The Journal The Authority on Global Business in Japan

Starting a new business is hard. Starting a new business overseas can be even harder. Starting a new business in an overseas country requiring that the venture be supported by most domestic financial institutions is near impossible.

For some expatriate entrepreneurs in Japan, language and cultural barriers are the least of their worries.

Convincing local venture capitalists to back their idea, in a country known for its corporate conservatism and a general propensity to risk aversion, is far more likely to keep a startup founder awake at night.

For Moneytree, founded in Tokyo in 2012, just being recognized as a Japanese startup when its co-founders aren’t Japanese has been an uphill battle, even after it secured landmark fundraising from the country’s top-three megabanks: Mitsubishi UFJ, Mizuho, and Sumitomo Mitsui.

No startup, Japanese or otherwise, had ever brought the trio of direct rivals together for the same financing round.

“It’s very hard to convince Japanese institutional investors to invest in a startup run by foreigners,” Paul Chapman, Moneytree co-founder and CEO, tells The Journal. “Even post-raise, people still ask us where our headquarters is.”

Three’s company
Chapman, an Australian, has resided in Japan off and on for more than a decade. While an undergraduate at Monash University in Melbourne—where he studied Japanese, business, and finance—Chapman co-founded and served as CTO of e-recruitment startup cvMail.

It focused on legal professionals, a similarly conservative client base to his current venture. Chapman saw the company through to acquisition by Thomson Reuters in 2007.

He later became an IT director and sales manager at en world, a recruitment company based in Tokyo.

In 2009, along with American co-founders Mark Makdad and Ross Sharrott, the trio established a boutique iOS and Android app development studio called Long Weekend.

Makdad and Sharrott are also long-term Japan residents, and all three are fluent speakers of Japanese.

“[It] took about four years to be able to read a newspaper, including one and a half years living in Japan as a full-time student,” Chapman says.

“Conducting business meetings and investor presentations requires specialized language, and an understanding of Japanese business rituals. Let’s put it this way: we’re still learning.”

In 2012, Moneytree was born. Chapman took the role of CEO, Sharrott became CTO, and Makdad dove into product and business development.

SoftBank had been the only iPhone carrier until AU began selling the 4S early that year.

Investors were skeptical about iPhone development in a market that was stuck on feature-rich flip phones—affectionately referred to as gara-kei (Galapagos phones) for having evolved independently from mobile phones used in the rest of the world.

The few iOS developers in Japan were largely focused on gaming, and the group saw a chance to enter the domestic fintech (financial technology) sector, while the country’s online banking services were desktop-focused and fragmented.

Rise to fame—and funding
Put simply, Moneytree helps iOS users get a snapshot of their personal finances.

They can input multiple bank accounts, credit cards, and even Japan’s ubiquitous loyalty cards into the app to visualize spending habits, account balances, and receive alerts when payments are due or points are set to expire.

A premium feature for businesspeople allows users to flag purchases in the app as work expenses, then export the data in a variety of formats to be sent to their employer.

There’s also an enterprise version for aggregating corporate accounts, which the startup touts as a first for Japan.

Of course, to access this data, financial institutions had to agree to work with Moneytree and give the startup access to highly sensitive customer data.

“When we started making the app, people told us we couldn’t do it without the support of the banks,” Chapman says.

“One well-known VC even said not a single Japanese person would register their accounts with us. By the time we won [Apple’s] App of the Year award in 2013, the banks had started to take notice—but were still not ready to be seen working with Moneytree.”

Six months after being recognized by Apple, Chapman says that several banks had started to whitelist Moneytree’s IP address.

“By the time we were seeking funding, we knew the banks were a natural fit because they needed fintech and we needed money,” he adds.

Company founders (from left) Mark Makdad, Paul Chapman, and Ross Sharrott

Company founders (from left) Mark Makdad, Paul Chapman, and Ross Sharrott

It’s a jungle
Moneytree isn’t without rivals—both at home in Japan and abroad.
In the United States, Mint offers many of the same services as Moneytree provides, and it’s been around since 2006.

Mint’s meteoric rise in the personal financial space culminated with a $170 million acquisition by Intuit, the maker of Quicken and TurboTax. Mint is only available for users in the United States and Canada.

MoneyForward, Moneytree’s most direct competitor, was also founded in 2012. It announced a $13.3 million series C round on the same day that Moneytree announced its investment from the trio of Japanese megabanks and US-based enterprise software giant Salesforce.com.

The amount of Moneytree’s series A round remains undisclosed, but it previously raised $1.6 million in seed funding from DG Incubation and angel investors, including former directors from MasterCard, Morgan Stanley, and PayPal.

The Moneytree app has more than 850,000 total downloads to date, and Chapman says it has a retention rate of 70 percent among active users.

MoneyForward boasts 2.5 million users for its personal finance product, and 400,000 for its enterprise version.

As of November, the company had 3 million total users. It also has a number of financial industry investors, including Mitsubishi UFJ and Credit Saison, one of Japan’s biggest credit card issuers.

While both Moneytree and MoneyForward focus solely on the domestic market, the former is offered in English, giving expats access to their financial data without the need to memorize difficult kanji characters.

This, coupled with Moneytree’s global mindset (half of the current 18 team members are non Japanese), could give it an edge in penetrating foreign markets.

Apart from the banks and Salesforce, the startup has two additional heavyweights in its corner when the time comes to scale. Moneytree became the first fintech partner for IBM’s API Economy initiative in Japan in October.

In November, Moneytree was also accepted into the MasterCard Labs’ Start Path accelerator, one of just four fintech startups selected from an international pool of hundreds of applicants.

So, does the startup that has worked so hard to be recognized as Japanese have plans to expand globally?

“There’s still massive opportunity in Japan, and we’re always looking for ways to reach new segments,” Chapman says.

“That said, from day one, Moneytree was designed with universal values and appeal in mind. The app offers a unique feature set that we believe can be very competitive in a number of markets.”

The service is set for release in an unspecified “Southern Hemisphere” country later this year.

J.T. Quigley is an editor for the Tech in Asia news site who reports on companies and happenings in the region’s tech and startup scene.
The Moneytree app has more than 850,000 total downloads to date.