Nurturing Startups Through Core Business—The Corporate Responsibility Demonstrated by Mitsubishi Estate’s 7 Years

Yoshio Sakai
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Mitsubishi Estate Co., Ltd. XTECH Operations Department, Unit Leader

‍After joining Mitsubishi Estate, Sakai was involved in the redevelopment of Marunouchi and successfully brought the Peninsula Hotel to Japan. From 2007, he was seconded to the Rockefeller Group in New York, where he worked on the development, operation, and leasing of office and logistics facilities across the United States. After returning to Japan in 2012, he worked in the building sales department, focusing on product planning, including the launch of FINOLAB at Otemachi Building, Inspired.Lab, and involvement in the FoundX project with the University of Tokyo. In 2021, he helped launch TMDU Innovation Park (TIP) in collaboration with Tokyo Medical and Dental University.

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The Man Who Created a Startup Hub in the Heart of Marunouchi, the Center of Big Business in Tokyo

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- Mr. Sakai, you have been involved in the creation of several startup hubs in Marunouchi, such as FINOLAB, Inspired.Lab, and TMDU Innovation Park (TIP). What motivated you to start these initiatives?

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After being stationed in New York from 2007, I returned to Tokyo in 2012 to work in the building sales department’s business planning. My role was to design office environments that would make it easier for our clients to work, improving customer satisfaction and attracting companies to occupy our office buildings from other commercial spaces.

Since the opening of Marunouchi Building and Shin-Marunouchi Building in the 2000s, Marunouchi had been successfully attracting large corporations such as megabanks, foreign financial institutions, and prestigious law firms. However, during my time in the U.S., I observed how Silicon Valley-based ventures like Google and Amazon quickly transformed into huge corporations. I was struck by the fact that such leading technology companies were not present in Marunouchi.

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Around 2015, I started to build a personal relationship with Masakazu Makishima, a lawyer at Mori Hamada & Matsumoto Law Offices. Mr. Makishima was well-versed in the startup ecosystem of Silicon Valley, having previously worked at a California-based law firm, and he was the one who designed J-KISS, a contract framework based on the KISS (Keep It Simple Securities) model that made it easier for startups to raise funds at the seed round under Japanese law.

Through discussions with Mr. Makishima and venture entrepreneurs of my generation, I began to consider how we could engage in business with startups that will drive future industries, not just with large corporations that dominate the current economy.

At that time, during business trips abroad, I witnessed the rapid rise of Uber as a mode of transportation, and in the U.S., the rise of the sharing economy with WeWork and Airbnb, as well as the growing influence of video streaming services like Netflix.

Seeing that IT technology companies were becoming the driving force of the economy, I realized that building relationships with startups, the key players in driving change, was crucial for the future of our company. I felt this needed to be addressed now. So I decided to propose to my boss the creation of a startup hub in Marunouchi, one of Tokyo's prime locations. This led to the launch of FINOLAB in 2016.

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- Given that startups are still small companies, did you think it was a viable business to rent office space in Marunouchi, a prime location, to them?

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At that time, we found a suitable space in the Tokyo Bankers Association Building, with one floor of 300 tsubo (approximately 990 square meters) available. However, although we decided to create a shared office for startups in Marunouchi, we were unsure whether it would be profitable. So, we actually started with the understanding that we would close it if it didn’t work after a year.

When recruiting tenants, we knew that simply calling it a “venture” or “startup” would make the message too vague. Given Marunouchi’s location and the relatively short lead time to commercialization, we decided to focus on the “FinTech” sector, which seemed promising, and named the facility “FINOLAB.”

Initially, we only had two tenants. It started with just six people, including myself, working on computers in a 300 tsubo space. However, the number of tenants quickly exceeded expectations, and within a year, it grew to 30 companies. As the space became cramped, we moved to a 600 tsubo space in the nearby Otemachi Building. Thanks to this, the space expanded to 1,500 tsubo.

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- Why did FinTech startups gather at such an unexpected pace in Marunouchi?

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Today, the environment for starting a business has improved, but in the past, it was common for startups to register their company from a home or an apartment near their university and borrow money from financial institutions with personal guarantees. Even if they wanted to meet clients, they couldn’t invite major companies or banks to their apartments. Additionally, as the number of employees grew, everyday inconveniences like insufficient restroom facilities also became a problem. However, even as revenue gradually increased, most of the funds were directed toward development costs and salaries, making relocation difficult.

