The “CIRCULAR STARTUP TOKYO,” an incubation program for startup companies specializing in the circular economy, was kicked off in collaboration with Harch Inc., operator of the circular economy media platform Circular Economy Hub, and the Tokyo Metropolitan Government.
The following is a report on the kick-off event, which featured input talks from experts in the field of circular business, as well as presentations by participants on their visions and business plans.
Input Talks
First, Sumiyuki Nakadai, President of Nakadai Co. Ltd. gave a lecture on “Industrial Waste Management Business and Circular Economy.” Nakadai Co. Ltd. is engaged in waste disposal, reuse, and consulting businesses, and has achieved a recycling rate of 99%. Nakadai, whose mission is to “connect unneeded items to people and companies that need them,” said that knowing the current state of industrial waste is essential to developing a circular business.
“First of all, we cannot talk about resource recycling without knowing the current status of industrial waste,” he said. “The overwhelming majority of waste in modern society is disposed of in places where it cannot be seen, and the annual volume of industrial waste is 389 million tons. This is about nine times the amount of general waste. Every circulation business is related to the waste management industry, so it is necessary to understand the laws pertaining to waste. This is because you could unknowingly be in violation of the law.”
Sumiyuki Nakadai, President of Nakadai Co. Ltd.
Industrial waste continues to be produced in large quantities, but circulating it is not easy. Because industrial waste is not discharged in a planned manner, it is not possible to secure resources “in a certain quantity, stably, and with a specific quality.”
Therefore, it is necessary to link the “throw away” and the “use.” In resource recycling, it is important to think of all products as material stock. The information to be discarded is the type and amount of waste and the composition ratio of materials. Information to use refers to the organizations and companies that need the materials. If the characteristics of each product are understood, they can be used as materials for the next product. For example, if we know that 10 tons of waste from one product contains 4 tons of iron, we can circulate that iron to the next product. In this way, by combining information on what is discarded with information on what is used, efficient resource recycling can be achieved. Nakadai said, “Because supply is unstable, information management of waste is essential to create circulation.”
Image via Nakadai Co. Ltd.
The company places great importance on communication with manufacturers in order to create circulation of waste. In particular, the company makes recommendations to manufacturers on how to make waste easier to dismantle and how to make it usable for longer periods of time. This is because we do not only receive information on waste disposal from manufacturers, but we also need to be involved in the upstream of the manufacturing process, communicating with them and working with them to create and change the information.
In addition, businesses that handle waste need to invest on the assumption that the amount of waste will decrease. As companies move in the direction of reducing the amount of waste, it is important to be flexible enough to guarantee quality when the amount is reduced. Nakadai pointed out that this is a point that is easily overlooked when promoting business in the circular economy, which aims to eliminate the concept of waste.
Participants listened attentively to Nakadai’s talk on the basic stance of the circular business.
Next, Kozo Eguchi of Kamakura Investment Management CO., LTD. The company’s philosophy is to “invest in good companies,” and what Kamakura Investment Management considers a “good company” is one that can grow in harmony with its stakeholders and foster a sustainable society. The company invests with the attitude of continuing to support “good companies” as long as they are “good companies,” based on face-to-face relationships of trust, he said. The “Emergence of Budding Buds Fund,” for which Eguchi is the investment manager, targets startups that will create the society of the future.
Kozo Eguchi, Investment Manager, Kamakura Investment Management CO., LTD.
Throughout his presentation, Eguchi emphasized the importance of trust. He said that circulating resources also means circulating trust, and that in order to change society, it is important to have a solid relationship of trust with stakeholders before products and services.
In particular, he stressed the importance of building relationships with institutional investors. In the past, institutional investors tended to invest in “profitable companies.” However, the current distortion of this trend, combined with the risk of climate change, has led to greater expectations for startups engaged in circular businesses. Startups lack both funds and track records, which is why both startups and institutional investors need to think about how to build a relationship of mutual trust.
