When EcoNaviSta listed on Tokyo’s all-new Growth Market last year, shares in the artificial intelligence-powered big data sleep analysis healthcare start-up zinged nicely higher. Then it started to wobble. Then it began a slide that would destroy 60 per cent of its market value. Today, the company lolls in a broad pasture inhabited by one of Japan’s most intriguing industrial species: a large, whimpering herd of “punycorns”.
Japanese start-ups are drawn into initial public offerings far earlier than they should be; most are not ready, commercially or psychologically, for that leap, and the public markets cannot realistically force a catch-up. As the head of one Tokyo-based VC fund puts it: a company’s journey should begin in earnest when it does an IPO; too often in Japan, the journey ends with the IPO.