Terrie's Take 703 -- JOBS Act-like Crowdfunding for Japan? Ebiz news from Japan.

Terrie's Take terrie at mailman.japaninc.com
Sun Mar 24 23:05:27 JST 2013

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, Mar 24, 2013, Issue No. 703


- What's New -- JOBS Act-like Crowdfunding for Japan?
- News -- Web spending? It's not about young people anymore.
- Upcoming Events
- Corrections/Feedback -- Ukraine non-GMO beans safe?
- Travel Picks -- Spiritual Mt. in Yamagata, Onsen in Kochi
- News Credits

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This weekend we spent time with a friend who lives far from Tokyo but who
has a dream to create a web-based company that will change the face of
English-teaching in Japan and globally. He is a modest fellow and not the
sort to make big promises just to shill investors. Instead he has put his
and a close friend's own money to work, and wants to prove the capabilities
of his software and concept. Then as he grows his user base, he plans to
bring in fresh capital to help build a more solid technical base...

Sounds like an ideal entrepreneur to us.

But one of his biggest challenges, like many others in Japan, will be
finding capital beyond the friends and family stage. With the lack of
risk-takers in the general community, and the nation's few angel and
Venture Capital investors tending to focus on start-ups circulating within
their personal circles (almost exclusively in Tokyo), the prospects for our
friend to find the money he will need is going to be pretty much limited to
debt financing. This is a slow and political process that compels a company
to do subcontracting work to show a "profit" to the bank, while work on
their real objective is limited to a few leftover staff (or lots of
overtime) and leftover funds. This isn't an intelligent way for Japanese
start-ups to compete on the global stage, and it hobbles their ability to
bring new ideas and technology quickly to market.

But all that may be about to change thanks to a rather surprising
announcement from the FSA.

[Continued below...]

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[...Article continues]

Yesterday, the Nikkei reported that the Financial Services Agency (FSA) may
allow crowdfunding websites in Japan to expand from their limited
"donations" style of getting cash to start-ups, as they have been doing so
far, and instead let them create proper secondary markets for start-up
companies to trade their unlisted stocks. This is quite a revolutionary
development if it is allowed to proceed and mirrors the Jumpstart Our
Business Startups (JOBS) act passed in 2012 in the USA.

The fact that small and highly risky privately held companies will be able
to sell shares means that the FSA has decided it is OK to move the focus
away from the viability of the company receiving the cash (so it will be
caveat emptor) and instead focus on the operator of the funding site. This
is pretty interesting and it will be even more so to see how the FSA builds
safeguards into the market operators so that the trading activities protect
small-lot investors from unscrupulous companies.

Until now unlisted companies could only raise funds by doing limited
private solicitations of investment. The maximum number of people who could
be approached was 50, meaning that it was difficult to legally advertise
the availability of shares in a new venture, and even more difficult still
to give the shareholders a means of redeeming or trading their shares if
they suddenly needed the cash again.

Some readers may recall that back in 2010 we advertised for shareholders in
a new software company called MetroWorks and that we had a limit of the
first 50 respondees. This was done to comply legally with the limitation on
the offer and we received legal advice on how to do it. The marketing was
successful and MetroWorks did in fact raise about JPY30m, but even with an
experienced team, MetroWorks imposed a 3-year lock-in for the investors, so
that it could ride out any market disruptions (such as the March 11, 2011

Other start-ups, however, typically offer no finite period for early
investors to commit to, and so the reality is that it is almost impossible
for them  to exit since there is no resale market. But now, with the new
FSA regulations, it looks like that hurdle will disappear -- taking some of
the risk (of getting stuck with unwanted shares) out of an early-stage
investment and thus encouraging more capital to come into the market.

The FSA announcement is light on details at this stage, other than that
they will be adopting some of the best features of US crowdfunding
policies, which were written into law in the JOBS act by President Obama.
Ironically the JOBS act is still yet to be implemented because of a lack of
suitable rules from the oversighting bodies (the SEC and others). It seems
that they are flummoxed by the conflict of priorities -- creating a fluid
and near-realtime marketplace and yet having to balance it with acceptable
levels of propriety for the companies raising such funds. In fact, it is
possible that the Japanese system may start up around the same time the US
one does.

With the FSA taking their cues from the JOBS act, they will require each
funding website to be registered and licenced. The operators will need to
provide fairly stringent processes for approving fundraising candidates (to
keep out the Yakuza, who will otherwise go crazy with this), and yet not
choke off the start-ups with too much bureaucracy. Then there will be
investor protection issues, and of course the challenge of setting market
valuations for shares with low volume and limited company background data.

Our guess is that a tiered system will be introduced, whereby there will be
a high-risk, low-hurdle band of activity, then at higher levels of funding,
more stringent controls. Probably JPY10m would be an appropriate first
level -- under which there can be "open slather" activity. Again, keeping
the Yakuza out will be one of the primary goals, and so the CEOs of
start-ups will likely need to make personal guarantees, not be allowed to
be sitting on the board of another company, and not to have run another
company for the last 5 years. We can conceive these points because they
would be similar to earlier government requirements on loans programs which
targeted start-ups and which tried to keep owners of troubled companies
shut out.

...The information janitors/


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+++ NEWS

- Web spending? It's not about young people anymore.
- New Japan-content media company
- New private nurseries plan to relieve wait lists
- Rakuten pulls out of Indonesia j/v
- Yup the sakura are early this year

=> Web spending? It's not about young people anymore.

