Japan has a very poorly developed venture capital sector. There are venture capital investment firms in Japan but it’s a very small sector and they only work in a very tight network of cronies in certain industries.
Instead of building a startup and seeking investments from venture capital firms, when most Japanese entrepreneurs want to start a new business, they seek partnerships with one or more bigger, established companies. Usually the partner companies are in the same market sector but very often they’re not. The same is true when foreign entrepreneurs try to establish a new business venture in Japan. Instead of seeking Japanese VC investment - which is extremely difficult to almost non-existent - they almost always are forced to “partner” with an established Japanese company.
For instance, Aderans (a Japanese wig manufacturer) went into a partnership with Bosley Medical (a HT surgery brand from the US), to form the failed “Aderans Research Institute” and they went on to a spectacular failure with clinical trials of an early hair multiplication method.
Likewise Shiseido (a Japanese cosmetics company) went into partnership with Replicel (a Canadian biotech company) to develop a hair multiplication method which is sill languishing in long-drawn out (and underfunded) clinical trials. What the heck does cosmetics have to do with hair cloning? The connection is quite remote. Not only is the synergy between the companies dubious, but this partnership has already had major internal problems with Shiseido suing Replicel because Replicel didn’t deliver on its contractual promise to report Phase 2 clinical trials results – because the trial was carried out very late. So, despite the fact that the two companies are still technically in partnership, they aren’t really even friends and Shiseido managed to get part of the contract changed, forcing Replicel to forfeit its rights to revenues from Asia - whenever revenues start, which may be never. The whole thing is a disorganized mess, I suspect MUCH worse than they’re letting on.
Another major example is Dr Tsuji’s partnership with Kyocera and Organ Technologies to develop his own hair multiplication or hair cloning technology. Dr Tsuji is an employee of RIKEN, the Japanese government’s premier government-subsidized scientific institute. RIKEN is where he did his research and made his discoveries regarding cloning hair follicles with epithelial and mesodermal cells. Kyocera, on the other hand, is a company that manufactures OFFICE COPIERS, as almost everybody knows. A very unlikely, and bizarre partnership, I would say!
Kyocera’s entry into 3D printing is an experimental offshoot of the main company, not their main business line. Their main business line is regular OFFICE COPIERS AND PRINTERS. Supposedly Kyocera’s “expertise” that they are bringing to Dr. Tsuji’s table is their knowledge of printing technologies. But biotech 3D printing using cells is NOT THE SAME as regular 3D printing using molten plastic, etc. It’s already a stretch for Kyocera to form a partnership with another company to do 3D printing. But to do 3D printing of HUMAN CELLS, that is a much bigger stretch for Kyocera. It is very far away from their main line of business.
Dr Tsuji and Kyocera also had third partner in their hair growth venture - Organ Technologies - a Japanese biotech firm which has now gone bankrupt, and therefore has left the partnership without their portion of the funding and technology.
Often in these Japanese inter-company partnerships, it’s very hard to determine what the different companies’ roles are. To some extent, I think they just “play it by ear”… the different roles of each company are not certain, not set in stone, and can remain fluid and changeable… For instance, a partner company’s role might involve offering a little bit of financing… some office space… some lab space if they have it. It is not very well-organized and prone to breakdown. Such partnerships are often only as strong as the weakest partner, and now as we’ve seen with Organ Technologies going belly-up and filing for bankruptcy, Dr Tsuji’s entire venture is adrift floating aimlessly on the sea and looking desperately for money. They don’t know what to do so now they’re trying - in a rather disorganized fashion - to raise money from the general public.
I think this is a big reason why Japan’s economy has been very stagnant for about the past 30 years or more. We think of Japan as an ultra-modern country, and yes, they are great at certain things, but as far as modern methods of quickly finding great opportunities and rapidly financing companies, like the VC industry which was born in Silicon Valley, Japan is absolutely TERRIBLE at this. They are still using an out-of-date, obsolete corporate “partnership” model like the Keiretsu partnerships of the 1960s.
With this kind of approach to financing, they will totally fail, 100%, even if Dr Tsuji has a great technology.
My advice is to look outside of Japan and try to pitch his technology to US-based (or UK-based) venture capital firms. Stemson received money from a UK venture capital firm - Fortunis Capital.
Even if the regulatory climate has improved in Japan and is now better than the US, and would likely get the product to market sooner, nothing can be done without secure financing in the first place.
Dr Tsuji needs to give up this traditional, old-fashioned Japanese-style quest for a Japanese “partner company” – which will definitely fail – and seek FOREIGN VENTURE CAPITAL FUNDING , even if he wants to develop his product in Japan and put it on the market in Asia first.