South Korean startups' Tokyo fever sizzles

Despite the recent Line-Yahoo cacophony, South Korean entrepreneurs are continuing their advance into Japan to find the next big market.

On Thursday, hundreds of startups and venture capitalists from Seoul and Tokyo mingled together to discuss ideas and investment opportunities after the end of D.Camp’s startup demo day D.Day, which was held in Shibuya, Tokyo as a partner program of Asia’s biggest startup conference SusHi Tech Tokyo 2024 held from May 15 to 16 at Tokyo Big Sight.

It was the first global D.Day held in Japan and pitched by 10 finalist startups from Korea.

D.Day is a monthly startup demo day, organized and hosted by D.Camp in Korea since June 2013. It is held mainly in Korea but also in foreign countries.

The Korean entrepreneurs participating in the Tokyo event did not hide their excitement about pitching their businesses to investors and potential customers in Japan.

“Korean startups must not miss a chance in Japan, emerging rapidly as a key market amid the country’s strong push for digital transformation to escape from an analog world,” said Lee Junseung, the chief executive officer of Shopl & Company, the winner of this month’s global D.Day.

Shopl & Company provides a digital solution that allows companies to manage their frontline teams’ work hours, attendance and tasks.

Last month, it set up an entity in Japan and leased an office in the startup campus Cambridge Innovation Center (CIC) Tokyo.

“We plan to make an earnest headway in Japan, Asia’s biggest business-to-business market,” said Lee, expecting great synergy through close tie-ups between Korea and Japan that are close culturally and geographically.

VAST MARKET OPPORTUNITIES

Lee was one of many Korean entrepreneurs pinning high hopes on Japan as a new market with vast opportunities thanks to the country’s aggressive five-year push, unveiled in late 2022, to build a strong startup ecosystem and accelerate the country’s digital transformation for each industry.

For the plan, the Japanese government vowed to ramp up venture investments to 10 trillion yen ($64.2 billion) and create 100,000 startups. Under the new plan, Japan hopes to up the number of the country’s unicorns with a corporate value of more than 100 billion yen to 100 from the current six.

Tilda CEO Chung Ji-ryang echoed Lee’s enthusiasm about business opportunities in Japan.

“We will set up a Japanese entity immediately after we win our first order from a Japanese customer,” Chung said after the Tokyo D.Day.  

Tilda offers machine learning-powered programs designed to maximize corporate profit and manage risk and cost based on business data.

The Korean startup, which has prepared its foray into Japan with the Japan External Trade Organization (JETRO), discussed the sale of its service with about 10 Japanese companies including a bank and a manufacturing company after the demo day.

CareerDay, a Korean startup operating a platform matching job seekers and employers, plans to introduce a program that enables startups and established companies in Japan to recruit Korean experts in the semiconductor, beauty and entertainment industries so they can address labor shortages in the aging society, said its CEO Kang Kyung-min.

“The side hustle market has rapidly grown in Japan since 2018, when the government lifted the ban on dual jobs,” said Kang. “We plan to start our platform’s beta service in Japan in the second half of this year.”

Realdraw, the Korean developer of artificial intelligence image generation technology, also joined the Tokyo D.Day, pinning high hopes on the country for growth.  

“The Japanese digital comic market values at 500 billion yen after growing at the world's fastest rates,” said Realdraw CEO Choi Sang-gyu, preaching that its AI webcomic production tool will significantly shorten digital comic production time so it can help production companies save costs effectively.

O.Ne People, which provides a solution to protect personal data, is in talks with nearly dozens of companies in Japan to supply its program. It plans to set up an entity in Japan this year.

“Japan is one of the countries with strict data protection and privacy policy,” said Nam Jung-hyo, O.Ne People’s chief business development officer, advocating its program as a very effective tool that can save costs to protect personal data more than 90%.

Other Korean startups, including Kokkanlogis, Everex, BVMT, Grassmedi and Sionic AI, took part in the D.Day event in Tokyo to pitch their businesses to investors.

FINANCIAL BACKERS ARE READY

Expectations are high that these Korean startups will not return home empty-handed.

Yasuhiko Yurimoto, the founder and CEO of Japan’s largest VC Global Brain, said at the Tokyo D.Day event that the VC will invest in Korean startups with a fund jointly formed with Shinhan Group earlier this year.

“Korean startups have made impressive achievements in the short period since their advance into Japan,” said Yasuhiko.

Park Young-hoon, CEO of D.Camp, also vowed that the Korean startup accelerator will team up with Korea’s Shinhan Venture Investment and Japan’s Kiraboshi Bank to give firm support to Korean startups wishing to venture into Japan.

“Korean startups’ forays into Japan will pave the way for their advance into the global market,” said Park.

Kiraboshi Bank plans various programs to aid Korean startups’ inroads into Japan, said Yoshiaki Hoshi, a general manager at the bank.

At SusHi Tech Tokyo 2024, D.Camp signed a memorandum of understanding with Kiraboshi Bank to facilitate startup networks between Seoul and Tokyo and their startups’ global push.

However, to succeed in Japan, Korean startups are advised to reinforce their local networking in Japan to overcome cultural differences.

The latest Line-Yahoo dispute between the two countries has also reminded Korean operations in Japan must be aware of Japan's different foreign exchange laws, as well as personal data protection issues.  

Write to Kang-Ho Jang at callme@hankyung.com

Sookyung Seo edited this article.