Compared to that environment, FINOLAB provided an attractive setting. With an office in Otemachi, a prime location, clients and banks could easily be invited, and it also enhanced the brand image and provided credibility. While the rent was slightly higher, if one used an apartment as an office, areas like the kitchen or bedroom would count toward the floor space, making them less useful. Since FINOLAB was specifically designed as office space, its rent, in terms of usable space, was not that expensive. These advantages made it an appealing option for many startups.

After FINOLAB was established, I moved my personal desk into the facility and started working there daily. Initially, we didn't have meeting rooms, and companies used open spaces for discussions. However, we received feedback that some discussions, such as fundraising, weren’t appropriate for an open space. So, we added meeting rooms, and there was a sense of mutual growth between FINOLAB and the startups. The early-stage startups, in particular, were conscious of each other’s services and business progress, pushing each other forward and providing mutual inspiration.

Looking back, FINOLAB was like a dormitory for FinTech ventures, and we were the dormitory managers. Through managing the facility, organizing events, and fostering communication, I learned the excitement of supporting startups during those years.

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- Did you engage in corporate venture capital (CVC) activities, such as investing in the startups at FINOLAB?

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We made small investments in the startups that were tenants at FINOLAB. Once the business of FINOLAB became profitable, we established a separate entity, "FINOLAB Co., Ltd.," to focus solely on this business. We set up a CVC with ISID and Mitsubishi Estate as LPs, with the company acting as the GP.

In terms of investment decisions, while we did consider economic returns, the main focus was on supporting entrepreneurs at crucial junctures in their careers and strengthening our sense of camaraderie by supporting their decisions. Being part of a community of 200-300 people, we knew more than just the business concept or the business model— we understood the entrepreneur's stance and the atmosphere within the team, which made this investment style possible.

At the end of last year (December 2022), ELEMENTS, one of our earliest tenants and investment recipients, went public on the Tokyo Stock Exchange’s Growth Market. It was a deeply moving experience, seeing a fledgling company grow and "graduate" to the next stage. I remain close with the management team to this day.

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- In 2019, you launched "Inspired.Lab," a hub for DeepTech, in the same Otemachi area.

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While FINOLAB was primarily focused on FinTech, we did have some non-FinTech ventures as tenants. During my time as the dormitory manager, I built a network with influential leaders in the AI sector. As terms like "AI," "big data," and "data analysis" started to gain traction, I could sense that ventures in this field were becoming more capable of raising funds.

When I began to think more abstractly about the DeepTech sector, I was introduced to Tomiko Kamata, a pioneering angel investor in the DeepTech field in Japan, through a friend who was an entrepreneur. I met Kamata at a café in front of the University of Tokyo's Akamon gate in 2017. Kamata shared his passionate belief that AI and DeepTech would play a crucial role in creating new industries and solving societal problems. This conversation deeply inspired me and reinforced my sense of mission, ultimately leading to the decision to establish Inspired.Lab.

Inspired.Lab was launched in February 2019, on a different floor of the Otemachi Building, which housed FINOLAB. The first tenants were TomyK Co., Ltd., led by Kamata, and its portfolio company, Lpixel Inc.

The AI boom at the time helped facilitate tenant acquisition, and we learned from the experience of FINOLAB’s launch, where we didn’t initially have meeting rooms. This time, we ensured that meeting rooms, building security, and a cafeteria offering light snacks were available from the outset. I believe we were able to provide a good office environment that met the needs of the startups.

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- Since 2021, you have been developing "TIP: TMDU Innovation Park," a hub for healthcare innovation in collaboration with Tokyo Medical and Dental University (TMDU).

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The healthcare field, which TIP focuses on, is expected to take longer than fields like FinTech and AI to show visible growth and success. Medical devices need to pass various hurdles, including clinical trials, before they can be approved and implemented in clinical practice. To establish a truly functional support hub in healthcare, I believed that it was essential to partner with organizations that have a strong track record and societal trust in the medical field. I am convinced that TIP’s efforts would not have started without my meeting with Professor Kaori Iida from Tokyo Medical and Dental University, a leader in industry-academia collaboration.

