SaaS Annual Report 2023-2024: Trends and Insights

MARKET / TREND Japan SaaS Insights 2024 - One Capital, Inc

onecapital.jp

www.cobloom.com

Balancing Growth and Profit: The Rule of 40 for SaaS Companies

SaaS Annual Report 2023-2034: ARR Acquisition Efficiency

Overview of ARR Acquisition Efficiency

The report highlights the correlation between profitability and ARR (Annual Recurring Revenue) acquisition among SaaS (Software as a Service) companies.
A notable trend is observed where investor focus is shifting towards companies demonstrating growth alongside profitability.

Key Metrics

Gross Burn Calculation

Gross burn is defined as the formula:
Gross Burn = (Cost of Sales + SG&A) / New ARR
This highlights the efficiency of a company in acquiring new ARR relative to its costs.

Performance Overview of Companies

Here are the figures based on the gross burn per different companies, showcasing the net losses and efficiency in acquiring new ARR:

Company	Gross Burn (Cost of Sales + SG&A) / New ARR	Net Loss
RAKUS	3.2	-
Plus Alpha Consulting	3.3	-
Smaregi	3.3	-
Chatwork	3.4	-
Cyber Security Cloud	3.8	-
kaonavi	4.1	-
rakumo	4.1	-
Sansan	4.6	-
HENNGE	4.6	-
SpiderPlus	5.2	-
Infomart	5.3	-
freee	6.0	-
Money Forward	6.0	-
Cybozu	6.1	-
Yappli	6.9	-
PLAID	7.1	-
Photosynth	7.1	-
Safie	7.7	-
oRo	8.2	-
AI inside	9.1	-
TeamSpirit	9.2	-
Unipos	10.1	-
CS-C	40.7	-

Cost Breakdown of Growth Efficiency Tiers

The cost efficiency breakdown reveals different tiers of growth among selected companies based on their ability to manage expenses in relation to new ARR:

Company	Cost Breakdown (Top/Middle/Bottom Tiers)
RAKUS	31% / 23% / 17%
Plus Alpha Consulting	26% / 14% / 5%
kaonavi	26% / 14% / 27%
Sansan	14% / 13% / 34%
HENNGE	16% / 10% / 22%
Cybozu	9% / 17% / 35%
PLAID	28% / 7% / 35%

Insights and Trends

Profitability and Growth Correlation: The top three companies (RAKUS, Plus Alpha Consulting, and kaonavi) exhibit positive operating profits while maintaining high growth. Thus, they serve as benchmarks for efficient ARR acquisition.
Lower Performance Indicators: Some companies are showing diminishing growth with ARR growth rates below 10%, indicating a potential concern for sustainability in growth.
Investment Discipline: Successful companies are those that balance disciplined investment with solid growth strategies.

Conclusion

This report underscores the significance of acquiring new ARR efficiently while navigating operational costs. Companies that can strike a balance between profitability and growth are more likely to attract investors in the evolving SaaS landscape.

Extended readings:

[PDF] SaaS Annual Report - UB Ventures

blossomstreetventures.medium.com

2023 SaaS Cash Efficiency relative to Growth | by Sammy Abdullah

chartmogul.com

SaaS Growth Report 2023 | ChartMogul

Vertical SaaS Growth Potential in Regional Economies

Overview

Vertical SaaS (Software as a Service) holds significant potential for growth in regional economies outside of Tokyo, Japan. This potential stems from the diverse industry presence in these regions, as opposed to the heavy concentration of businesses in Tokyo, which accounts for only about 10% of all businesses in Japan. Key industries such as ICT, real estate, and finance show varying degrees of growth potential scattered across the country.

Barrier Analysis

Three main barriers have been identified that may hinder the regional expansion of vertical SaaS:

Regional Barrier
- SaaS companies often struggle to directly engage with local businesses due to a perceived lack of credibility.
- Insight: Building local partnerships and establishing a physical presence, such as regional offices, may enhance trust and facilitate entry into these markets.
Partnership Barrier
- Some SaaS companies provide only a spot commission, which is not a sustainable business model for their partner companies.
- Insight: Developing long-term partnerships and creating incentive structures that benefit both SaaS companies and local partners can strengthen business relationships.
User Barrier
- Customers often lack clarity on how SaaS solutions can improve their efficiency due to insufficient information on successful use cases in other regions.
- Insight: More robust educational resources and case studies should be created and shared to demonstrate the value of SaaS products.

