UTokyo’s support for startups nurtures entrepreneurship Entrepreneurs 26

Since launching the UTokyo Entrepreneurs Series in 2021, we have introduced 25 University of Tokyo startups and their founders. For our latest installment, we caught up with Taketo Sugawara of UTokyo’s Division of University Corporate Relations to provide an overview of the university’s support in getting startups off the ground. Sugawara, who is director of the division’s Office of Startup and Entrepreneurship Education, has been instrumental in building and operating a framework for forming such companies. We hope this primer will help not only UTokyo researchers and students, but also those aspiring to join the university, to learn about what we offer to nurture startups.

For starters

――To begin with, could you define what a startup is?

A startup is a new company that aims to achieve rapid growth in a short period of time after its launch. In recent years, as the term “startup” has entered the general lexicon, its meaning has broadened to refer to any new company.

In Japanese, the term “venture” is used synonymously with startup. Originally, it referred specifically to new companies based on a high-risk, high-return business model. However, as the term became more commonly used, venture came to refer to new companies in a broader sense. To distinguish from this broader usage of venture, the term startup came to be used. However, as startup also became a general term over time, we could say that its connotation, too, has become broader in a similar way.

UTokyo’s support for startups

――When did UTokyo begin providing support to startups?

The university’s organizational support of university startups began in 2004, following the reorganization of Japan’s national universities (which includes the University of Tokyo) into corporations. That year, UTokyo’s Division of University Corporate Relations (DUCR) was established. Since then, over the past two decades, DUCR has played a pioneering role in nurturing entrepreneurship and has offered various support measures to startups (as described below), as well as building collaborative ties with relevant entities. So far, 577 UTokyo-related university startups have been launched (as of March 31, 2024, based on DUCR data).

――What kinds of support programs does UTokyo offer?

First, we have a program called UTokyo FoundX that supports UTokyo graduates and researchers to launch a business. This program helps them from the preincubation (prelaunch) stage through the initial launch phase (prior to their initial round of funding). We receive applications a few times a year. Successful applicants benefit from this program, such as by acquiring the necessary know-how and resources to run a startup in its initial phase, and having access to entrepreneur communities as well as workspaces near our Hongo Campus – all expense-free. Any UTokyo graduate is eligible to apply, regardless of their business idea – even ones not based on UTokyo research. We also look for participants who are willing to change their business idea during the program, which only targets high-growth startups. I would like students enrolled at UTokyo to bear these points in mind.

For the startups that have procured funding and are in their seed stage or beyond, we offer incubation facilities with larger office and lab spaces. (In the context of startups, incubation refers to supporting companies, particularly in the initial launch phase, by intensively providing necessary resources at minimal cost until they can “hatch” and achieve independent growth.) DUCR operates four facilities, at UTokyo’s Hongo, Komaba and Kashiwa campuses, providing private office rooms and co-working spaces at affordable rents, along with free consulting services from lawyers and certified public accountants contracted by the university. Shared back-office services and conference rooms are also available to them.

Our facilities have special characteristics and operating rules. They are located on campus and equipped to handle biotechnology experiments, and startups with these needs receive priority. The objective is to incubate seed- and early-stage startups that have limited resources and nurture them for success, with the understanding they will find new “nests” once they reach a certain size, go public or are acquired by another company.

For preseed or preincubation stages, we offer shared lab space with facilities for conducting experiments. We also provide entrepreneurship consulting and services to connect with existing businesses available to all UTokyo-related startups or members enrolled at the university, even if they are not part of the FoundX program or using the incubation facilities.

UTokyo’s incubation facilities

――What kinds of financial support can startups receive from UTokyo’s entrepreneurial ecosystem?

The business activities of investment firms such as UTokyo Innovation Platform Co., Ltd. (UTokyo IPC) and the University of Tokyo Edge Capital Partners Co., Ltd. (UTEC) are indispensable for startups to have a significant impact on society and the economy.

These two investment companies not only provide risk capital to startups through investment, but also offer hands-on business development support from the pre-establishment phase. They provide advice even to those who ultimately may not secure investment from them. So we encourage UTokyo researchers and students to make inquiries even before they have fully developed business plans. Over half of the entrepreneurs featured in the UTokyo Entrepreneurs Series have received funding from at least one of these companies. Additionally, the investment firms have their own incubation programs to support fledgling entrepreneurs, such as a program called 1stRound.

Entrepreneurship education

――Can students learn about entrepreneurship through university classes?

Various UTokyo departments and divisions offer numerous courses related to entrepreneurship. More than 50 such courses are available. While I won't go into the details of each one here, interested UTokyo students can search for courses using the list (in Japanese) on the DUCR website and enroll in those that appeal to them. DUCR also offers a variety of courses (as described below).

Celebrating its 20th anniversary this year, the Entrepreneur Dojo (which derives its name from the Japanese term dojo, referring to a school for training in arts of self-defense, such as judo and karate) is our oldest, traditional educational program on entrepreneurship in a “broad sense.” It is essentially an introductory course designed to impart knowledge and skills useful for any future career path students choose to pursue. Some may find it an entrepreneurship course in a “narrow sense” (further description of “broad sense” vs. “narrow sense” below), as it invites a few entrepreneurs as guest lecturers.