In building a relationship of trust, Eguchi first mentioned the importance of a “place.” There are two main types of “place.” The first is that it is the base of the business, and the second is that it is the point of contact between the two parties. In creating a “face-to-face relationship,” Kamakura Investment Trust places great importance on opportunities to meet and talk with clients at its office in Kamakura. In addition, the company creates opportunities to communicate with its portfolio companies at its annual general meeting of beneficiaries. This is an opportunity to communicate and get to know each other, which leads to a relationship of trust.
Eguchi also mentied two points on that institutional investors want to know when making an investment. One is the strength of the company, and the other is its ability to execute.
Image via Kamakura Investment Management CO., LTD.
Eguchi said, “If you cannot verbalize your strengths, you cannot demonstrate them.” This is because institutional investors are comparing their own hypotheses with the strengths perceived by the companies. He said that mimicking the strengths of other companies is an option at the beginning, and that the process part is important, such as how to leverage them in the course of the business and differentiate the company from others.
Regarding the ability to execute, he explained that what institutional investors are looking for is whether the company is growing or not. For example, how much has the company changed over a period of time, such as three or six months? Investors look at the growth potential and decide whether or not to continue investing.
In order to create room for growth, he said, a company is required to have “human ability.” When investors or, in the case of this program, mentors and partner companies, give us harsh opinions, can we take them seriously? Eguchi emphasized that the ability to find value in external opinions and advice without putting a lid on them, and to implement, verify, and correct them, will lead to changes in the company, which in turn will lead to a relationship of trust with investors.
Pitches from Participants
After the talks by Nakadai and Eguchi, pitches were given by the participants of CIRCULAR STARTUP TOKYO. Each gave a 3-minute presentation on their company’s vision, strengths, and business model. The following is a brief introduction of each company’s presentation (some parts omitted).
Ryota Namba/EcoLoopers Inc.
The company aims to “realize a circular manufacturing system through the conversion of ‘vegetable waste’ into biomass plastic.” The company makes pellets of biomass plastic mainly from food waste from food and beverage manufacturers and restaurants, and commercializes them using 3D printing technology. The company plans to differentiate itself from its competitors by integrating the entire process from material production to commercialization in-house, and to appeal to consumers through the production and sale of interior products.
Yutaro Koyanagi/JOYCLE LLC
In view of the rising cost of transporting waste and the resulting increase in greenhouse gas emissions due to the closure of waste incinerators one after another as Japan’s population declines, we propose a compact resource recovery system that converts waste into resources without transporting or incinerating it. The “JOYCLE BOARD” data visualization system enables visualization of the cost-effectiveness and environmental effects of the equipment, and for businesses that do not have enough equipment to own one per company or in remote island regions, the company is considering offering the equipment itself through the “JOYCLE SHARE” service. Currently, the company is conducting demonstration tests on Ishigaki Island and plans to increase the number of locations for future demonstration tests.
Naoki Abe/Fan Circle Inc.
The sports industry is affected by climate change in real time, and Fan Circle’s vision of “sports leading the way in ecology” is to shift the manufacturing of products in the sports industry from the design stage to the environmentally conscious stage, thereby increasing the market supply of environmentally conscious products and the resource recycling rate. The company is also working to improve the market supply of environmentally friendly products and the recycling rate of resources. The company aims to solve the two problems of environmental responsiveness and operational inefficiency in the product manufacturing process through its supply chain management system, a cloud service.
Mayuko Miyagaki and Benoit Mantel/HELSINKINOKO Co., Ltd.
Through the provision of home-use mushroom cultivation kits using coffee grounds, the company aims to create a society in which individuals can contribute to the formation of a circular society from the comfort of their own homes. Helsinki Mushrooms is attractive because anyone can contribute to sustainability as long as they have coffee grounds, and they can accumulate knowledge in the process of growing mushrooms while having fun. The company already has a successful case in Finland, where it has been developed first. While the mushroom market is expanding worldwide, the Japanese market is stagnant, and the company has a vision to grow the domestic market.