Industry Dependence by Number of Businesses

The following table presents regional dependence by the number of businesses in various sectors, comparing data from outside Tokyo to those located within it:

Industry Name	Outside Tokyo	Tokyo
Agriculture, Forestry, Fisheries
Mining, Quarrying, Gravel Extraction
Combined Services
Construction
Manufacturing
Lifestyle Services / Entertainment
Electricity, Gas, Heat and Water Supply
Transportation / Postal Service
Healthcare / Welfare
Wholesale / Retail
Other Services
Education / Study Support
Secondary / Tertiary Sectors (ex. Public Service)
Accomodation and Food Services
Finance / Insurance
Real Estate / Goods Rental
Academic Research, Professional and Technical Services
Information / Communication

The specific numerical values in the table are not provided in the image. The insights drawn are based on the context of regional economic activities and barriers faced.

Conclusion

SaaS companies need to foster credibility and build local networks through collaboration with local financial institutions and regional companies. Effective engagement strategies will be essential to navigate barriers and unlock the vast potential for vertical SaaS in Japan’s regional economies.

Extended readings:

nihonium.io

SaaS Adoption in Japan

www.sciencedirect.com

Governance reaction to the emerging megacity shrinkage in Tokyo

Global Vertical SaaS Market Report: Key Trends, Size, and Growth ...

SaaS IPO Annual Report 2023-2024 Overview

Key Insights

SaaS IPO Activity: The number of SaaS company IPOs in 2023 was the lowest since 2018, with only two companies (DreamArts and Human Technologies) going public.
Funding Sources: These two companies did not receive funding from Venture Capitalists (VCs), indicating a lack of fresh capital typically associated with startup-style SaaS companies.
Market Trend: There's a noted shift in the market focus from growth to profitability, causing companies to be cautious about rushing into IPOs.
Future Outlook: Despite challenging conditions, some companies are successfully navigating mid- and late-stage funding rounds, indicating potential for recovery in the IPO market in 2024.

IPO Overview

IPO Numbers by Year

Year	Number of IPOs
2015	1
2016	1
2017	4
2018	2
2019	7
2020	4
2021	8
2022	3
2023	2

Insight: The significant increase in IPOs from 2018 to 2021 (with a peak in 2021) demonstrates increased market confidence and investment in SaaS. The decline in 2022 and 2023 indicates a cooling off and possible market correction.

Valuation Context

Valuation Trends: Multiples remained flat from 2022 to 2023. Companies that raised funds in 2021 or earlier are struggling to surpass their previous valuations.

Notable SaaS Companies and Fundraising in 2023

Company	Funding Round	ARR at IPO	Market Cap (at offering)	PSR (Price-to-Sales Ratio)	Release Date
DreamArts	Series C	JPY 2.88 bn	JPY 11.1 bn	2.3x	Oct. 27, 2023
H&T	Series C	JPY 4.36 bn	JPY 10.8 bn	2.5x	Dec. 22, 2023

Additional Insight: The PSR values indicate that these companies are valued in relation to their sales, providing insight into market expectations for their future revenue growth.

Future Considerations

Market Recovery: Companies like KAKEHASHI and CADDi are showing positive trends in large-scale fundraising in 2023, suggesting that while the IPO market is currently subdued, there may be opportunities for resurgence as the market stabilizes.
Strategic Caution: The shift in focus within the market highlights the importance for SaaS companies to demonstrate profitability to attract investment and successfully navigate IPO processes.

Conclusion

The report underscores a critical juncture for SaaS IPOs as they navigate through a challenging economic landscape. Attention to valuation and strategic fundraising will be key for successful entries into more favorable market conditions in the future.

