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Following the blockbuster stock market debut of e-commerce company Mercari, Inc. on June 19, Japan’s lineup of unlisted startups valued at more than $1 billion has shrunk to basically one, underscoring the domestic tech industry’s persistent failure to cultivate such companies, known as unicorns.

Mercari ended its initial session with a market capitalization of ¥717.2 billion ($6.53 billion), making it the new leader of the Tokyo Stock Exchange’s Mothers board for startups. Now, the only widely recognized Japanese unicorn left is artificial intelligence developer Preferred Networks, Inc. after another unicorn—MTG Co., Ltd.­, maker of the Sixpad wearable training gear—also went public on July 10.

Out of the 240 unicorns globally, the United States is home to 116 while China has 71, according to data from CB Insights. Non-Japanese unicorns that graduate to the trading floor also create a far bigger splash than Mercari. Spotify Technology’s initial public offering on the New York Stock Exchange reaped a market cap of $26.5 billion at the end of the session, while Dropbox was valued at more than $11 billion on the Nasdaq Stock Market.

Meanwhile, even bigger heavyweights are preparing to go public. Uber Technologies Inc. in the United States is estimated to be worth more than $40 billion.

Japanese Prime Minister Shinzo Abe’s government aims to produce 20 unicorns by 2023. But Japan is having a hard time because of “the scarcity of investment money and the low rate of establish­ment” of such enterprises, said Yosuke Nakamura of the NLI Research Institute.

Pension funds and similar traditionally oriented institutional investors tend to shy away from startups. The venture capital funds that startups received in the year ended March amounted to about ¥130 billion—just over $1 billion—a far cry from the roughly $80 billion spent annually in the United States.

“It is hoped that Mercari’s listing will create the impetus for insti­tu­tional investor money to actively flow to startups,” said Soichi Kariyazono, chairman of the Japan Venture Capital Association.

There is also a dearth of Japanese startups willing to tackle the inter­na­tional market from the very start, as Mercari did. The company went as far as recruiting John Lagerling from Facebook to head its US operations.

But Mercari’s US business has been lackluster. Ever since the company entered the market in 2014, sales have failed to top ¥1.5 billion, and the segment’s operating loss persists at ¥6.9 billion. In contrast, Mercari’s domestic operation earned a ¥5 billion operating profit during the nine months ended March, and sales jumped nearly 70 percent.

Lagerling says Mercari will prevail in the United States by employing advanced technology such as machine learning. Tomoichiro Kubota, senior market analyst at Matsui Securities Co., Ltd., said America will be tough to crack due to the high costs of advertising and the language barrier. Japan’s e-commerce platform Rakuten and the chat app Line are also struggling to gain a foothold in the United States.

On the other hand, Kubota said, Mercari is making the right call in going for the United States. “It is a large market, and expecta­tions from investors run high.”

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