Yoshinari Takahashi/YTRO DESIGN INSTITUTE, LLC
“NULL” aims to create a society where people actively participate in ‘monozukuri’ through the power of art and design by transforming scrap wood and natural materials into paint. In addition to the production of paints, NULL will also contribute to community building by creating opportunities for people to actually get involved in manufacturing through workshops. Workshops have already been held, and in one workshop using Seto-yaki pottery waste, the participants transformed it into paint together with local residents, who then applied the paint to the floors and walls of local bases to encourage residents’ participation in community development.
Hiroki Iwasawa/Water and Old House Co.
Having experienced the shock of visiting the river where he used to play in his childhood for the first time in a long time and finding that the river had changed from what it was then, he is now developing a septic tank that breaks down sludge and synthetic detergents. The septic tanks have problems such as the need for pumping due to sludge generation, and functional impairment (reduction of purification capacity) due to the inflow of detergent and oil. In response, the company is increasing the decomposition capacity of septic tanks by regularly introducing a unique group of microorganisms, thereby reducing sludge disposal costs for municipalities and restoring biodiversity. There is currently no other small-scale entity that is pursuing similar initiatives, and the company aims to be a pioneer in this field.
Mika Yamaoka and Sayuri Yamanashi/Beautiful timeS
Under the theme “A Journey to Pick Up Sustainable Food,” this project aims to transform the food-related behavior of consumers in the Tokyo metropolitan area into a cyclical and sustainable one. Composed of members who met within a program for business people at an art college, the program is centered on an interdisciplinary approach using the “transition design” method. In this program, participants will brush up their ideas with the aim of commercializing them, while analyzing competitors, markets, etc. and acquiring business knowledge.
Keiichi Fujishiro and Masami Terada/Oki Circular Design Lab
Oki Circular Design Lab believes that “human connections (relational capital)” are the foundation of a sustainable circular economy, and proposes a “journey around abundance” where “goods,” “people,” and “values” circulate.
By experiencing various lifestyles in Japan and abroad, including Oki, where “there are no convenience stores,” “there are many opportunities to see marine debris,” and “you can see where the detergent you flush goes,” the project aims to shift from conventional “consumption-type” tourism to “value co-creation” travel that fosters partnership with the local community.
Tomonobu Shigeta/PHI
PHI will contribute to the development of people for a sustainable society by providing practical environmental learning content for children, who will be responsible for the future, in order to bridge the gap between the educational field and the real world. With environmental education and local resource circulation at the core, professional human resources in the field of sustainability, including the circular economy, will work together effectively to promote cooperation among companies and municipalities, thereby spreading the circular economy throughout society. Eventually, the project will be modeled as “Japanese culture,” and export and implementation overseas is also being considered.
Junya Kubo and Sho Teshima/Heritage Corporation
Inheriting “Made in Japan” to the future. The apparel brand “CRAFSTO” was launched in 2020 with the mission of “rebuilding the value of Japan’s manufacturing industry through sustainable methods,” and is based on the themes of environmentally friendly materials and genderlessness. By using a production management system developed in-house for each craftsman, the brand has achieved a 100% fixed-price sales ratio in the apparel industry, where excess inventory is a major issue. In the future, the company plans to propose vegetable-based leather, for which the market is growing worldwide, develop upcycled products, and collaborate with upcyclers in the BtoB domain.
Munehiro Honda and Yuta Kimura/Ecofurni (Mitsubishi Estate Co., Ltd.)
Ecofurni is an in-house venture of Mitsubishi Estate Co. Focusing on the problem of large amounts of furniture being discarded when office tenants vacate their premises, the company is engaged in the sale and pick-up of reused furniture for tenants. The company’s strengths lie in its tenant relations and its operation in an “urban warehouse.” The company will expand its activities through this program.
Hiroto Takahashi and Shunsuke Uta/Team FarmBot Cafe (Kajima Corporation)
Team FarmBot Cafe is an in-house venture within Kajima Corporation. Its starting point is the question, “Can we do something about buildings that are being demolished even though they are still usable?” Instead of demolishing small- and medium-sized buildings with high vacancy rates, the company is attempting to create a pseudo-natural environment by installing agricultural robots called “FarmBot” in these vacant spaces. By making this space available for membership use as a café, lab, or office, the project will lead to the formation of a new community and a more vibrant building, as well as meet the needs of citizens who want to grow plants in the center of the city.