For researchers, we offer a program called Greater Tokyo Innovation Ecosystem (UTokyo GTIE). Through this platform designed to build and enhance the startup ecosystem, researchers can engage in specific business development projects using their research results (i.e., technologies).

We also offer the 100 Program, which is not specifically focused on business or entrepreneurship. This program brings together 100 university students from across Japan for online sessions during their spring and summer recesses. They spend 100 hours on product development, with the costs covered by the program. Any student eager to learn, regardless of their university affiliation or amount of experience in making products, can participate.

For student teams that already have ideas and are equipped with technological capabilities, we offer the Spring/Summer Founders Program (SFP). Under this advanced program, participants have access to the Hongo Tech Garage, a facility normally restricted to UTokyo students for engaging in technological projects. Additionally, the teams will each receive up to 300,000 yen in development support funding.

In recent years, experts have increasingly distinguished between two definitions of entrepreneurship education: narrow sense and broad sense. The narrow sense definition focuses on equipping aspiring entrepreneurs with the knowledge and skills necessary for starting a new business. In contrast, the broad sense definition is not intended solely for entrepreneurs. It encompasses the acquisition of knowledge, skills and mindsets that fosters creativity in various work and everyday life situations. When people hear about entrepreneurship education at the university level, they may envision a program solely designed to prepare students for launching new businesses. In reality, however, we offer a diverse range of educational experiences that extend beyond the narrow sense of entrepreneurship education. We want people to be aware of this.

Interestingly, most participants of the Entrepreneur Dojo go on to work for established companies and only a handful launch startups while still in university or immediately after completing their college or graduate education. But five to 10 years later, more than 100 have become entrepreneurs who have started businesses, and an even greater number of the program’s alumni who did not become founders themselves are working for startups. Moreover, although they provide experiences that are far removed from business or entrepreneurship, the 100 Program and SFP have produced many entrepreneurs committed to addressing global issues. These cases all demonstrate the depth and effectiveness of entrepreneurship education in the broad sense.

Why are university startups in the spotlight now?

Approximately 24,000 domestic startups are registered in Speeda (formerly Initial), a commercial database of startups maintained by a private company in Japan. Of these, 9,500 companies have secured investment from venture capital or business enterprises. Given that Japan has approximately 1.78 million companies (as of June 1, 2021), according to the 2021 Economic Census for Business Activity, startups are considered anomalies. (When noncompany corporations and private proprietors are included, the number of corporations is approximately 3.68 million.)

According to the 2024 White Paper on Small and Medium Enterprises in Japan, the average annual number of newly launched companies from 2016 to 2021 is approximately 95,000. In contrast, the average yearly number of new startups that secured external funding during the same period is about 600, based on data from Speeda. (When private proprietors are included, the average annual number of newly launched businesses is about 144,000. During the same period, the number of all newly launched startups registered in Speeda, regardless of whether they secured external funding or not, is about 1,200.)

In other words, 99% of newly established companies are not startups; therefore, startups are indeed rare in the context of new business enterprises, with university startups, which utilize university research results, being even rarer.

――You say startups are a rare entity among businesses and newly launched companies. So, why are university startups, which are even rarer, attracting attention?

Several factors contribute to this. First and foremost is the significant social impact of university startups. We still remember that during the COVID-19 pandemic, startups using university research results, such as biotechnology companies Moderna and BioNTech, played a crucial role in mitigating the crisis by developing vaccines. University research and technologies are increasingly viewed as essential in addressing various modern societal challenges, including crises affecting humanity, like pandemics, and issues of global scale. There are high expectations for university startups to be key players in rapidly utilizing university research outcomes for practical applications in society.

Secondly, startups can have a significant economic impact. When we look at the ranking of global companies’ corporate value (in terms of market capitalization), we see that many leading companies started as high-tech startups less than 50 years ago. Notably, companies like Alphabet (Google) and Meta Platforms (Facebook) originated on university campuses. These companies, which were originally startups representing a small portion of the entire industry, are now creating significant employment and massive wealth, influencing people’s lives and leading the global economy. Given this, many countries are providing support to foster the creation and growth of startups.

Future prospects

――What are UTokyo’s future goals in supporting startups?

Over the past 20 years, UTokyo has enhanced its startup support measures and entrepreneurship education through various trial and errors. However, there are still areas that need improvement or rectification. To fulfill our mission as a university and transform academic knowledge into social value, we will further accelerate our efforts to support aspiring entrepreneurs and enhance the ecosystem for supporting startups.

　

Division of University Corporate Relations (DUCR)

Established in 2004, the division is a universitywide organization responsible for planning partnerships between companies and UTokyo, as well as facilitating and providing common infrastructure. In addition to the Office of Startup and Entrepreneurship Education, whose activities are featured in this installment, the organization comprises three other sections: the Office of Intellectual Property Management overseeing general intellectual property management and utilization; the Office of Strategic Research Alliance promoting the commercialization of research results; and the Management Department for the Institute for Open Innovation accelerating open innovations between industry and academia on an organization-to-organization basis. Alongside the University Corporate Relations Legal Department and the University Corporate Collaboration Department in its administrative arm, the division is dedicated to promoting university-industry collaboration and conducting related work to advance its mission.

Text: Division of University Corporate Relations
Photos: Public Relations Group