The port city of Fukuoka, Japan, offers some excellent ideas for local governments mulling over smart strategies to fuel entrepreneurship in a post-pandemic new normal. Fukuoka is already emerging as Japan’s most powerful startup engine, boasting the country’s highest new business creation rate. While the path the city travelled to compete as a global destination for startup founders is a very unique one, as with all burgeoning startup ecosystems, policymakers have played a key role. GEN interviewed city officials, to uncover some of the key policy instruments that have catapulted this city in the south of Japan to the global map of startup hubs.
Regulation easing unlocked
First, it is worth noting, being located closer to Seoul than to Tokyo, Fukuoka has long been the country’s gateway to Asia, enabled by a strong transportation and shipping infrastructure.
The journey began when the National Government of Japan selected Fukuoka as a National Strategic Special Zone (NSSZ) for Global Startups and Job Creation. This designation became a turning point in expanding the city’s role in the global entrepreneurial economy because it allowed the city to relax regulations.
Under the leadership of Mayor Soichiro Takashima, the city government went to work in improving the policy environment for business creation. This has involved redesigning its regulatory framework to one more likely to unleash new business creation, looking at barriers to entrepreneurship ranging from from deep institutional reforms to fiscal incentives lowering the corporate tax burden on businesses.
Diversity and connectedness as the pillars of the Fukuoka startup ecosystem
Parallel to improving the regulatory environment, the City also embarked on a mission to diversify its pool of entrepreneurial capital, leveraging the fact that entrepreneurs can enjoy a lower cost of living there, compared to other cosmopolitan cities in Japan.
At the core of this strategy is a Startup Visa program, implemented for the first time in Japan in 2016. This visa allows foreigners who found a business in the Fukuoka zone to have a six-months grace period before reuniting the requirements to apply to the regular Business Manager Visa which Japan offers: having 5 million yen ($45,240) in capital or hiring two or more permanent employees, opening a physical business office, etc.
For foreign entrepreneurs, the visa makes it possible for them to relocate to Fukuoka with time to do the pre-work of registering their company, opening a corporate bank account, leasing office or co-working space. Foreign entrepreneurs who have utilized Fukuoka’s Startup Visa include: Mark Gaensicke, the German founder of Renzo, which develops applications, its main product, called Japanese, is a study app; and brothers Juan G. and A. J. Cruz-Ayoroa from Puerto Rico who founded ComQuest Ventures, a drone design business; Jeff Kuo, the Taiwan founder of Gogolook, which provides a fraud prevention and phone number identification App called “Whoscall”; Tania Mirella, the Indonesian founder of Dopang and its easy Japanese learning program “Gengoya”; and Cyrielle Thomas, the French founder of Doko Japan, introducing green tea discovery platform called “Dokocha” and Digital menu platform “Digitomenu”.
But beyond attracting foreign entrepreneurial capital via this special immigration avenue, Fukuoka City also has standing partnerships with 11 regions and 15 cities around the world including San Francisco, Helsinki, St. Petersburg, and Taipei. These partnerships have enabled startup-exchanges and valuable network building for Fukuoka-based startups. For example, the city has sent 300 local citizens to Silicon Valley to learn from top talent in their fields, and has supported local startups’ participation in tech entrepreneurship gatherings such as Slush in Finland and Latitud59 in Estonia. Moreover, the Mayor of Fukuoka often personally leads a delegation to these events every year.
An ecosystem that transcends government leadership
With a vision of helping the various actors in the local ecosystem to bind, the City transformed a historical elementary school into a local startup ecosystem hub where all stakeholders can meet for communication and collaboration. This facility, known as Fukuoka Growth Next (FGN), is managed jointly by Fukuoka City and private sector.
The renovated FGN space serves as an incubation facility, co-working space and as home to a startup acceleration program. It also offers a ‘Startup Café’ where the city provides individualized support to help local and foreign entrepreneurs navigate ecosystem resources, and a Global Startup Center where any entrepreneur can receive free legal, tax and business advice from certified advisors.
Since its launch in April 2017, over 380 startups have used this facility. The most successful ones, some 54 startups which have called FGN home, have raised a record estimate of 111 million dollars investment.
The city is now focusing on the phase III of its plan to turn the city into an increasingly vibrant startup ecosystem: implementing a smart city strategy.
While this is currently the focus of the Fukuoka’s plan as a special economic zone, it builds on previous public policy strategy. For example, in modernizing its wireless regulations, the city an expedited licensing process for startups in the Internet of Things (IoT) sector, which is now a cornerstone of Fukuoka smart city strategy.
Fukuoka’s results alone make it a part of the world worth keeping an eye on.