Behind the scenes when 11 companies were selected. What did the judges look for in the companies taking on the challenge of sustainable development in Latin America and the Caribbean?
At the Pacific Alliance seminar
Eleven companies were selected, exceeding the number from the previous year. What did the judges feel was the potential of each company?
The key point that was emphasized in the selection process was the question as to why it was necessary to take on new business challenges in the Latin America and Caribbean region. And whether development impacts would be generated in the region.
The open innovation program “TSUBASA” is now in its second edition. The program supports Japanese start-ups to contribute to the achievement of the SDGs in Latin America and the Caribbean. This time around, 29 companies applied for the program, out of which 11 were selected. Both the number of applications and the number of companies selected exceeded those of the first edition. What kind of start-ups were selected and in what elements did the judges sense potential business solutions? We will now review the judging process accompanied by remarks from the five judges who made the selections.
Almost half of the companies selected were regional companies. Both quantity and quality were at a level exceeding that of the previous edition.
On March 23, the companies selected for the “Open Innovation Challenge TSUBASA” were announced. TSUBASA is a program in which the Japan International Cooperation Agency (JICA) and IDB Lab, the innovation laboratory of the Inter-American Development Bank (IDB) Group, collaborate to support Japanese start-ups in developing their business ideas in the Latin America and the Caribbean market.
The program calls for start-ups to submit ideas that will contribute to the solving of development issues and achievement of SDGs for the region. Start-ups selected under TSUBASA go on to participate in a six-month “support program” to prepare for commercialization and other business development activities. During the period of the program, the participants receive support, including introductions to local networks, and depending on their progress, may subsequently be given access to IDB Lab’s business support tools and other JICA programs.
This second edition of the program began on January 6 with an open call for business ideas. Twenty-nine companies applied for the program, a higher number than in the previous edition, and 11 companies were selected (*The previous edition of the program received 23 applications from which 8 companies were selected).
What was unique was that the applications came from a wide range of regions across the country. Mayumi Miyata, Deputy Director of the Office for STI and DX, in JICA’s Governance and Peacebuilding Department, had the following to say.
“One of the main distinctions [of this edition of the program] is the increase in applications from outside of Tokyo. Looking at the companies that were selected as well, these were all Tokyo-based start-ups in the previous edition, but this time five of them are from regional areas. In addition to Tokyo, we also held TSUBASA kick-off events in Kyoto and Fukuoka, and I think the fact that we were able to publicize this program extensively through VCs and accelerators had a significant effect.”
An event held at Fukuoka Growth Next, a facility in Fukuoka City that supports start-ups
Toshitaka Takeuchi, Principal Advisor at IDB Lab, said, “We are pleased to have received applications from a wide range of regions in Japan.” He also had the following to add concerning the content of each company’s ideas.
“I felt that all the applicants were highly aware of the ‘development impact’ of ‘what they can bring to the Latin America and Caribbean region through their business’. I have the impression that more and more start-ups are seriously considering business development in the region.”
Toshitaka Takeuchi, Principal Advisor at IDB Lab (at the same event in Fukuoka)
Why is “attractiveness to local partners” a key factor in the selection process?
After screening of the application documents, 16 companies proceeded to the pitch presentation round. Over the course of six months, they made presentations on their business solution, target market, the competitive advantage their business has in the market, subsequent business developments, and the specific benefits they expected to gain from participating in the TSUBASA program. In addition to Ms. Miyata and Mr. Takeuchi, the other judges were Mitsuru Nakayama, CEO of B Venture Capital, which invests in and fosters start-ups in the region; George Goda, CEO of 01Booster, which provides a number of programs aimed at nurturing businesses; and Kyohei Hosono, COO of Dream Incubator, which supports the growth of businesses and industries.
From the left:
Mayumi Miyata, Deputy Director of the Office for STI and DX, Governance and Peacebuilding Department, JICA
Toshitaka Takeuchi, Principal Advisor at IDB Lab
Mitsuru Nakayama, CEO of B Venture Capital
George Goda, CEO of 01Booster, Inc.
Kyohei Hosono, COO of Dream Incubator Inc.
What points did the judges focus on during the selection process? Ms. Miyata of JICA said, “Can you visualize the path to solving development issues in the region through the services and technologies of each company, can you clearly verbalize or quantify the changes and impacts they will bring, and is the business model of each company sustainable and competitive? There are the three points we focused on.” She further added, “We also screened for affinity with JICA projects, in other words, the possibility of collaboration with the counterpart government or local government.”
Mr. Takeuchi of IDB Lab, on the other hand, spent much of the selection process asking himself whether the solutions proposed by each applicant were “attractive to local partners.”
“To commercialize in the region, local co-creation partners are essentially indispensable. It would be unrealistic to expect a Japanese start-up to accomplish this alone. It is thus important that the solutions proposed by each company are sufficiently appealing to make local partners want to join forces with them,” Mr. Takeuchi explained.
Mr. Nakayama of B Venture Capital, who has extensive local knowledge, emphasized a similar perspective.
“A unique feature of TSUBASA is that the search for local partners is carried out using the expansive networks of JICA and IDB Lab. In fact, the program has a track record whereby the companies selected in the previous edition have indeed been successful in finding partners in their respective areas. That’s why we checked the precision with which each applicant was searching for a partner, and whether they possessed the attractiveness that would make the other party want to partner with them.”
Introduction to some of the selected companies. Differentiating strengths are key.