Extended readings:

www.iconiqcapital.com

Decoding the SaaS IPO Landscape: The Metrics that Matter and the ...

kpmg.com

IPO Insights Q4 2023 - KPMG International

www.meritechcapital.com

2024: When to IPO in the Age of Uncertainty - Meritech Capital

日本のSaaSスタートアップにおける資金調達の概要

概要

2023年のSaaSスタートアップへの投資額と件数は減少。
SaaSは日本のスタートアップ投資の18%を占める。
日本のスタートアップ投資総額は753.6億JPYで、前年と比べて減少。

データ概要

年	資金を調達したスタートアップ数	総資金調達額 (JPY mn)	スタートアップあたりの中央値資金 (JPY)
2016年	226	27,159	71,921
2017年	295	46,010	-
2018年	355	111,048	-
2019年	367	98,643	-
2020年	402	192,580	-
2021年	399	225,061	-
2022年	385	134,799	-
2023年	247	-	-

データポイントの洞察

資金調達したスタートアップ数 : 2023年は247社に移行し、前年から37%減少。これは、投資環境の厳格化を示す。
総資金調達額 : 134,799百万JPYと推測されるが、詳細は2023年の最終数値を待つ必要がある。
スタートアップあたりの中央値資金 : 71,921JPYが2022年の中央値となっており、資金分配の傾向を浮き彫りにしている。

2023年の大規模資金調達事例（連続起業家によるSaaS企業）

日付	会社名	創業者	ラウンド	総資金調達額 (JPY bn)
2023年9月	ショウサン	安川正人	シリーズB	18.1
2023年9月	Pathos Logos	増本雅之	プレシリーズA	3.3
2023年11月	LayerX	福島義則	シリーズA	13.3
2023年11月	－KNOwLEDGE Work－	浅野浩二	シリーズB	6.1

事例の洞察

2023年には、特に早期段階のファイナンスラウンドでの投資が増加している。
シリーズAでは中央値の投資が34%増加し、起業家の循環が影響を及ぼしている。

総括

日本のSaaS市場は投資環境の変化に直面しているが、資金調達の規模は増加傾向にある。
将来の資金調達環境やスタートアップの健全性に関する注視が必要。

Extended readings:

prtimes.jp

SaaS市場のトレンドをまとめた「Japan SaaS Insights 2024」を公開

assets.ctfassets.net

[PDF] Japan Startup Finance 2023

productzine.jp

One Capital、国内SaaS市場の動向や2024年における予測をまとめ ...

Issues and Solutions in the Construction Industry

Key Facts

Labor Shortage: A predicted shortage of 1 million workers in the next 10 years, highlighting the urgent need for improved productivity.
Worker Burden: High pressure on workers, many working 6-day weeks.

Labor Productivity Insights

Construction Productivity: Only 50% of the productivity level in manufacturing.
Low Days Off: Only 5% of workers take 2 days off per week, indicating an overworked labor force.

Actual Days Off Per Week in Private Sector Construction

Days Off	Percentage (%)
2 days	5.0
1 day	16.3
1.75 days	7.0
1.5 days	38.4
1.25 days	30.2
Undetermined	2.7

Construction Workforce Trends

Number of Workers and Investment Trends (in million workers)

Year	Number of Construction Workers (million)	Nominal Construction Investment (JPY tn)
2005	600	30
2010	500	40
2015	400	50
2020	300	60

Observations

Decreasing Workforce: Contrary to the increasing demand for construction, the number of workers is decreasing.
Investment Trends: The nominal investment in construction has generally increased over the years, despite the declining number of workers.

Needs Identified

Saving Labor in Low-Productivity Work: Focusing on reducing labor in non-core activities to maximize productivity.
Off-site Remote Management: Emphasizing the need for managing construction sites remotely to improve efficiency.
Breaking Away from Analog Management: Transitioning from traditional methods reliant on experience and intuition is crucial for modernizing construction management.

Proposed Solution: AI Remote Construction Management SaaS

Introduction to SoftRoid: A solution that enables data conversion of entire construction sites via camera technology.
Improved Site Supervision: Enhances project quality while reducing the necessity for site visits.

Representative Insight

Mr. Hiroki Nozaki, Director/CEO of SoftRoid, emphasizes the urgency for construction sites to overcome severe labor shortages by adopting digital management systems that enhance productivity and quality control.

Conclusion

This analysis outlines the pressing challenges faced by the construction industry, primarily driven by labor shortages and productivity inefficiencies. The transition to AI-driven management solutions is pivotal for addressing these issues effectively.

