Monday, October 28, 2013
Big Companies Turning To Start-Ups For Innovation
TOKYO (Nikkei)--Large companies are increasingly turning to start-ups as a way to make new business breakthroughs. This in turn has boosted start-ups by helping build their assets, credibility, brand names and customer bases.
According to Nomura Research Institute Ltd. (4307), more than 70% of major companies are dissatisfied with their new business ventures because of unfavorable results.
Every year in the U.S. there are more than 400 takeovers of start-ups by large companies, which absorb the technologies and employees to help the larger company. According to Todd Carter, a managing director of GCA Savvian Corp. (2174), large firms and start-ups have close ties with each other in Silicon Valley.
Japan, too, has a growing number of aspiring entrepreneurs than before thanks to the lower cost of getting a business off the ground being provided by the spread of cloud computing.
Seeing The Future
When Hiroshi Rinno, president and CEO of Credit Saison Co. (8253), first met Naoko Samata, CEO and founder of the smartphone credit card settlement start-up Coiney Inc., in February, Rinno asked with a touch of surprise, "Are you a president?"
Samata is more than 40 years younger than Rinno. She set up Coiney in March 2012, and soon realized that though credibility is essential for a company dealing with money, it cannot be obtained overnight. As such, she decided to team up with a large company. Credit Saison was the recommended choice among people she consulted.
Meanwhile, Rinno has thought much about how to survive in the 21st-century business world, and he sees the answer in the IT industry. In particular he feels that companies that are online savvy have the upper hand. Rinno took an interest in Coiney because the company makes credit card settlements possible without the need for special devices that costs several hundred thousand yen.
Rinno and Samata hit it off and the two firms tied up in April with the goal of creating affiliated businesses. In August, Credit Saison also put roughly 500 million yen into Coiney.
"Start-ups lack in many things, but big firms are not versatile, either. So it's important to understand each other's strengths," said Samata.
Nippon Television Network Corp. and its group companies have been trying to develop new businesses by fiscal 2015 by establishing a 50 billion yen investment program. A planning division official this spring became acquainted with the start-up Creww and felt it was a good fit for these development plans. Creww operates a website that connects entrepreneurs, management advisers and investors. More than 700 companies have signed up with the service.
The official told the company's management team that Creww's website would enable the company to get ideas that it could not find otherwise and find business partners. His persuasion paid off and the company invested around 120 million yen in Creww in September.
KDDI Corp. (9433) on Oct. 24 announced the expansion of its smartphone paid-membership service in collaboration with Isetan Mitsukoshi Holdings Ltd. (3099). The two companies were brought together by Origami Inc., an e-commerce start-up that is also KDDI's capital and business partner. The start-up's founder and CEO Yoshiki Yasui's personal connections in the apparel and retail sectors played a major part in the deal.
-- Translated from an article by senior Nikkei staff writer Keiichi Murayama
(The Nikkei, Oct. 28 morning edition)