We will now have a look at few of the start-ups that were actually selected, along with the judges’ comments. Many of the projects up for selection in this edition of the program were related to climate change and environmental issues, with ideas for solutions using satellites standing out in particular. Sagri Co., Ltd. uses satellite data to provide two main types of value. One is to optimize the use of fertilizers by performing detailed soil analysis, including pH values, from satellite images. Decarbonization from reduced fertilizer use will provide farmers with carbon credit income and other benefits.
The other is the setting of farmland plot boundaries using satellite images. The boundaries of plots can be easily determined and confirmed even in mountainous areas where it is difficult for national and local government officials to visit.
“This company’s technology enables farmers to perform detailed soil analysis over the course of a single day, instead of the one month it used to take them, and at a price affordable even to farmers in developing countries. In Latin America and the Caribbean, there are countries with a large number of small-scale and poor farmers operating in mountainous areas, and improvements to the agricultural productivity of these types of farmers can be expected through inexpensive and rapid soil analysis using satellite data.” (Mr. Takeuchi of IDB Lab.)
Axelspace Corporation is also developing satellite-based services. The company provides a one-stop service from satellite development to launch and the provision of data collected by the satellite. As of May 2023, it operates five optical satellites, the largest number in Japan.
“This company’s satellite data can be used for a wide range of applications, including disaster prevention, agriculture, and infrastructure. The Latin America and Caribbean region in particular has high needs for monitoring against illegal logging and the management of agriculture. They already have dedicated staff in Brazil, and the fact that we could consider specific business developments through TSUBASA was also a key point in our evaluation.” (Mr. Nakayama of B Venture Capital)
Services using satellites are increasing, but Axelspace Corporation says its strength lies in its capability of specifying in detail the area and time of data acquisition.
One of the regional companies mentioned earlier is Sakaegumi Corporation from Iwate Prefecture. This is a company in possession of proprietary technology for repairing cracks in concrete, and which is engaged in activities to extend the service life of concrete structures. Many of its patented technologies have been registered in Japan and other countries, and the company applied to TSUBASA in order to accelerate the establishment of their methods to extend the service life of concrete structures in Latin America and the Caribbean.
“The deterioration of infrastructure due to reasons such as issues with costs, a lack of human resources, is growing into a global issue. The Latin America and Caribbean region is no different. This company is promoting the life extension of infrastructure not only through the introduction of technology, but also by providing extensive support, such as examination of criteria for determining deterioration tailored to the region and the training local personnel. We expect them to be able to deploy the strengths of Japanese technology and quality on a global scale. Also, while we expect the company’s technology to be used in public works projects, we will also be able to introduce them to JICA’s contacts in the governments of the region.” (Ms. Miyata of JICA)
The ideas of each of the selected start-ups are characterized by their contribution to solving local development issues and their competitive strengths which places them above the competition. Mr. Goda of 01Booster said that he valued the sustainability and expandability that these strengths bring to a business.
“When Japanese start-ups expand into countries that will be developing in the future, we see cases where the social significance aspect is there, but the managerial value (business potential) and level of technological differentiation is low. In other words, they stop at the idea of reducing a negative aspect (an issue) to zero, and have few ideas about how to turn it into a positive. This inevitably raises issues of sustainability and expandability. In the TSUBASA selection process, we specifically examined this aspect, and we felt that many of the ideas presented were both socially significant and technologically differentiated.”
We would also like to consider building a community of TSUBASA participating companies.
Including the above examples, 11 companies exhibiting strong enthusiasm and determination were selected, and will now go on to explore commercialization in the region during the program over the coming 6 months. Mr. Hosono of Dream Incubator, who participated as a judge in both the first and second editions, had the following hopes throughout the selection process.
“Even in Southeast Asia, the number of start-ups willing to challenge themselves are limited, so why would any start-up wish to take on a challenge on the other side of the world? Those were my thoughts during my first time as a judge. And this time, we were concerned that there wouldn’t be any companies left with such ambitions, and that the number of applications would drop. However, when the lid was opened, it turned out that both quantity and the level of quality had increased. It appears likely that businesses are increasingly thinking beyond the confines of Japan. I felt, if this is the case, then Japan is not about to be left behind.”
Moreover, the judges also have high expectations for the future development of the start-ups that were not selected on this occasion.
“There were also cases where we couldn’t select applicants that were proposing potentially innovative solutions due to the considerable time requirements expected before commercialization could be achieved. What is important is how quickly we can establish a path to commercialization and arrive at the creation of development impacts. Therefore, I would like these applicants to further polish their proposals, including details on the envisioned path to final commercialization, and apply again for the next and subsequent editions [of the program].” (Mr. Takeuchi of IDB Lab.)
As for future developments, Ms. Miyata of JICA also mentioned the “building of a community among participating start-ups”. “The companies selected for the first edition are already on their way to expanding locally, and we are considering opportunities for them to interact with the companies of the second edition,” she went on to explain.
Mr. Hosono also commented, “Different Japanese start-ups aiming to expand globally are not in the habit of exchanging opinions with each other on a daily basis. I hope this program will be part of the formation of such a start-up ecosystem,” he agrees.
Of course, everyone is also involved in the rigorous pursuit of results for the program. The 11 companies, JICA, and IDB Lab will work together and proceed as one. “We, too, will be concerned with prompt commercialization and the creation of development impacts,” said Mr. Takeuchi of IDB Lab, expressing his determination.
This is the second edition of TSUBASA. Eleven enthusiastic and determined start-ups will now embark on their six-month long challenge.