Start-Up Sows Seeds In Softbank Shadow
By Edwina Gibbs
[DAN's COMMENT: Since I've been talking up Softbank, here's a little something on the other side of the coin. NOTE the comment about 10 companies in 10 years. Good luck boys! BTW, the future belongs to the ones who get there first. OK, It's story time...]
TOKYO (Reuters) - When it comes to Japan and the Internet it may often seem that empire-builder Softbank Corp is the only game in town.
But high-tech start-ups such as Digital Garage have their own ambitions and are out to claim a share of the Japan e-commerce pie.
''Over the next 10 years, I think we can give birth to 10 companies,'' Digital Garage President and CEO Kaoru Hayashi said in an interview with Reuters.
Looking to U.S. firm Idealab!, which has developed over 20 businesses including online retailer eToys, Hayashi sees Digital Garage as an Internet incubator company nurturing projects that evolve into new firms.
''We will complete our IPO, then use that as a base to develop other companies,'' Hayashi said.
Digital Garage, one of the nation's pioneering start-ups, established in 1995, aims to go public on Japan's over-the-counter market after announcing financial results next June.
Japan's start-ups live in the shadow of Softbank, a corporate whirlwind with stakes in 100 web-related businesses worldwide and whose lust for new deals makes headlines almost on a daily basis.
But Hayashi says Softbank is not -- at least not yet -- the all-dominating presence in Japan's nascent Internet industry it appears to be, noting that most of its investments are overseas.
''Softbank is a great investor. It is what it is because it invested in the U.S. Internet market, but its actual business within in Japan is not that big,'' he said.
Digital Garage is no stranger to competition with Softbank.
It launched and until last month managed the Japanese version of search engine Infoseek, competing with Softbank's Yahoo! Japan.
It has since sold back the business to Infoseek and is now concentrating on e-commerce.
But if Yahoo Japan has overwhelmed its search engine competitors, it has not deterred Digital Garage from competing with Softbank in ventures that see Japan's ubiquitous convenience stores as a key hub of e-commerce.
Where Softbank's Yahoo Japan has teamed up with Seven-Eleven Japan, Digital Garage will help Lawson Inc, an affiliate of supermarket chain Daiei Inc, to sell goods on-line which can be picked up and paid for at the convenience stores.
Digital Garage is also developing its own portal entertainment site, set to start in August, that will offer music and movie information and sell CDs and DVDs that can be picked up at Lawson stores.
And it is keen to use its experience in creating Infoseek Japan to join hands with overseas corporations to create Japanese versions of successful Web sites, an area which some analysts see as potentially its greatest strength.
How many companies like Digital Garage does Japan have?
Analysts tentatively say there may be several hundred Internet start-ups, but Hayashi thinks there are more, with numbers rising as the economy improves.
Funding, in particular, has become much easier, he says. Domestic financial institutions, until recently more concerned with their own troubles, seem to be relaxing tight lending attitudes, and venture funds are keen to invest in potential high-flying start-ups.
The government too has woken up to the need to support the industry, not only because of its growth potential but because it is also a key for national morale, he said.
''Last year we had brokerages going bust, their presidents weeping on TV, and everything seemed quite dark, but now some Japanese are feeling a bit more confident, are trying again and they are doing this at start-ups.'' |