UB Ventures Overview

Vision Statement

An Enduring Vision: A VC for Entrepreneurs, by Entrepreneurs.
- This highlights the mission of UB Ventures to create a supportive environment for entrepreneurs.

About UB Ventures

Team Composition:
- Comprised of venture capitalists with hands-on experience.
- This suggests that the team not only invests but also has practical knowledge in running businesses.
Mission:
- Supporting the growth of entrepreneurs and businesses that are creating new industries worldwide.
- This indicates a focus on innovation and leadership in emerging sectors.
Empowerment Focus:
- Striving to empower startups from Asia.
- Encourages expansion beyond local markets, aiming for global presence and success.

Key Insights

Venture Capitalists (VCs):
- Professionals who invest in startups and early-stage companies in exchange for equity.
- Hands-on experience implies that the team can provide more than just funding, including mentorship and strategic guidance.
Global Market Approach:
- The focus on "lasting success on a global scale" signifies a strategic outlook towards international market integration.
- Asian startups may have unique advantages such as access to large markets, but need support to navigate global challenges.

Conclusion

UB Ventures emphasizes a collaborative approach to venture capital, aiming to foster growth and success for entrepreneurs via experience and mentorship on a global platform.

Extended readings:

Startup and Innovation Collaboratory - University at Buffalo

SUPPORT - UB Ventures

www.buffalo.edu

www.buffalo.edu

Startup Support - Business & Entrepreneur Partnerships

SaaS Annual Report 2023-2024 Overview

Key Insights

Valuation Trends (2022-2024)
- Average Price to Sales Ratio (PSR) has consistently remained between 6x to 8x since 2022.
- Profitability emerged as a significant factor for valuations in 2023, affecting how companies are perceived in the market.
Rule of 40%
- The Rule of 40% indicates that the sum of Annual Recurring Revenue (ARR) growth ratio and profit margin should exceed 40% for SaaS companies to be deemed financially healthy.
- SaaS companies achieving this metric demonstrated higher valuations. Companies achieving the Rule had an average PSR of 7.1x, while those that did not achieved an average PSR of 5.3x.

Historical PSR Data (Average of 28 Listed SaaS Companies)

Year	2021	2022	2023
PSR (x)
Average	10	20	30
freee	40	50
RAKUS

Observations:

Key Factor of Valuation: Sales growth ratio shows fluctuations, with notable increases in specific years.
Companies like freee showed significant growth ratios, which impacted their PSR values.

Implications for SaaS Companies

Growth vs. Profitability: Companies are increasingly being evaluated not just on growth potential but also on their ability to generate profits.
Strategic Focus: SaaS companies should aim to balance growth initiatives with profitability measures to enhance their market valuations.

Sources

Compiled by UB Ventures based on Next SaaS Media Primary and SaaS Multiple Data.

Extended readings:

[PDF] SaaS Annual Report - UB Ventures

Takashi KAWABATA on LinkedIn: SaaS Annual Report 2023-2024

Vertical SaaS Investment and the “2024 Problem”

Key Insights

Investment Trends: There is a notable increase in investments in vertical SaaS addressing the impending “2024 problem” in Japan, characterized by a severe labor shortage due to new regulations on overtime work.
Leading Companies: CADDi has emerged as a significant player in this space, raising large-scale financing for data management SaaS aimed at manufacturing and other sectors.

Total Funds Raised in Vertical SaaS by Industry

Industry	Number of Companies	Total Funds Raised (JPY mn)
Healthcare / welfare	29	87,450
Manufacturing	19	34,385
Wholesale / retail	14	29,645
Accommodation / restaurant services	23	29,348
Construction	12	28,356
Real estate / goods rental	18	27,605
Transportation / postal service	15	23,643
Education / study support	7	15,830
Lifestyle services / entertainment	5	8,926
Information / communication	1	4,555
Academic research, professional and technical services	2	3,257
Finance / insurance	2	1,925
Services	1	811
Public services (excluding others)	1	160
Agriculture / forestry	1	79
Others	1	78

Insights on Fund Distribution

Healthcare and Welfare: The largest investment area with a staggering JPY 87.45 billion, likely reflecting the need for innovative solutions amid demographic changes.
Manufacturing Sector: Second highest at JPY 34.39 billion, highlighting the growth potential in business processes as companies look to improve efficiency.

