What’s Holding FinTech Back in Japan – Executive Summary – DisruptingJapan.com
This Post is originally from Tim Romero’s excellent Website and Podcast; Disrupting Japan – Your Inside Track on the Startups Changing Japan. Option to Subscribe to Tim’s Podcast are here
This Executive Summary was written by David Forncrook
Paul Chapman, a founder of Moneytree, presents well learned lessons for doing business, raising capital in Japan and how to navigate the fine line of what is accepted business behavior in Japan.
Moneytree enables its users to consolidate information into one easy to use interface by automatically logging into and pulling data from their various financial accounts including bank accounts, credit cards, loyalty points, digital money etc.
Being a downloadable iOS app resulted a lot of skepticism by investors as to whether users would find it trustworthy. In other words a common misperception was that accessing and using your own financial data with a 3rd party small company app without the permission of the banking institution is not allowed.
The regulations and banking laws in Japan in no way prohibit this type of service nor are users doing anything remotely illegal. Accessing your own data in this manner without the explicit permission of the financial institution had never been done before and was thought to improper by some.
In reality customers of financial institutions own their data and most banks provide a similar service to each other anyway so the concerns voiced by skeptics about violation of privacy laws were unfounded.
Another challenge was being a foreign entrepreneur in Japan which gets the same reaction of being a female entrepreneur everywhere else in the world. You always have to operate at a higher level than the norm and are questioned as to what the special reason is that you exist.
Paul advises don’t embark on a new business venture without the right reasons. If you are serious you must be really passionate and desire to make a positive impact and not because you want to make money or be cool. Ensure you have the right team balance i.e. not to many engineers, a person who understand finance and find a senior advisor from the industry you are targeting.
The concept of paying forward is not understood in Japan unlike Silicon Valley. You will hear people tell you to let them know how they can help you but in reality almost no one will follow up on that. Traditionally there are many gate keepers who want their pound of flesh in advance.
Raising capital is all about risk and benefit and in Japan startups are thought to be all risk. Traditionally start-ups are a very difficult sell to VC’s but this trend is changing as the concept of disruption to create profits begins to sink in as it has in Silicon Valley.
Meet with as many VC’s as you can to understand what they are looking for and what they can provide to you. This will give you an understanding of the unwritten rules that in turn will make you an easier risk to accept and get your venture funded in the end.