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Monozukuri Ventures has built an innovative ecosystem connecting Silicon Valley startups with Japanese small and medium manufacturing enterprises. We spoke with the founder about his journey that began with a passion for regional revitalization, the strengths and potential of Japanese manufacturing, and how Japanese companies can compete in the global arena.
What inspired you to pursue entrepreneurship coming from Aichi Prefecture?
I'm from Toyohashi City in Aichi Prefecture. Back then, Aichi was considered a wasteland for startups, with job opportunities primarily centered around Toyota. My high school friends would leave for universities in Tokyo or Kansai regions, but even when they wanted to return home after graduation, there were no suitable jobs for them.
During my student days, I learned that "venture businesses create employment opportunities," which made me think that if startups emerged in my hometown, it could create an environment where my friends could work locally. However, after graduating from the university, I felt I lacked the knowledge and experience to immediately start a venture business in my hometown.
How did you end up in Kyoto?
When looking for a job in 2005, I realized I didn't want to be just a small cog in Tokyo's venture ecosystem but instead wanted to create a venture environment in a new region. That's when I saw the potential in Kyoto.
Kyoto is a creative city with research institutions, young talent, and established corporations. It was once called the "City of Ventures," having given birth to companies like Kyocera and Nidec, though fewer new ventures had emerged there recently. I thought if I could create a venture environment in Kyoto, it might be possible in other regions too. That's why I joined Future Venture Capital, a venture capital firm headquartered in Kyoto.
Tell us about your connection with Silicon Valley.
Shortly after starting work in Kyoto, I felt the overwhelming information gap with Tokyo. Around that time, blogs were becoming popular, and I could access information not only from Tokyo but also from Silicon Valley. Realizing Silicon Valley was even more advanced than Tokyo, I started visiting there around 2006, despite it being the post-IT bubble period when Japanese companies were withdrawing from the area.
In Silicon Valley, I observed how the entire society supported startups, and I was particularly impressed by the emergence of accelerators like Y Combinator. I became convinced Japan needed similar systems. I proposed creating an accelerator as a new business for Future Venture Capital, but then the Lehman shock hit, plunging the venture industry into a long winter period.
After moving your activities to Osaka, what did you learn from your Silicon Valley connections?
In 2009, I joined Astem, a Kyoto City organization, and started an accelerator-like initiative. There I learned the importance of balancing small-scale businesses with growth-oriented startups. Realizing that Kyoto alone was too small a market, I moved to Sunbridge in 2012 as their Osaka manager, working on startup ecosystem development across the Kansai region.
In my interactions with Silicon Valley companies, I was often told "Japan isn't growing" or questioned about Japan's mobile environment still being dominated by feature phones. This made me realize Japan's peripheral position in the global perspective. However, manufacturing-focused startups showed interest in Japan, and I noticed that in America, Japan was primarily known for manufacturing companies like Toyota, Honda, and Sony rather than IT firms. That's when I realized that leveraging Japanese manufacturing expertise could be our way to connect with the world.
How was MONOZUKURI Ventures founded?
I realized many Silicon Valley companies were struggling at the pre-mass production stage, often called the "valley of death." I thought there was an opportunity if we could support them through this phase.
While in Kyoto, I learned about "Kyoto Shisaku Net," a network of small manufacturing enterprises that were originally 100% subcontractors for companies like Panasonic. In this structure, large companies would handle the conceptual design, these smaller companies would create prototypes and handle production design, and then mass production would be outsourced to factories in China.
Connecting New York(East Coast) startups with this Kyoto Shisaku Net could create a unique venture capital model. That's how MONOZUKURI Ventures was born.
Now in our 10th year, we've invested in 57 companies and supported around 250 prototype projects. Our goal is to connect existing ecosystems with startup ecosystems. From the beginning, we had our sights on American investments, so more than half of our 57 portfolio companies are American. We started by supporting American startups with prototyping partners in Japan.
As MONOZUKURI Ventures invests in hardware businesses, what do you see as the strengths of Japanese hardware?
The strength is definitely "the ability to make things well." In America, especially, many products have rough construction. For example, early Tesla cars would rattle when you closed the door—something unimaginable in Japan.
I think this relates to Japanese culture, particularly in Kyoto. Japan has limited land and small houses, so organizing and optimizing space is crucial. There's a tendency not to create superfluous things.
For instance, at Ginkakuji (Silver Pavilion) in eastern Kyoto, there's the concept of "borrowed scenery." When Ashikaga Yoshimasa was confined there after losing in the Ohnin War, he had no money but had an aesthetic sensibility. He slightly opened the sliding doors to frame the outside nature like a hanging scroll. This concept of finding beauty in absence and simplifying things is powerful.
Sony's Walkman is another example—they removed the speakers from portable radios and left only the playback function. Japanese manufacturing excels because of this concept of "subtraction." Japanese people are good at organizing, making them strong in miniaturization and space efficiency. This is a concept that can compete globally.
