ICT Startup League

On October 8th, the "3rd Startup League Academy" was held in Tokyo.

After the secretariat explained the day's agenda, Ms. Ayuko Nakamura, Representative Director and President of eiicon Inc.—a member of the ICT Startup League steering committee and a company that supports open innovation—was introduced.

Prior to the sessions, Ms. Nakamura explained the essence of open innovation to the participants. She clarified that viewing open innovation merely as an accelerator program is a mistake. Instead, she described it as "a means to create businesses and generate value that cannot be achieved alone, by collaborating with external partners on an equal and fair footing."

Additionally, noting that collaboration with large corporations can take diverse forms—such as sales cooperation, business alliances, or capital investment—she conveyed the intent behind today's theme: "We want you to utilize these options according to your specific situation and pace, and take home tips on how startups can successfully target collaborations with large enterprises."

■ Session: "How to Stand on the Shoulders of Giants" as a Startup

Taking the microphone from Ms. Nakamura was Mr. Toru Shimozono, Quality of Open Innovation Officer at eiicon Inc. In addition to serving as an evaluation committee member for the ICT Startup League, he is involved in projects supporting collaboration between large corporations, SMEs, and startups through activities such as the Kanagawa Prefecture Innovation Ecosystem formation and sports open innovation support at the Japan Sports Agency. Drawing from this experience, he delivered a lecture focusing on three key points regarding "what needs to be done with intent when large companies and startups collaborate."

Point 1: The Timing and Phase for Approaching Large Corporations

"If startups do not approach large corporations appropriately, there is a risk that communication will fail," Mr. Shimozono stated. He noted that many participants are in the early seed to Series A stages; while they have ideas and technology, their productization may be insufficient. Consequently, even if a person at the staff level is interested, it often fails to reach internal decision-making or budget approval. He pointed out the reality that selling based on ideas alone is difficult. "It is necessary to imagine the organizational dynamics and decision-making processes of the partner company and clarify which layer your proposal will resonate with," he emphasized.

Furthermore, he stressed the importance of carefully choosing which department to connect with in a large company. Citing a proposal example involving plant maintenance using drones, he explained: "Maintenance personnel tend to strictly follow existing methods and rules, so they often reject new ideas. Moreover, they often lack the network to connect you to the relevant departments." He continued, "The key to success is to create an internal 'hook' by adopting a co-creation stance—approaching those responsible for external collaboration, such as the New Business Division or Alliance Promotion Division, and asking to 'think about new business development together'—and then jointly designing proposals to address personnel or operational issues in maintenance."

Important in collaborating with large companies is understanding the partner's needs and making proposals that contribute to their new business development. He emphasized the importance of providing benefits to the partner, letting them win, and ultimately winning yourself.

Point 2: What "Collaboration" Means

The word "Collaboration" (Kyogyo) can have multiple meanings. Aside from simple partnerships that connect to existing businesses, such as sales or functional cooperation, there is a type of collaboration where you "create a business together" to expand the market. He explained that this latter case is a completely different task from merely providing a service or function.

Since collaboration partners are people involved in the process of creating a business, he pointed out the need to understand that "treating them with the same mindset as simple sales will not mesh well and is likely to cause internal backlash or a mismatch in expectations."

Point 3: The "PoC Stop" Problem

It is a common occurrence for Proof of Concept (PoC) trials with large companies to fail or end without further progress. Mr. Shimozono presented three tips to overcome this: "Sharing a mid-to-long-term vision," "Aligning the field with the verification hypothesis," and "Consistency with management decisions."

If you do not verbalize mid-to-long-term goals and share what you are both aiming for, the results of a PoC will not lead to the next step. He pointed out that a PoC should not end with just "good" or "bad" numbers; it is necessary to clarify what points should be verified next based on the insights gained, and to indicate what will be verified in the second and third years.

He stated that the crucial point is "not just lining up KPIs (Key Performance Indicators) during the PoC preparation stage, but drawing the KGI (Key Goal Indicator/Management Goal) and the success pattern first." By designing KPIs backwards from the management perspective of "how the company wants to be in the mid-to-long term" and determining which indicators and verifications are necessary, the PoC is more likely to lead to management decisions.

