SaaS startup valuations and growth rates have dropped sharply in most of the world, but not in Japan.

SaaS startups are growing fast in Japan, and that trend is set to accelerate even more over the next five years.

Today Shinji Asada of One Capital explains Japan's still-untapped SaaS potential, his unique SMB and product-focused investment thesis, and the big changes that are happening in Japan's startup ecosystem.

It's a great conversation, and I think you'll enjoy it.

Show Notes


The untapped potential of SMB SaaS
Unique requirements for product collaboration software in Japan
What is will take for Japanese SaaS startups to go global
How One Capital helps its investors with digital transformation
Japanese CVCs play a different role than in the US, and that's a good thing
Why Japan SaaS valuations will continue to climb
What makes a great SaaS company
How Japanese founders have changed over the past 20 years
How they will change in the next five
How Japanese VC will (and will not) change in the next five years
What Shinji learned from doing inside sales as a VC

Links from our Guest

Everything you ever wanted to know about One Capital
The SaaS metrics tool, Projection AI
Follow Shinji on Twitter @asada23
Friend him on Facebook

 
Transcript
Welcome to Disrupting Japan, Straight Talk from Japan's most innovative founders and VCs.
I'm Tim Romero and thanks for joining me.
I have always been a fan of Enterprise SaaS. In fact, all of the startups I founded have been enterprise SaaS companies, and some of those were back when SaaS was called ASP.
But these days it seems that SaaS has lost a lot of its former shine and sparkle, at least in the US market. Multiples are way down for both public and private SaaS companies. We're seeing a lot of flat and even down rounds.
For the first time in a very long time, American VCs just aren't that excited about SaaS startups.
But things are very different in Japan.
Today we sit down with Shinji Asada, co-founder and general partner of One Capital.  Shinji explains how SaaS in Japan has had a very different history and why it's likely going to have a very different future than it will in the West. And he brings the numbers to back that up. We also talk about why SaaS valuations continue to climb in Japan, how Japanese VCs are changing, and why Shinji spends his spare time doing inside sales for SaaS products.
But you know, Shinji tells that story much better than I can. So let's get right to the interview.
 
Interview
Tim: So, we're sitting here with Shinji Asada, the founder of One Capital. So, thanks for sitting down with us.
Shinji: Appreciate it.
Tim: So, Shinji, first of all, let me just congratulate you on your recently closed Fund two, which was just last month, right?
Shinji: Yeah. It was a great adventure too, because Fund two is different from Fund one. Fund one is totally, totally new, where you have to talk a lot, about track record and your strategy. And Fund two, you have a little bit of an easier life because you've started your Fund one and you've deployed most of the capital. So, you have a story to tell in a concrete manner.
Tim: I'm going to dig into that whole journey in a bit later. But right now, tell me a bit about One Capital. What's your thesis? Who are you investing in and why?
Shinji: We are a sector focused early stage Fund, focused on enterprise software. The reason is, I think Japan has a huge problem with the adoption of technology in the workforce. And I've been working at Itochu, which is a great company in a profitable large market cap growing. But the systems that I had to use was very, very old. It's on-prem customized software. You know, even under those IT system circumstances, I think corporate Japan is doing pretty well. And people didn't actually use digital workflows pre-covid because we had this thing called the Hanko, which is stamps.