Ready for a big surprise? A Nikkei survey has found that in Japan more web
spending is done by middle-aged and senior people than by young people.
They found that about 5.4% more people over the age of 50 spend JPY5,000 or
more per month online than the average survey sample (which was people aged
20-69). At higher spending levels the gap opens up even wider, with about
25% more (5.8% in total) of the 50+ respondees spending JPY30,000/month or
more -- this compared with the overall average of just 4.2%. (Source: TT
commentary from e.nikkei.com, Mar 23, 2013)


=> New Japan-content media company

Fuji Media Holdings (Fuji TV) and Itochu have responded to a recent
challenge by a Dentsu-led consortium by creating a pan-Asia Japan-content
media company. The new company, to be capitalized at JPY40m (seems rather
small to us), will create and distribute original music programs and
infomercials across Indonesia, South Korea, Thailand, and Taiwan. The music
and TV content market for Asia, ex-Japan, will apparently be worth around
US$62bn by 2020. ***Ed: Thus laying the groundwork for a lot more "Cool
Japan" companies to make forays into the market over the next few months.**
(Source: TT commentary from e.nikkei.co.jp, Mar 22, 2013)


=> New private nurseries plan to relieve wait lists

A Cabinet Office advisory panel has recommended that the government
deregulate the nursery school market for a limited time, so as to encourage
competition in the sector and significantly reduce waiting lists in the
major cities. The panel has set an ambitious target of zero waiting -- down
from 25,000 kids now -- by the end of FY2014 (March 2015). Both for-profit
and non-profit organizations will be encouraged to enter the sector.
(Source: TT commentary from japantimes.co.jp, Mar 23, 2013)


=> Rakuten pulls out of Indonesia j/v

Not all business decisions by Rakuten are lined with gold. The online
merchant has apparently pulled out of its joint venture with local media
company Global Mediacom. The e-commerce site put up by the partners did
seem to be going well, with more than 400 online merchants and 300,000
different products available online. ***Ed: One assumes that the small
numbers and the costs of maintaining a massive infrastructure for the site
are what killed it off. Rakuten needs to conceive a second business model
for smaller countries that can't support its mega-shopping mall concept.**
(Source: TT commentary from zdnet.com, Mar 22, 2013)


=> Yup the sakura are early this year

It's not just your imagination. Unseasonably warm weather mid-March, about
10 degrees warmer than normal and as warm as one would expect in mid-May,
have brought out the cherry blossoms 10 days earlier than usual. The
viewing peak has been this weekend and will continue on into early next
week -- probably a big disappointment to all those thousands of foreign
tourists who booked months ago for the end of March and first week of
April... (Source: TT commentary from asahi.com, Mar 17, 2013)


NOTE: Broken links
Some online news sources remove their articles after just a few days of
posting them, thus breaking our links -- we apologize for the inconvenience.



=> BiOS, a Division of the LINC Media group, is actively marketing the
following positions for customers setting up or expanding in Japan, as well
as other employers of bilinguals.


BiOS is urgently looking for a BiOS is looking for an authentication
infrastructure architect (Active Directory) to help with administering
Active Directory for our client, an international company with offices
overseas. The candidate will be responsible for consultation and
collaboration regarding Active Directory architecture, network engineering,
messaging, enterprise server and workstation areas, as well as provide 2nd
level support and occasionally 1st level for Active Directory for end users
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- Help Center Analyst, global bank in Okinawa, JPY2.5M-3.5M
- Staffing Consultant, IT integration services provider, JPY2.5M-3M
- Desktop Engineer, IT services provider, JPY3M-5M
- Data Center Operator, global financial services company, JPY3M-5M

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In this section we run comments and corrections submitted by readers. We
encourage you to spot our mistakes and amplify our points, by email, to
editors at terrie.com.

=> In TT-702 we ran a story about the Japan Tourism Agency changing
direction on its global message, and focusing on the Japanese themselves as
Japan's differentiator, not its temples and cherry blossoms.

*** Reader: I am very impressed by this new tourism campaign website. I
only viewed a random sample of videos but each of them was a lot a better
then I saw previously. These videos are each more of a mini-documentary
then a marketing video. And I am glad to see that not only
English-subtitled versions have been made.

The English guide book (PDF on home page) has magnificent photos. But this
one seems to be available only in English: I did not see it when I selected
any of the other languages.



Dewa Sanzan Sacred Mountain, Yamagata-ken
In search of Japanese spirituality

There are mountains and there are sacred mountains. What looks like rocks
and trees to some, are deities to others. Mountain peaks can be beautiful
scenery or holy ground depending on what you seek. Mountain worship has a
long tradition in Japan, a country that is to 70 percent covered by
mountains and forests. One of the centers of mountain worship is Dewa
Sanzan in Yamagata Prefecture.

Traditionally, the Japanese believe that mountains are the seats of the
gods, the resting place of ancestors’ souls and the roaming ground of all
sorts of demons in the otherworld which humans did not dare to venture
into. Some monks in search of spiritual powers, however, tried to connect
to these mountain deities and spirits. They pursued their spiritual
training through an ascetic lifestyle as hermits. Some of them set up
temples, and over the centuries, these grew into centers of mountain


=> Getting Lost to Wakamiya Onsen, Kochi-ken
Dogs, boars, and a lot of mountain

When I usually go to an onsen that is buried deep in the mountains of
Kochi, it is because someone told me about it or I saw an advertisement in
a pamphlet somewhere. However, I discovered Wakamiya Onsen after getting
lost on the scenic route to Jinzan Park in Tosayamada. I am glad I stumbled
upon it, because I think that probably added a certain mystical element to
my visit that I would not have otherwise had.

It was at this point that I discovered Wakamiya Onsen as flags lined the
road, begging me not to pass it by. I decided to comply, even though all I
could see from the road was yet another ramp downward, facing the opposite
direction (it would be much easier entering from the south). I made my way
through the gate, noticing a sign warning me of wild boars and also of
their traps and if I should find myself caught in one, it was not the
owner's fault. Unless the boars were really big, I thought I'd probably be
alright in my car.




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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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