Nasdaq Helps Japan Startups Escape Risk-Averse Home Market

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Dozens of Japanese startups are preparing to list on Nasdaq in the next few years as an unprecedented number of entrepreneurs turn away from an aging, risk-averse home market.

Around seven Japanese companies are due to list on the exchange in the next several months, following five such listings since the start of the year, according to regulatory filings. About ten to 20 more plan to list next year, said bankers and entrepreneurs recently interviewed by Bloomberg. Only a handful of Japanese firms were traded on Nasdaq before a flurry of listings began this year.

Historically, Japanese listings in the US have primarily been by blue-chip firms like Toyota Motor Corp. aiming to secure access to global investors through dual listings. But many delisted their New York shares in recent decades as it became easier for foreigners to invest in Japanese stocks and the companies decided the costs outweighed the benefits. Years of slow economic growth in Japan further discouraged overseas listings.

Kaori Iwasaki, senior economist at the Japan Research Institute, said the trend was also helped by a changing corporate culture, with more young, talented workers choosing to join startups or start their own businesses rather than opt for lifetime employment at traditional blue chip companies. Boustead was the lead underwriter for Heartcore Enterprise Inc., a software outsourcing firm which listed on the Nasdaq last year. It also handled the IPO of Pixie Dust Technologies Inc., a developer of ultrasound technologies, earlier this year.

“Nobody really knew how to do it,” said Yamamoto, whose book about listing his company on Nasdaq came out last year and became a best-seller. “Now it’s booming quite a bit.” “To be successful on the Nasdaq stock market, you need to have enough liquidity among professional institutional investors, so just being listed on the Nasdaq is meaningless,” said Tomotaka Goji, CEO of the University of Tokyo Edge Capital Partners, Japan’s best-performing university venture fund with more than ¥10 billion under management. He said some Japanese startups appear to be seeking a Nasdaq listing without a concrete growth plan.

 

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