in six weeks. If it is wire correction, it is also normal to come to the hospital once in four weeks. By using Digitalmonitoring, the frequency to go to the hospital reduces to once in half a year as it said once in six weeks until then.

There is a benefit that they can do detailed orthodontics as if patients come to the hospital every week just scan and upload their dentition data once a week. For doctors, it is an innovative system because they can engage in care for more patients if the patients come to the hospital when they really need and they don’t have to waste time.

To explain my background, I have experience in expanding medical high-tech startup companies from North America and the EU in Japan. My previous job was related to medical tools such as scanners in dentists. After the project, I made a band with my wife and played rock music, but I got contacted by DentalMonitoring one day.

I thought it was really innovative system, and told them “I want to try this.” I joined the company to expand their business in Japan.

Fukuda: I am Fukuda Tsuyoshi from Meero Japan. Meero is the fourth unicorn out of 26 French unicorn companies.

I’d like to explain what we do. Have you ever heard of the sharing economy? This means the service which matches someone who has the skill and wants the skill, or someone who has the skill and needs the skill like Airbnb.

At Meero, we match photographers and companies who need pictures.

For example, recently, food delivery like Demaekan and Uber Eats grew exponentially because of the pandemic. On the apps of these services, there are pictures of restaurants and foods. These pictures are actually very powerful tools to sway users to order food or not.

In the past, when food delivery service companies prepare pictures, they first had to ask for restaurants’ available dates and found someone who could take pictures. They did this process one by one individually and took photos.

However, there are too many restaurants that join food delivery services. For example, Uber has photoshoots with hundreds of restaurants all over Japan every day.

If they use Meero, this process would not be burdensome. For example, if you order “Fukuda Chinese restaurants, the day after tomorrow, 15 photos”, then we will do everything. We tell photographers that “we have this task” and then there will be a person who accepts the offer.

We do photo editing after photo shooting. These are also one of the factors in which Meero is evaluated as a unicorn. It takes time to edit photos after taking them. Actually, we do this by using AI.

Therefore, our business model is “sharing economy” + “AI”.

The image of pictures is really important for companies. If some pictures are too light or dark, it breaks the harmony of the overall experience of the customers and therefore directs the sales.

This is referred to as “Fuku-Warai” -the Japanese New Year puzzle game where blindfolded players try to correctly arrange facial parts on the picture of a face. (It is difficult to digest the information if the appearance of the pictures is disorganized, right?) We support the experience of the end customers.

Meero was founded in France in 2016; we opened a Japanese branch in 2019. We are young as a company but most food-delivering companies in Japan are using Meero’s service.

To share my background, I am from the IT industry. I was in the Japanese branch of foreign software/hardware company.

Things start-ups struggled when they expanded their businesses in Japan

Sophie: Several months ago, we conducted a survey for 50 foreign entrepreneurs in Japan led by La French Tech Tokyo. They said that marketing and getting new customers were the biggest problem when they expanded their business in Japan.

The second biggest problem was the B2B sales, which is probably stemming from big cultural differences. The third problem is employment, followed by the acquisition of resources. Obtaining VISA or establishing a company was the fifth biggest problem. Overall, the survey result showed us that it is difficult to found companies in Japan.

What do panelists think of these results?

Tatewaki: Regarding the result of this survey, it is including the very thing which we suffered, especially sales and marketing. Fortunately, people who see our exhibition are interested in our system. So, it is easier to get prospective customers.

However, considering the business environment in Japan, even though people on the ground are interested in our products and services, it will take 3–4 years until we close the deal, given the size of our system. This is far from the growing speed of unicorns.

Our current approach is to meet people who are close to decision-makers as much as possible. We have strong networking events such as the French chamber of commerce. In fact, we have built connections with decision-makers via networking events.

We have observed that people are more open to networking in France. In Germany, they also do have a chamber of commerce and various networks. However, there are few networks with companies’ decision-makers. (They tend to do business rather moderately, so the total number of networks is small.)