Summary

The keys throughout the process are "Imagination" and "Polite Communication." How a proposal is received changes by imagining the position of the person in charge at the large corporation and what evaluations or constraints they face internally, and then structuring the conversation accordingly.

"The trick to leading collaboration with large companies to success is to prepare the words and preparations to link the results of the PoC to the next verification plan and management impact, rather than making it a one-off event," said Mr. Shimozono.

He summarized that when startups aim to collaborate with large companies, they should intentionally align three points: "Approaching according to the phase," "Understanding the differences in types of collaboration," and "Mid-to-long-term perspective and management consistency to connect the PoC to the next step." Doing these carefully will increase the probability of commercialization.

■ Value Up Session

AironWorks Inc.: Aiming to be the World's No. 1 Security Software Company

The first speaker of the Value Up Session was Mr. Anri Terada, CEO of AironWorks Inc.

Business Overview and Challenge:
Mr. Terada moved to Israel, the "Holy Land of Cyber Security Startups," in 2014 and founded "Aniwo." In 2021, he established AironWorks Inc., which develops and provides a platform specialized in the cybersecurity domain. The company has been selected for the Startup League for three consecutive years since 2023. Their security solution utilizing AI agents has over 300,000 users, and they work with over 30 sales partners, currently entering a growth phase. They plan to expand into the Asia-Pacific region next year and aim to become the world's number one security software company in the future.

Challenge 1: Optimal Capital and Business Alliance Partners:
They plan to increase optimal sales partners and accelerate growth through sales cooperation and capital participation. However, low brand awareness—where their product is known by only a few percent of target companies—is a major bottleneck. They want to focus on marketing activities to raise this to 20-30%.

Challenge 2: Strengthening Cooperation with the Ministry of Internal Affairs and Communications (MIC):
They aim to strengthen cooperation with the MIC for national security, formulating guidelines and building mechanisms for mutual assistance. They aim to contribute to improving national cybersecurity.

Challenge 3: US/Global Expansion Strategy:
There is a challenge that their growth speed is slow compared to competitors in Europe, the US, and Israel. To become world number one, it is necessary to conquer the US market, and they are looking for partners who can help open up such new markets.

Proposals from Steering Committee Members and Evaluation Committee Members:

Regarding the challenge of expanding the market and clients raised by AironWorks, there was a succession of proposals to increase agility by diversifying service content and price ranges. Mr. Shimozono advised, "For example, start from a very light level like 'we only check emails for viruses' and then connect that to a larger network."

Also, addressing AironWorks' "marketing challenge," Ms. Nakamura recommended utilizing web marketing, which has good cost-performance and can be started with a small budget. Furthermore, as a form of matching with new sales partners, Ms. Nakamura suggested a plan to "form a capital and business alliance with a small company of about 4 or 5 employees and entrust the sales department entirely to them."

Mr. Fukuda emphasized the importance of creating partners or companies that have already used the service and achieved results. "If companies with usage records introduce or recommend the service, the persuasive power to other companies increases dramatically, leading significantly to the promotion of adoption," he said. He also presented a concrete plan for promoting adoption: "If government agencies and large corporations can make it a condition during bidding that your service is included, we can expect a large number of operators to emerge who meet that standard."

Bashow Inc.: Building the Fundamental System for the In-Car App Market

The second speaker of the Value Up Session was Mr. Masashi Hodozuka, Representative Director of Bashow Inc.

Business Overview and Challenge:
Mr. Hodozuka, who served as a researcher in the car and mobility field at the Japan Research Institute think tank, established Bashow Inc. in April 2024. He is working on the development of an in-car app that guides users to local topics. A proprietary AI system semi-automatically creates topics from publicly available information. It provides short voice guides about surrounding locations to users moving by car. Furthermore, they are gathering user feedback and developing a function to judge the timing of content provision based on location, time, and situation.

