EY Japan is pleased to announce that it launched EY Startup Innovation on 1 November 2020. The EY Startup Innovation team represents a wide range of top talent in related fields with real-world specialist knowledge and skills to support stakeholders in the startup ecosystem offering comprehensive one-stop services. Through its services, EY Startup Innovation will contribute to the advancement of the entire startup ecosystem in Japan while reinforcing much needed services within the startup ecosystem. We anticipate that a total of 700 professionals will be working on the team by the end of June 2023.
Over the last 10 years, the pool of startup investors in Japan has expanded, with the launch of many independent venture capital (VC) firms, as well as the recent entry of some private equity (PE) funds. This has enabled startups to raise funds on a large scale and helped them attract competitive talent, while, at the same time, many major corporations have become more open to partnering with startup firms. As a result, the startup ecosystem in Japan has evolved considerably.
As the startup ecosystem matures, meanwhile, the surrounding business environment is also increasingly sophisticated and complex. As a result, startup participants, management in major companies, and investors are entering into more complicated transactions than ever before, such as large-scale fund procurement involving highly diverse groups of investors; capital and business tie-ups between traditional companies and startup entities; M&As between startups and large corporations and subsequent management; and investment in and collaboration with unicorns overseas. To address these complex transactions, startup entrepreneurs and management at major companies need professionals with specialized expertise to help effectively coordinate activities throughout the deal-making process, including the assignment of specific tasks to third-party professionals, which can be extremely burdensome.
EY Japan offers the following solutions to address all these issues.
Solutions that are possible because of EY
The EY Startup Innovation team comprises professionals from various fields, including certified public accountants, tax accountants, lawyers, M&A advisors, and strategy consultants. Familiar with startup businesses at all stages of development, they bring in-depth knowledge and valuable insights. EY Startup Innovation was designed to offer the specific services required within startup ecosystems and established one-stop service delivery structure. Going forward, we intend to reinforce the organization by recruiting experienced professionals who understand the nature of startup investment and fund management at VC firms, as well as strategy consultants specializing in fund procurement advisory and open innovation.
Until now, professionals in relevant fields had been somewhat widely dispersed, and companies needed to request professionals to provide separate stand-alone services, and the process then had to be coordinated by the companies themselves. EY offers a streamlined one-stop service structure to support the entire process. Professionals from each field collaborate to provide seamless and timely support.
・EY’s comprehensive service offerings:
As the world’s leading IPO-related professional services firm, EY has been supporting unicorns and startups for decades. In July 2020, EY launched the IPO Professionals Certification Program Through this system, EY reinforces the training of professionals specializing in IPO-related audits and focuses on problem solving for the so-called “audit refugees,” those startups preparing for an IPO who are restricted from receiving key audit services. EY also enthusiastically supports entrepreneurs and new business development. For more than 20 years, it has hosted EY Entrepreneur of the Year, a prominent award program that recognizes distinguished entrepreneurs. With its ambition to drive long-term value (LTV) creation, EY continues to be committed to contributing to the long-term advancement of the startup ecosystem under the banner of “EY Startup Innovation: Building a Better Startup Ecosystem.”
Furthermore, considering the startup ecosystem as a single sector, EY Japan can expand the range of our services requested by various stakeholders within the startup ecosystem. We believe that in order to provide all the services required to meet their needs, we must possess the requisite knowledge and experience that differs from the more generalized service offering for major companies, for example, an understanding of the unique mindsets of entrepreneurs and investors, as well as their priorities.
Without being unduly influenced by a focus on short-term profit, the EY Startup Innovation team will endeavor to create long-term value by developing various types of services that stakeholders within the startup ecosystem really require and will build up and reinforce the one-stop service offering structure. By doing so, we will contribute to the success of startups in Japan.
Yoshinori Aoki, EY Startup Innovation Co-Leader, says:
“In the US, more than 90% of startup investors opt for M&As, instead of IPOs for their exit strategy*
1. Many major companies acquire startups and attempt to then shift their own business models. In Japan, the move toward launching corporate venture capital (CVC) firms is gaining momentum, and corporate led minority investments in startups is increasing. However, many of them thus far refrained from entering into M&A agreements with startups themselves. I believe bridging this gap is one of strategies we should aim for the advancement of the startup ecosystem in Japan in the next decade. I’m committed to creating a world where big innovations will be created to society by livening up M&As between major corporations and startups, apart from IPOs. As a result, there will be win-win-win relationships between startups, major corporations, and investors, and serial entrepreneurship will increase.”
*1 The approach for realizing the ultimate end goal of investors (company founders, angel investors, venture capital funds, etc.) to earn an appropriate return on their investments.
Masato Saito, EY Startup Innovation Co-Leader, says:
“Due to the coronavirus pandemic, we’re experiencing significant environmental changes that result in business uncertainty, among other disruptions. That’s why EY is promoting long-term value (LTV) creation. We believe we can achieve EY’s purpose of building a better working world by creating LTV value for client companies, EY members, and society as a whole. We’d like to propose ‘EY Startup Innovation: Building a better startup ecosystem,’ as our ambition in the field of startups, which is based on this concept of LTV creation. EY Startup Innovation aims to contribute to the advancement of the entire startup ecosystem, including not only startups but also large organizations, venture capital investment firms, and the public sector. As a highly independent professional firm, EY Japan is committed to actively developing comprehensive services that only EY can offer.”