Seiki Fukudome and Tateki Ueno/LiNk LLC.
LINK LLC.’s business objective is to break away from the business model of mass production and mass disposal in the fashion industry, and it aims to improve secondary distribution value by utilizing the blockchain mechanism and LCA data. The company also focuses on the issue of the large amount of discarded background paper used when photographing fashion items, and operates an environmentally friendly photography studio. In the fashion industry, where horizontal connections are considered important, the members of the company are seeking to develop their business by taking advantage of the personal connections they have cultivated in the industry.
Satoshi Kishi and Yuji Hayashi/naoseru Inc.
The company has noticed that both individuals and businesses who want to sell their broken smartphones are facing a lot of hassle and the collection rate is declining, while repair companies are facing difficulties in purchasing at a fair price and not being able to choose the condition of the devices.
To address these issues, the company proposed a service that matches the two. By checking the condition of smartphones in-house and grading them, the company guarantees that the seller will save time and effort, while the vendor will receive a fair price according to the condition of the device. In the future, the company plans to enter the secondary distribution market for consumer electronics as well as smartphones. With the vision of “creating a society where people do not throw things away,” the company aims to develop its business on the back of the expansion of the right to repair.
Ayaka Ono/RIPPNIS Co.
RIPPNIS is considering solutions to expand the options for “comfortable spaces that connect with nature,” as typified by passive design.
The company focuses on the fact that the forestry industry has been stagnant due to the falling price of domestic timber, and that the value of natural resources and real estate created from the user’s perspective has not been visualized. Based in Kamikawa Town, Hokkaido, a location close to forest resources, the company is conducting interviews with businesses. In the future, the project aims to connect the wellbeing of the earth and people through the traceability of materials and the valorization of comfort.
Junji Okawa and Tsuyoshi Kojima/Liberonte Co.
What is important is the change from now on
After all participants finished their pitches, Hirokazu Kitahara of Archetype Ventures, an organizer member of CIRCULAR STARTUP TOKYO, commented, “I hope that startups will connect and learn from each other.” Nakadai, who also participated in the inspiration talk, encouraged future activities, saying, “How you brush up your business during the five months of this program is very important.” Furthermore, participants were reaffirmed in their managerial stance by Eguchi’s powerful words, “If you can’t move people’s hearts in 3 minutes, you can’t move people’s hearts even if you take 30 minutes.”
Hirokazu Kitahara, Partner, Archetype Ventures
The event concluded with a reception, where participants and mentors actively shared their thoughts and opinions with each other.
Here are some comments from the participants.
I was able to hear from entrepreneurs in similar fields and feel that I am not alone in my fight in this field! (Junya Kubo/Heritage Corporation)
I was impressed by Mr. Nakadai’s comment that “there is far more waste in areas we don’t look at.” I felt once again that in the environmental area, it is important how quickly we can change the system and realize environmental restoration. (Hiroki Iwasawa/Water and Old House Co.)
I was strongly impressed by the key words of Mr. Eguchi of Kamakura Investment Management, “Thinking about the future” in thinking about business, which is indispensable for future business design and verification. Through this program, I would like to work together with the participants to create businesses that will have an impact in the future! (Ryota Namba/EcoLoopers Inc.)
It was very gratifying to experience firsthand the enthusiasm of the participants, as it has been difficult to find people with whom I can have a dialogue on this kind of theme. I hope to make an impact on society through the power of our connection with you all, while striving to realize the vision and mission of my own project! (Yoshinari Takahashi/YTRO DESIGN INSTITUTE, LLC)
I will face my business idea again based on the concept of “imaginative investment,” brush up my business idea, and make it a reality with a “super long-term viewpoint,” and I hope to make a positive impact on society through the power of our connections. I would like to “create new value by accepting both the sour and the sweet sides of this project!” (Mayuko Miyagaki/HELSINKINOKO)
“CIRCULAR STARTUP TOKYO” is a project in which each of the participants has their own vision and ideas. We look forward to seeing how the business ideas that promote the circular economy and the participants themselves will be transformed by the program.