Addressing the Labor Shortage

2024 Problem: The term refers to the labor shortage anticipated due to reforms in labor laws in Japan, impacting various industries significantly.
SaaS Providers Rising to the Challenge:
- X Mile: A SaaS for non-desk workers, has increased installations to 10,000 offices and raised JPY 1.8 billion in Series B funding.
- Ascend: Focused on logistics, expanded its cloud-based system, Logix, and successfully underwent Series A financing.

Future Outlook

Companies like CADDi are set to expand into U.S. markets, indicating a global interest in resolving labor inefficiencies through SaaS investments.
Opportunity for Startups: The ongoing labor shortage presents startups with unique challenges and opportunities to innovate within traditional industries by leveraging SaaS technology.

Conclusion

The data reflects both a trend towards increased funding in vertical SaaS and the urgent need for solutions to address Japan's impending labor challenges. This landscape is ripe for innovation as companies seek to enhance efficiency in response to the "2024 problem."

Extended readings:

laiye.com

新品タグ付きゲラルディーニトートバッグ [uT48la] - Laiye

studylib.net

IIMA Prep Book 2023-2024 - Studylib

Product Portfolios of Top Listed SaaS Companies in Japan

Overview of SaaS Companies with ARR Over JPY 10 bn

Key Companies and Their ARR Breakdown

Company	ARR (JPY bn)	Notable Products
Sakura	32.47	-
Sansan	29.43	- Business card management
Cybozu	24.01	- Office collaboration software
freee	23.25	- Accounting software
Money Forward	23.15	- Financial management tools
infomart	13.14	- Business information service
GMO Payment Gateway	10.62	- Payment processing services

Product Insights:

Growth Drivers: The report highlights that in 2023, a "Compound Strategy" is emerging, where companies expand by launching multiple products rather than focusing on a single product. This approach is attracting strong interest among Japanese SaaS startups.
Diverse Applications: Companies like Money Forward and freee are diversifying from their core accounting products into fields such as HR management and SaaS ID management, indicating a trend towards comprehensive service offerings.

Additional Insights:

Post-IPO Product Launches: The expansion into new product areas is often seen in companies after they go public, such as RAKUS’ Rakuraku Series and Cybozu's kintone, which have become key growth drivers for these companies.
Future Growth Strategies: Historically, startups grew organically, but there is a notable shift towards mergers and acquisitions (M&A) as a means to drive growth. Companies will increasingly be assessed on the number of products they have that generate JPY 10 billion in annual recurring revenue (ARR).

Performance Indicators:

ARR Calculations: The ARR calculation methods are noted to be consistent with previous analyses, ensuring a reliable measure of company performance.
Market Dynamics: Companies are now expected to innovate and diversify to meet market demands and maintain competitive advantages, as indicated by growth percentages and strategic shifts observed in the sector.

Conclusion

The landscape of SaaS companies in Japan is evolving, with a strong focus on multi-product strategies and diversification into various business domains. This trend signifies an opportunity for companies to not only sustain but also enhance their market positions by leveraging a range of software solutions.

Extended readings:

[PDF] Untitled - UB Ventures

Jin Hsueh - UB Ventures reports on Japan SaaS market - LinkedIn

SaaS Annual Report 2022 – The Key to Industry Transformation

2023年における日本のSaaS企業によるM&Aの記録

高プロフィールなM&A（2023年）

Release Date	Buyer	Target	Target Business	Feature
2023.12.11	ITANDI	Housmart	System for realtors	Integration of vertical SaaS and startup
2023.10.4	EQT	HRBrain	Talent management system	PE investment in later-stage startup
2023.10.4	Kaminashi	StatHack	Image recognition AI model	Acquisition of startup for AI technology
2023.10.2	SmartHR	Metaps Cloud	SaaS centralized management	M&A as expansion strategy by later-stage startup
2023.7.21	Bengo4.com	Lisse	AI contract review	Multi-product expansion in legal tech
2023.1.20	freee	sweeep	Invoice management	Expanding functional coverage in ERP domain

