yeah...livin on the edge indeed.... the right edge
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JAPAN: Money meets youth and ambition at Bit Valley
Investors are pouring into the Tokyo district that is home to Japan's hottest internet entrepreneurs, writes Naoka Nakamae
To a roar of approval from the crowd gathered on the dancefloor, Masayoshi Son leaps into the spotlight on stage like an evangelist at an American prayer meeting.
"I didn't think I'd be able to come," the president and founder of Softbank, Japan's foremost internet investment company, exclaims. "This event clashed with a speech I promised to give in Switzerland. But I wanted to come so much, I spent ¾30m (œ172,000) and chartered a plane to get here on time."
For the young entrepreneurs of Toyko's "Bit Valley" the surprise appearance by Japan's foremost internet guru is the highlight of the evening. These young men, and a few women too, are the driving force behind the high-technology businesses that are springing up in the back streets of Shibuya, Tokyo's trendiest district. The name literally means "bitter valley" - hence the Bit Valley tag.
Like internet gatherings the world over, the meeting, at one of the city's glitziest discos, is an encounter between the old and new economies: investment bankers and company executives in dark suits jostling with engineers, journalists and students in jeans and trainers. The sheer size of the gathering - some 2,000 people are present - highlights how the internet revolution has suddenly taken off in Japan.
Even Masaru Hayami, governor of the Bank of Japan, puts in an appearance. Foreign companies are also represented, including France Telecom and a slew of foreign investment banks. "We're here looking to see what new sectors we should be developing," says Hirokazu Okamoto, assistant manager in the market development division at KDD. Yet barely a year ago, Bit Style - as the gatherings are known - comprised a dozen or so unknown twenty somethings, who met at a local coffee-shop on Friday evenings to discuss business strategies and ideas for raising cash. It started when a bunch of internet devotees who normally talked online decided to create a forum where they could network off-line.
Typical of the new breed of entrepreneur is Takafumi Horie, the 27-year-old president of Livin' On The Edge, an internet company regarded by many investors as one of the most promising in Bit Valley.
"The sector is sizzling. The money is pouring in. But it still needs more people. For those of you with the passion and the courage to grab this chance: grab it now. Don't miss this wave - it won't come again," he proclaims to the audience.
Like many present, Mr Horie has found success by turning traditional Japanese business norms on their heads. He established his company while still a student at the prestigious
Tokyo University; but when his company took off, he did not wait to graduate. He advises students not to bother with university if they are genuinely serious about making it in the internet business.
Livin' on the Edge has since soared in value. Mr Horie aims to float the business in the spring, either on Mothers (Market for High Growth and Emerging Stocks), which started operations last December, or Nasdaq Japan, a joint venture between Softbank and the US-based National Association of Securities Dealers, which will open in June.
"You can always go back to school, but if you miss this wave, you've missed it for good," he warns. But he admits that not everyone is ready to heed his advice. He has been visited by several crying mothers, begging him not to encourage their sons to abandon the safety of careers with Japan's big corporations.
Many students remain undeterred by such risks. In a sign of the changing times, several have come to the disco waving stacks of business plans. Some are developing new technology in internet infrastructure; others have plans for auction and shopping sites to fill the gaps in Japan's content-starved online world.
"If I need to give up my degree to concentrate on business, I will," says Yohei Osuga, a 21-year-old student at Hitotsubashi University, who has an idea for a community site for students.
Capital is flooding into Bit Valley as domestic and foreign investors search for the latest hot stocks and start-ups. "The environment for venture businesses in Japan is improving dramatically," says Kiyoshi Nishikawa, a founder of Bit Valley and the president of Net Age, an internet business incubator.
Many of the companies plan to raise capital by going public. InterQ, an internet company that in August became the first Bit Valley company to list its shares, is one of the successes: its stock price shot up to 420 times their par value on the first day of trading. The group, which started with ¾10m of capital eight years ago, is now valued at ¾300bn.
Other internet stocks are also experiencing the phenomenon. Shares in Internet Research Institute, one of the first stocks to list on Mothers, have surged some 20 per cent since its December flotation. The company has 40 employees, and a market capitalisation of about ¾842bn - larger than the ¾532bn market capitalisation of Mazda Motor, the carmaker.
The wide difference in market valuations are not the only contrast between the old and new economies. Outside the packed nightclub where Bit Valley is doing business, the streets, cafes and bars are almost deserted - a reminder that Japan continues to languish in its worst recession in the postwar era.
The phenomenal success of Bit Style has finally overwhelmed the event. It is announced that this will be the last regular event, since it has now become too unwieldy for people to network efficiently. Instead there will be smaller affairs, centred on special topics.
Masayoshi Son is not about to let the opportunity presented by the final meeting slip by. His suggestions of how the youngsters might raise cash include a spot of self-promotion: "I know what it's like to have banks turn their backs on you. But now with Nasdaq Japan, you won't need to go to them for money." |