To implement this, we needed to create an environment that could work closely with clinical sites and clinical trials, as well as with medical professionals such as doctors and nurses. Therefore, TIP was set up not in Otemachi, where FINOLAB and Inspired.Lab are located, but in Ochanomizu, adjacent to Tokyo Medical and Dental University.

The acceleration of the aging population and the declining birthrate is no longer just a problem for Japan. Thinking about my own generation, my parents' generation, and the next generation of children, I want to promote technological innovation in the healthcare and life sciences fields and aim to create positive social impact.

We are already seeing visible results, such as early detection of lung cancer through image recognition AI and the development of advanced medical devices that significantly reduce the difficulty of complex surgeries. It may still take time to make a big impact, but I am highly motivated to work on it as something deeply personal to me.

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Large Corporations Can Commit to Producing Startups

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- What is essential to accelerate the creation of new industries through startups?

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The fundamental premise is that the idea that "the growth of startups improves society" needs to become a more widely accepted understanding in society.

In the United States, there is a widely shared belief that "startups are entities that lead society in a better direction by creating new industries and services. Therefore, the growth of the startup ecosystem is a critically important theme for the economy and society as a whole."

On the other hand, while more people in Japan are aspiring to start their own businesses, I don’t think we’ve yet reached the point where it is understood that "startups are the mainstream economic activity that will create the future of society".

From my experience with FINOLAB and Inspired.Lab, I feel that large corporations have the power to create an environment through their business operations where startups can emerge and thrive.

When we opened FINOLAB, only two tenants had signed contracts. The location of FINOLAB was in the prime Otemachi area, and it would have been possible to lease the entire space to large corporations that could pay higher rent. In this context, the opening of FINOLAB was an example of how we, including the executives who supported us, took risks and demonstrated our commitment to supporting startups.

"Creating a hub where startups can shine in Otemachi and offering it at a relatively affordable rate" was a unique form of support from a developer, but large corporations, regardless of their industry or business type, can create an environment through their own operations where startups can grow, thrive, and be supported.

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- Large corporations are increasingly investing in startups through CVC (Corporate Venture Capital) activities with the expectation of realizing synergies through collaboration, aren't they?

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Collaboration and investment are powerful means to support the growth of startups, but it is important to approach it from the startup's perspective and assist their growth without imposing the circumstances of large corporations.

I have had the opportunity to witness firsthand many companies grow from startups to publicly listed corporations, and during the early stages, startups are often focused solely on generating revenue. At that stage, they are typically unable to focus on long-term collaborations, as they are busy building their business.

Expecting too much collaboration from the beginning may be like expecting a child in their growth phase to meet the demands of an adult. Even with the best intentions, it can hinder healthy growth. Rather than forcing short-term collaborations, it is better to support the startup's growth until it reaches a certain scale, which will open up more opportunities for long-term collaboration.

From my experience working closely with startups, if I were to offer advice to large corporations, it would be: "In society, children are the future treasures, but in the economy, startups are the ones who carry the future. Mature corporations, as adults, should help create a world where we can positively cooperate to nurture startups!"

Personally, I believe that supporting startups not only brings benefits to my company and myself, but also contributes to creating a future where healthcare technologies are implemented and where my generation, my children’s generation, and even future generations can live long, healthy lives. This is why I continue to work on supporting startups with conviction.

When large corporations and industries act with the mindset of "nurturing startups," and new businesses or industries emerge, the benefits are not limited to business returns, such as gaining future valuable partners or clients, but also societal transformations and advancements, including changes in individuals' lives.

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By Making Your Own Decisions, You Can Reach a Different World Than the "Prepared Future"

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- As a corporate employee who took an early interest in startups, Mr. Sakai, what kind of childhood did you have?

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My father worked as a tunnel engineer for the Japan Expressway Corporation. Due to his work on large tunnels connecting the Kanto region to the Joetsu area, our family frequently relocated between Niigata and Chiba. During my early years, from kindergarten to fourth grade, we moved four times: to Itoigawa, Funabashi, Niigata, and Kashiwa. Because I repeatedly had to reset friendships and neighborhood relationships, I believe I developed a cautious and observant personality.