主な洞察

SaaS企業のM&A: 2023年には約20件のSaaS企業によるM&A（マイナーな買収を含む）が記録され、これは過去最高の数値である。ビジネス拡大に関連した取引の他に、後期スタートアップに対するPE（プライベート・エクイティ）ファンドからのセカンダリー投資が見られる。
市場動向 :
- PEファンドの投資 : European PE fund EQTがHRBrainの過半数株を取得。この企業は、IPOを選ばずに市場価値をJPY 100億に引き上げることを目指している。
- マルチプロダクト戦略 : 特定のドメインでユーザーを獲得した後のシナジーやクロスセリングを狙ったM&Aが増加傾向にある。
- AI技術の取得 : ジェネレーティブAIの台頭により、法律関連などAIとの高い親和性を持つ企業が投資を加速している。

データ分析

M&A動向 :
- 2016年から2023年までのSaaS企業による買収およびターゲットの数を示したチャートがある。特に2023年には顕著な増加を見せており、2022年の16件から2023年には2件の購入に対して多くのターゲットが存在している。

結論

2023年は日本のSaaS企業にとって、M&Aが特に活発な年となり、多様な戦略が採用される中、AI技術と各社のコアバリューに基づく連携が重要視されている。

Extended readings:

www.dreamnews.jp

Panorama Data Insightsの専門リサーチアナリストが読み解く

note.com

国内SaaS企業M&Aデータ 2024年4月版 - note

law.asia

M&Aのメカニズム：インド、日本、ロシア - Law.asia

Can Japan Overcome the World’s Fastest Decline of Its Workforce?

Overview

Japan's labor force is declining at the fastest rate globally, leading to significant concerns about its economic stability and growth. This report outlines the implications of this demographic shift and potential strategies for recovery.

Key Points

Labor Force Decline in Japan

Current Trends: Japan's labor force has decreased by approximately 14% over the last 20 years. It is projected to continue declining over the next decade.
- Insight: This decline is the result of several factors, including a low birthrate and an aging population, which may challenge economic productivity.

Comparison of Working-Age Population Changes (2000-2030)

Country	Relative Changes in Working-Age Population (Year 2000=100)
India	175%
Australia	150%
United States	125%
China	125%
South Korea	100%
Germany	100%
Japan	75%

Insight: This table demonstrates a stark contrast between Japan and other nations, indicating Japan's significant demographic challenges compared to growth in other economies.

GDP and Labor Implications

GDP Formula: $\text{GDP (Value Added)} = \text{Labor Productivity} \times \text{Working Population}$ $GDP (Value Added) = Labor Productivity \times Working Population$
- Insight: Japan faces low labor productivity, the lowest level in developed countries, exacerbating the impact of a declining working population.

Strategies for Economic Stability

Immediate Options:
1. Improving Productivity: Utilizing technologies such as SaaS (Software as a Service), robotics, and automation to enhance labor productivity.
2. Expanding Workforce: Reskilling the current workforce and recruiting talent from overseas can help mitigate decline.
Long-Term Policies: Addressing the declining birthrate through family-friendly policies and incentives that promote higher birth rates, although these initiatives tend to have limited immediate effects.

Challenges for Japan

Projected Decline: A 40% decrease in the working population is expected over the next 40 years.
Conclusion: Without immediate and effective strategies to boost labor productivity and workforce numbers, Japan's economy may face severe challenges.

Final Thoughts

Japan's demographic decline poses a unique puzzle that requires innovative solutions. Focusing on technology and global talent acquisition may provide pathways to economic sustainability in the face of a shrinking workforce.

Extended readings:

www.elibrary.imf.org

Chapter 6. Japan's Growth Challenge: Needs and Potential in

www.imf.org

Managing Japan's Shrinking Labor Force With AI and Robots

www.mckinsey.com

[PDF] THE FUTURE OF JAPAN: REIGNITING PRODUCTIVITY AND ...

24 Startups Tackling the Challenges of a Depopulating Society

Overview

This note captures insights into startups aimed at addressing societal challenges due to depopulation, as outlined in the SaaS Annual Report 2023-2034. Each startup focuses on distinct sectors contributing to improved efficiency and productivity.

