As an online travel start-up myself – I started travel.jp, a meta-search site in Japan, 12 years ago – it’s been interesting to watch the evolution of the Japanese online start-up scene.
Kei Shibata
Unlike the US, where Silicon Valley has been around for almost 40 years – so remember, it didn’t happen overnight – Japan doesn’t have a history of technology entrepreneurship; yet in terms of evolution, it is running ahead of other Asian countries.
In Q1, Japan saw up to 14 IPOs, its IPO market is the second largest in the world after the US and this year, it is expected there will be 50-60 IPOs in total for the year 2013.
Entrepreneurship, in general, has been in Japan for a while but what’s changed is that “old Japan” is partly being replaced by “new Japan”.
“Old Japan” was characterized by first generation entrepreneurs, who were local players. Now we have a set of international-minded young entrepreneurs coming onto the scene – those who have studied overseas, returned and see the bigger world.
At WIT Japan, we saw a couple of start-ups with international mindset, Voyagin, for example. From day one, they launched in multi-languages and now they have moved to Singapore to establish a base for expansion into South-east Asia. 
Trippiece, which won the WIT Start-Up of the Year last October, is also expanding and looking to set up a base in Singapore. PeaTiX, which handled the ticketing for WIT Japan, is another example – a start-up established by a group of ex-Amazon employees who all studied in the US is also looking to expand outside home base.
What is interesting is the originality of the ideas by these young start-ups. For example, one of the companies that IPO-ed recently is Oisix, an e-commerce site focused on organic vegetables.
Japan’s never lacked for originality but what was lacking before was a global mindset. Hopefully this new breed of entrepreneurs will be able to succeed in blending originality and “internationalism” and they can leapfrog, scale and capture global business.
Japanese funds also on the move
Along with this new global wave, we are also seeing Japanese funds expanding. Venture Republic, my own company, for examplehas started investing in start-ups in South-east Asia. Along with that, I am on the board of two start-ups in Indonesia (Telunjuk) and Singapore (Flocations).
Cyber Agents, one of the largest Internet companies in Japan, started an investment fund with a clear focus on Indonesia and Vietnam from the start. The investment arm of another major Japanese Internet company, Gree Ventures has four investments in Indonesia already.
I think what’s holding back start-ups in Asia is the lack of funding around Series A or forward. In almost every country, thanks to incubators or accelerators and some angel investors, there is no problem raising funds at seed or early stage but the challenge is in that window between A and C or D – that pre-exit stage.
That whole conversation is missing in Asia. If we can plug that gap, then it’d make the whole market more exciting and dynamic for everyone.
What I found interesting was that during the recent Echelon start-up event, run by e27, one of the sponsors was the Tokyo Stock Exchange, so maybe they see opportunities to attract start-ups in Asia to be listed with them.
More original ideas needed
From what I’ve seen of travel start-ups in South-east Asia, I feel the ideas are lacking in originality, still a lot of “me-toos” with ideas copied from US and Europe. As an investor, I’d like to see more differentiation and originality.
There are great entrepreneurs and individuals in this region, and I see great potential but they need more help to survive, grow and differentiate.
I think if we manage to blend local entrepreneurs with industry veterans – combine ideas and execution – that will change the whole paradigm.
And this is what I think the WIT Start-Up Pitch platform can help facilitate – surface the ideas and entrepreneurs and match them with industry veterans who are willing to share their time and knowledge to develop the whole eco-system of travel start-ups in Asia.
Meta-search still new but it’s changing
In Indonesia, I’ve invested in Telunjuk.com, a meta-search for shopping – just like how Venture Republic started with coneco.net, which is now Japan’s leading shopping comparison engine. 
Meta-search is still a baby in Asia and there is almost no one that’s really established across this region. Five years down the road, I would expect that meta-search will play a stronger role in travel here but can they compete with Google? It depends on how fast Google manages to penetrate individual markets. I understand their focus markets are Japan, China, India, Indonesia and Australia. Google will have an impact on my business but I think they will have a tough time in Japan because distribution there is very different.
The more complicated the market, the better it is for local incumbents.
The meta-search model is also evolving and the lines between meta-search and OTAs are getting blurred. The more meta-searchers put the booking path onto their website, the more users will think they are an OTA.
Qunar, China, is heading in that direction – they are asking second tier and third tier travel agencies to put products into their system and driving the transaction themselves on the platform
We have a chance to go there with travel.jp but local regulations would require us to get a travel agency licence and that’s costly.
But when you think of it, any online travel player can be an OTA – TripAdvisor, Groupon, Lonely Planet. Destination guides like mustseeindia.com with six million monthly users – they are trying to be an OTA for domestic packages. And companies such as Expedia Affiliate Network and booking.com are facilitating the technology for any start-up to become an OTA.
Same-day booking apps – all about curation
A lot too has been written about the viability of same-day booking apps. That space is all about curation. As long as they can curate by suggesting only top notch hotels at great value, they will do well – otherwise there is no value proposition.
This is how Ikyu.com in Japan has survived – it curates luxury hotels – and consumers have two assumptions when they use Ikyu – one, not bad hotels and two, I can get the best value for that hotel.
If those conditions are met, same-day booking apps can survive.
Note: Kei Shibata, who wrote this article, will be part of the judging panel in the WIT Start-Up Pitch 2013. You can submit your entries here.
