In 2023, the word ‘start-up’ is a trending word that is often seen in the media, etc. It is a trending word that began to be used in Silicon Valley in San Francisco, USA, where many IT companies are concentrated, and has now entered Japan.
A start-up is an up-and-coming company or project that uses advanced technology and ideas to build and develop a market and business model from scratch, growing both the market and the company. They aim to achieve rapid growth in a short period of time by creating innovations that create unprecedented social value.
Typical examples of start-ups are companies such as Google, Amazon, Facebook and Uber. On the other hand, a trendy word that became popular a long time ago is the word ‘venture’. Companies that are now classified as start-ups were also spoken of as representative of ‘venture companies’ back then.
In Japan, the words ‘start-up’ and ‘venture’ are often thought of as having the same meaning, but in fact they are two very different things.
The trendy word ‘venture’ was coined a decade ago as a Japanese word based on the word ‘adventure’. The words ‘venture business’ and ‘venture company’ are derived from this word ‘venture’. In other words, it is a word that is used only in Japan, where it was originally introduced by the Japanese.
There is a fundamental difference between the business models of ‘start-up’ and ‘venture’. First of all, let us understand what a ‘venture’ is again, recognise the difference between it and a ‘start-up’ and learn what a ‘start-up’ is.
Venture’ is a Japanese word derived from “adventure”.
The English word ‘venture’ generally means ‘venture capital’ or ‘investment company’, but the meaning of ‘venture’ in Japan is much broader and was coined by Professor Tadao Kiyonari, who was teaching at Hosei University at the time, and others as a term for a company in the process of growth. It is said to have been coined by Professor Tadao Kiyonari, who was teaching at Hosei University at the time, and others.
Therefore, venture enterprises may include companies that have only just been established, small businesses, or simply have a small number of employees.
There is no clear definition of a venture company, but the following are some of its characteristics
❶Create new services based on an existing business model
❷Newly established
❸Small businesses
❹Small to medium-sized enterprises
❺Fewer employees
The key points to look out for are ‘new services based on an existing business model’.
Notable points are the characteristics of ‘creating new services based on an existing business model’ and ‘small business’. The biggest difference between a venture and a start-up is the difference in business models.
Ventures take unique measures to increase profitability based on existing business models, or enter existing markets when new services or technologies are judged to be acceptable to some extent in existing business models, and develop their business with the expectation of long-term growth. The aim is to generate a lot of revenue by scaling up the small business.
In Japan, start-ups and venture companies are often lumped together as ‘new start-ups’ and are often confused with each other, but as explained in the previous section, there is a clear difference between the two in terms of business models.
To reiterate the previous section, a venture company enters an existing market by creating a business with new knowledge or unique technology based on an existing business model, with the goal of stable earnings and long-term growth. In terms of domestic companies, Softbank is an example of a venture company that has expanded.
Start-ups aim to catch up with unrealised customer needs and build new business models based on innovative or cutting-edge ideas and technologies through a series of experiments.
Investments from investors who share the start-up's potential are the driving force behind the speedy development of the business model. Companies such as Google, Amazon, Facebook and Uber are examples.
The characteristics of start-ups can be briefly summarised as follows
❶Innovative innovation
❷Aiming for rapid growth in a short period of time
❸Increase the value of the company, sell shares and fix profits
❹Raising funds from investors.
The start-up market is an ongoing process of growth.
The start-up market is growing at an ongoing pace. An increasing number of domestic start-ups, such as Mercari and Ruskle, have a market capitalisation of over 100 billion yen.
As such, the start-up market is expected to continue to grow steadily in the future, and it will be necessary to keep a close eye on new start-ups and other market trends.
［Features.]
Creating markets and business models from scratch with advanced ideas.
［Growth strategy]
Rapid growth in a short period of time.
［Funding]
Concentrated investment by venture capitalists, angel investors, etc.
［Objective]
Recovery of investment funds in the short term through M&A and IPO, establishment of a stable company structure.
［Characteristics.]
Business development based on existing business models.
［Growth strategy]
Long-term, stable growth and business expansion.
［Financing]
Own funds, general bank loans, etc.
［Objective.]
Steady growth and the establishment of a sustainable and stable company structure.
Business learning from start-up company failures
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