Later, after passing the junior high school entrance exam, I entered a prestigious integrated junior and senior high school. The reason was that I thought "high school entrance exams will be even harder" after witnessing my older brother, who was three years older, struggle with his high school entrance exams despite being better than me in both academics and sports. When he was struggling with his grades, I thought, "If he’s having a hard time, high school exams must be tough," and decided it might be easier to go to an integrated school from middle school. So, I researched the best local cram schools and asked my mother if I could attend one.

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A significant experience that I believe is connected to what I do now was my time in the basketball club in middle school. Of course, I learned a lot from working hard with my teammates, but the most impactful experience was in my second year of high school, when the entire team decided to quit basketball voluntarily. This was a significant turning point in my life.

After discussing it for days with the teammates I had worked with since the first year, we decided not to follow the traditional path of having an emotional retirement after losing in the final tournament. We were strongly advised against it by our seniors and friends, and even though I personally still wanted to continue playing basketball, I have no regrets at all. The experience of making our own decision without being swayed by others' opinions left a huge impression on me. For the first time, I experienced that by making my own decision, things happen that are different from the "prepared future" or the common expectations.

After entering university, I continued to make my own decisions without worrying about what others thought, and I built a mindset that once I made a decision, I would not regret it.

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- Why did you choose Mitsubishi Estate as your first employer after graduation? What have you learned or felt through this career?

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In a word, it was about discretion. When I attended the gathering of new hires, despite the fact that it was such a large corporation, there were only 13 of us in my cohort. I had received offers from other large companies as well, but the number of new hires there was much higher. While I didn’t have a special attachment to the real estate development field, I thought that in a smaller team, I would be able to have more discretion and be given the opportunity to make a bigger impact. This was my thinking as a student when I made my choice.

I honestly enjoy my work at Mitsubishi Estate. From a young age, I was entrusted with significant projects. I also had the opportunity to be stationed in New York, and after returning to Japan in 2012, I was given responsibility for major client negotiations until I established FINOLAB in 2016. I am grateful for the opportunities that allowed me to grow into the professional I am today.

One experience that stands out was when I failed in a negotiation with an overseas company. After returning to the office and reporting it to my manager at the time, I was strongly impacted by their response. The project was already very difficult, and my seniors and colleagues had not been able to close the deal, so the situation was more or less accepted as "it’s understandable."

However, my manager, unlike anyone else, said to me, "Are you sure you're accepting this result because you truly think it’s acceptable, or is it a case of 'reckless indifference'?"

In other words, they pointed out that maybe I had avoided taking a more difficult course of action, choosing instead a more convenient option, even though I could have done more, in order to avoid complications. That criticism hit me right where it hurt. I hadn’t clearly recognized it at the time, but I understood immediately that I had prioritized staying within the acceptable bounds for a salaryman, avoiding risks, and not fully committing to what I should have done. I regretted that.

Of course, sometimes even if you give your all, results won’t follow, but since that moment, I have tried to avoid making excuses based on external factors, and instead focus on what I should really be doing and take action accordingly.

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- From the perspective of a large corporation, what are the key points in advancing startup support projects?

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When it comes to realizing what I want to do, I always make sure not to fit into conventional molds. If you cannot act freely with a liberated mindset, it’s difficult to notice new trends or the potential of emerging businesses.

Working in a large corporation with scale and history comes with its own constraints, but I believe the real challenge is how much freedom of thought and action you can maintain within those constraints.

Now that I’m over 40, I have come to understand the balance between constraints and freedom. For example, while I have a duty to report to my superiors, I can choose to see this as a bothersome restriction, or I can view it as an opportunity to gain support, to bring more people on board for my ideas. The meaning of this action can differ depending on how I approach it.

While reporting is necessary, if the results are not forthcoming, there’s a problem. However, if I can demonstrate that thinking and acting freely leads to better outcomes, I believe I can create an environment where I gradually gain support from my superiors and company.

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- Finally, could you share with us what you would like to challenge next?

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Currently, collaborative projects with educational institutions, such as TIP with Tokyo Medical and Dental University and joint research with Hitotsubashi University’s new School of Social Data Science, are underway. I believe collaboration with universities and graduate schools will become increasingly important in nurturing talent for startups and in authorizing the value of startup technologies and services, leading to social implementation.

Although the winning pattern is not yet clear, I believe nurturing startups is a crucial theme for Japanese society, and investments for the future will inevitably return to benefit both the business and personal life. I hope to create a positive cycle through challenges and concrete examples that will make this feeling a reality.