I would say that barrier of entry is very low when it comes to the startup ecosystem in France. Like today’s event, we can exchange our business cards, and it would be very quick to collaborate. I think this is amazing and we want to leverage it more.

Fukuda: It was so hard when we opened the Japanese branch. We had two approaches when we got new customers after our launch in Japan.

First, it is the approach in which we did sales to companies where that used Meero service in other countries or know very well about Meero’s business model because they already used similar service.

For example, Uber. Uber used Meero in other countries, they considered using our service very positively if they had Meero in Japan.

There are various pain points when they use different services. For example, some companies have a hard time having their employees use the service in the company. Sometimes, finding photographers is burdensome, and the quality of pictures varied.

We get clients by leveraging our global presence and reputation efficiently. This is the first approach.

The second approach is selling our service to traditional Japanese companies. This was the highest barrier. Since it is extremely difficult to get buy-in from both decision-makers and people in the field, we suggested doing sales to both of them like sandwiches and balance focus.

It is also important to take time carefully. Japanese companies are still conservative, so they tend to hate communicating with companies that they don’t know.

Like “Who is Meero?” However, I intentionally say, “Thank you” if they don’t know us.

When people decide to buy our products or services before we get famous in the market, doesn’t it make you extra happy? So we conversely use the current situation of law popularity and say “Thank you very much for getting to know the latest technology and services which will be prevalent in the near future.”

Nishitani: DentalMonitoring’s headquarter has high expectations towards the Japanese market. It is because there are a lot of dentists.

We have 66,000 dental clinics in Japan. There are as many dental clinics as convenience stores.

However, what we struggle with is “the lack of digitalization.” Especially in orthodontics, it is still analog when we bend wires.

However, we cannot work if it is not digitalized at a certain rate.

I was in a Danish company before, but Japan is behind in digitalization. While 30% of dental work is digitalized in the US, only 10% is digitalized in Japan. The biggest problem in our industry is that the industry has not been digitalized.

Advantages start-ups leveraged when they expanded their businesses in Japan

What are the advantages when you expand your business in Japan?

Nishitani: We, DigitalMonitoring, haven’t officially started our sales in Japan yet, as of September.

However, many doctors in Japan are also technically advanced, and some of them individually import our services.

Also, French startup companies are very innovative. If the business model itself is innovative, there are fewer competitive companies as well.

There are indeed problems like digitalization in Japan when we expand to the Japanese market; however, if the business model is truly good, we can say French companies are highly competitive.

Fukuda: I was in the IT industry (especially at companies from Silicon Valley) before. Customers tend to connect the U.S. with IT companies, and users also tend to have the same impression.

However, when we talk about French Tech — the fact that the number of start-ups is increasing in France — most of our clients get interested in it. On the other hand, when I was in an American company, companies from Silicon Valley tended to be perceived as “one of them.”

France is very famous for its luxury brands and fashion. However, the tech industry is actually getting highly popular. When we say “we are one of them,” people get attracted as they recognize tech as the strength of France.

This means we can leverage its growing popularity as an advantage. In fact, we often sell technology by proactively pushing French brands.

Tatewaki: The image of France is really good in Japan. Especially, I have an impression that French products and services are evaluated highly for their quality.

Therefore, people are positively surprised when we explain “we make robots 100% in France.” They highly evaluate us because we prioritize things made in France as much as possible.

This reputation expands all over the world, and we got big companies like UNIQLO as a client. Then, trust from customers is getting high. “I didn’t know, but France is actually a tech country!”

Although France is still not widely recognized as a tech country, it is getting easy to do business because “Made in France” is rapidly gaining power.

Summary

After getting opinions from panelists, we had a Q&A session among panelists, and then we got some questions from the audience. (We may publish a follow-up article later — stay tuned!)

If you are interested in French startup companies, and French companies in Japan, please join us at our events. (We hold panel discussion events every three months or so) We are looking forward to seeing you!