Currently, the app is being operated on a trial basis in some areas, with plans to start wide-area operation throughout the Tokyo metropolitan area from November. They also aim to complete the development of an MVP (Minimum Viable Product) for the timing judgment function within fiscal year 2025. As a long-term outlook, they aim to provide their system as middleware for vehicle OS and a development environment for in-car apps from the latter half of 2027 onwards, creating value worth hundreds of billions of yen in the in-car app market by the 2030s.

Proposals from Steering Committee Members and Evaluation Committee Members:

Mr. Isao Tanimoto, President of TOM'S Co., Ltd., an official tuner for Toyota, stated that while getting it installed as a standard app in automakers' cars is best, "It is a good idea to put that aside for now and explore other paths." He cited drive recorders as an example of a product group that created a market without becoming standard equipment for automakers immediately. His view was, "It is better to create an environment where people want to install it later as a third-party product. Then, the procedure of eventually having the most compatible automaker adopt it is good."

Mr. Tadashi Fukuda, Head of the Startup League Steering Committee, also recommended a "strategy aiming for a de facto standard first," and suggested a path of receiving support from a specific automaker's CVC for joint development. At the same time, Mr. Fukuda asked, "Why must it be in-car?" In response to Mr. Hodozuka's answer that "the timing judgment AI is the biggest differentiation factor," Mr. Fukuda cited the example of Highway Walker (a free paper distributed at service areas and parking areas within NEXCO East jurisdiction), which he was involved in launching, and asked if there wasn't a path for utilizing it as a smartphone app.

Also, Professor Tetsuya Kawanishi of the Department of Electronic and Physical Systems, School of Fundamental Science and Engineering, Waseda University, asked, "When do you assume this will become widespread?" Mr. Hodozuka replied, "It has already started in China and Europe. It will increase further around 2030 when effective Level 3 or higher autonomous driving becomes more generalized." Then, Mr. Toshiya Haida, Senior Managing Director of IACE Travel Co., Ltd., also commented on the direction of the business: "Will you wait until autonomous driving is possible, or will you enhance what you can do now as a smartphone app?"

Mr. Shimozono stated, "It is necessary to increase the introduction desire of the automaker side by showing not just function but 'Experience Value' (UX)," pointing out that how to create traction and bargaining power in discussions with headquarters is key. To that end, he advised that a strategy of not fixating on the car, but starting from outside the car or in a different domain, is also effective.

Ms. Nakamura pointed out that it is important to balance countermeasures for user "Pain" with new approaches in the realm of "Pleasure" (Entertainment). She suggested, "Regarding pain, multilingual road signs and construction/safety information on the Metropolitan Expressway would improve convenience for foreign drivers. As for pleasure, events or services related to 'Oshi-katsu' (fandom activities) or 'Seichijunrei' (pilgrimage to sacred places) could create new business opportunities through attracting fans."

■ Event Summary
At the end of the Academy, the customary networking session began. Adopted companies and supporters actively exchanged business cards and communicated with each other.

Mr. Terada of AironWorks Inc. evaluated this Value Up Session, saying, "It was great to receive new ideas to increase the value of our business." He continued with a determined expression, "Operating in the somewhat niche area of security, I realized that we must further strengthen our messaging and marketing to be more easily understood and widely accepted by everyone."

Mr. Hodozuka of Bashow Inc. shared his impression: "I was allowed to talk about what I like, and getting comments from everyone as they pleased seems like it will be very interesting material for future discussions."

Ms. Nakamura, who attended the Academy, noted that "the support side was very luxurious," focusing on the lineup of steering committee members and evaluation committee members. She remarked that because supporters at general league or acceleration events are often VCs (Venture Capitalists), "the conversation tends to be about how much market share you will take in the existing market." However, she shared her impression: "The two companies presenting today were both challenging 'markets that do not exist yet.' Usually, they might be dismissed saying the market they are challenging is bad, but the discussion developed into 'How do we create the market?' and 'How do we become the de facto standard?' I felt this was a unique characteristic of this league."

Because it is a gathering of startups with different genres and phases, the Academy once again fully utilized the unique benefits of the ICT Startup League, where both adopted companies and supporters can think about things from various angles.