Japan's four seasons also influence its color sensibility. In Kyoto's Nishijin textile district, there are about 20 different shades of blue for kimonos, distinguished by holding them up to the sunlight. Japan's seasonal diversity creates varied angles of light reflection, expanding the color spectrum. In contrast, Los Angeles, where Hollywood is located, is a desert with only rainy and dry seasons, limiting color variations. That's why Japanese animation, like Miyazaki's works, has rich gradients while American animations like Spider-Man use more straightforward colors.
In globalization, you can't compete on the same playing field. What's important is how to make Japan's unique sensibilities globally competitive.
So Japanese sensibilities are in demand?
Yes. What's interesting is that globalization rules have changed. Thirty years ago, there was a "national team" concept where American companies were run by Americans, Japanese companies by Japanese.
But now we're seeing a "club team" model. Imagine a soccer club like Barcelona. If Barcelona played against Brazil's national team, Barcelona would likely win. Barcelona gathers players and funding from around the world, while Brazil's team must consist only of Brazilians.
Now we're in a situation like "Barcelona versus Japan's national team." The competition is uneven. Moving forward, Japanese companies and individuals need to consider how to integrate into global teams rather than competing as isolated entities.
How does Japan appear in this context, as Silicon Valley becomes more like a club team?
Japan is still operating as a national team "Japan." Even national policies promote "going global with Japanese people and Japanese technology." This approach might work for Japanese entrepreneurs targeting only the domestic market.
What do you focus on when building ecosystems that connect startups with other entities?
I believe Japan can contribute meaningfully to global teams. In soccer terms, consider Shinji Okazaki at Leicester City during their Premier League championship. Despite being a forward who rarely scored, he was indispensable because he created passing lanes for his fellows forward and defended unusually well for a forward position, fitting perfectly into the team's strategy.
That's the "MONOZUKURI" domain I've focused on. Manufacturing is an area where Americans may lack interest or expertise. Previously this was outsourced to China, but I think Japanese companies can step in and become vital members of the global championship team.
Another example is Japanese rugby. The Japan national team coach was Eddie Jones from Australia, and more than half the team consisted of foreign players who couldn't make their home countries' national teams. After playing in Japan for about two years, they could obtain Japanese nationality, making it a "Japanese team" on paper but multinational in reality. Knowing they couldn't win with conventional methods, they developed a unique Japanese approach. In scrums, they aligned with millimeter precision, proving that despite physical disadvantages, proper alignment could overcome powerhouse nations.
It's the same with Japan's 4x100m relay team. Japanese runners rarely make finals in individual events, but in relays, they can win medals through perfect baton passes.
What appeal does Japan have for foreign startup entrepreneurs looking to challenge themselves here?
Recently, we've been focusing on deep tech startups. These can't complete their business cycle alone—materials startups, for example, need mass production partners. Japan still has strong manufacturing industries, so there's a need for partnerships with such companies.
Rather than seeing Japan as the final market, these startups can use Japan as a gateway to global markets. Japanese companies still have strengths in automobiles, production equipment, machinery, and materials.
For instance, even in beverage manufacturing, mass production requires minute adjustments that can't be quantified, and adjustments are needed daily despite using the same materials and procedures. With machine tools, the final precision adjustments are done by human hands. Japan still has competitive advantages in these areas.
Finally, what advice or important thoughts would you like to share with entrepreneurs?
I don't have much advice, but first, I think it's wonderful that you're taking on challenges.
Venture capitalists rarely see the future—it's actually entrepreneurs who see further ahead. If VCs truly understood the future, they would start ventures themselves. In reality, they don't fully understand. Entrepreneurs are the ones who see far ahead and believe in that vision.
Please cherish this quality. Don't make your dreams smaller or bend them because of what others say.
During my university days, my professor at Kobe University gave his final lecture before retirement and said something impactful: "My dream was too small."
He explained, "Only a portion of dreams come true. That's precisely why you should dream as big as possible. Even if only part of it comes true, it will still be a significant achievement." Whether dreams materialize depends on luck, timing, and ability, but dreaming itself is about your mindset.
Everyone had enormous dreams as children, but as we learn more about the world, we naturally become more realistic. But as entrepreneurs facing the future, your initial big dreams tend to shrink as people give their opinions. Entrepreneurs start with neither money nor technology—all they have is their "dream." That's why I hope you'll protect the size of your dreams.
Through this interview, we glimpse a survival strategy for Japanese companies in the coming era. It's a path that leverages Japan's unique strengths while playing an essential role within global teams. The future Makino envisions isn't "Japan versus the world" but "Japan within the world"—a collaborative model where refined technical skills, meticulous craftsmanship, and the Japanese "aesthetics of subtraction" contribute to the world in new ways. His message to entrepreneurs to maintain their "big dreams" carries the deep insight of someone who has sincerely contemplated the future of Japanese industry. We'll be watching MONOZUKURI Ventures' future developments with great interest.
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