Startup Category Overview

Sector	Startup Name	Description	Stage
Agriculture, Forestry	DeepForest Technologies	Improving efficiency of forest management with DF Scanner, an analytic software using aerial drone imagery.	Seed
Fisheries	Regional Fish	Combining breeding technologies including genome editing with smart aquaculture technology.	B
Livestock	Eco-Pork	Building a sustainable livestock industry through Porker, a management tool for pig farming.	B
Construction	SoftRoid	Improving productivity at construction sites with Zenshot, an AI service for remote construction management.	Seed
Manufacturing	Skillnote	Optimizing personnel management in the manufacturing industry with Skillnote, a skill management system.	B
Utilities	ASIOT	Significant labor savings with automatic meter reading SaaS.	Pre-A
Local Government	Graffer	Digitalizing municipal government operations with Graffer, a platform for public administration.	B
Transportation/Post Services	XMile	SaaS for non-desk service providers that aims to resolve labor shortage and low productivity.	B
Finance/Insurance	enpay	Eliminating inefficient cash collection at childcare and education facilities.	B
Real Estate	THIRD	AI cloud system for building management that transforms building maintenance from labor-intensive to data-intensive.	B
Food and Beverage Service	Timee	Part-time job service matching workers' schedules with stores looking for help.	D
Accommodation	Edeyans	SaaS for hotel housekeeping management, aiming to become an infrastructure for the hotel industry.	A
Lifestyle Services and Entertainment	hacomono	Customer management/reservation system that streamlines store staff operations.	C
Education and Study Support	Monoxer	Reforming teacher workflows through a SaaS service supporting memory retention.	B
Healthcare/Welfare	Henry	Cloud-based electronic medical record system for efficiency and cost reduction at small/mid-sized hospitals.	B
Wholesale/Retail	XMart	A platform that digitizes the operations of restaurants and wholesalers.	B
Technology	al+	Aiming to eliminate unproductive labor with personal artificial intelligence.	D
Super-Aging Society	Triple W	Supporting elderly independence with a device that predicts urination.	D
Well-being	HataLuck and Person	Enhancing shift workers' satisfaction and productivity with a store management tool.	C
Wage Improvement	WorkCircle	Enabling workers to make the best career choices through an anonymous career-themed social media platform.	Seed
Foreign Workers	AIRVISA	Cloud software for visa management for foreign employees; a subsidiary of SmartHR.	100%
End of Life/Inheritances	famitra	Supporting family trust formation for asset management in the 100-year life era.	A
Female Empowerment, Femtech	mederi	Supporting women’s health with an online pill prescription service.	C
Sustainable Energy	Challenergy	Aiming for widespread use of wind power in Japan with a propellerless Magnus Wind Turbine.	C

Insights and Key Ideas

Technology Integration: Many of these startups leverage advanced technology (like AI and cloud computing) to enhance productivity and operational efficiency.
Focus on Labor Shortages: Multiple companies specifically address labor shortages, reflecting a broader societal issue amidst depopulation trends.
Diverse Applications: The range of sectors highlighted indicates a comprehensive approach to tackling various aspects of societal challenges related to a decreasing population.
Sustainability Considerations: Startups like Challenergy point toward a trend in sustainable solutions, emphasizing the need for environmentally friendly innovations.
Empowerment Initiatives: The presence of Femtech startups underscores the increasing focus on women’s health and empowerment in business strategies.

This structured note provides a clear and comprehensive overview of the startups and their respective roles in addressing depopulation challenges.

Extended readings:

The #1 Biggest Issue for SaaS Startups In The End - LinkedIn

joeprocopio.com

The Downfall Of SaaS And The Impact On Startups - Joe Procopio

What Do the Top 50 Startups of 2024 Have in Common? - LinkedIn

Notes on Tackling Population Decline

Overview

The report from UB Ventures outlines eight key themes aimed at addressing population decline through measures focused on labor productivity and expanding the labor population.

Labor Productivity Measures

Tech-driven Productivity Improvement
- Description: Enhancing work efficiency by adopting best practices in vertical Software as a Service (SaaS), automation, robotics, and artificial intelligence (AI).
- Insight: Leveraging technology can streamline operations and reduce manual labor, leading to increased output per worker.
Age Tech to Support a Super-aging Society
- Description: Developing next-generation social infrastructure to support elderly care and related services, ensuring productivity remains high among the working generation.
- Insight: Proactive care solutions can help maintain a healthy workforce, essential in societies with aging populations.
Well-being Tech to Improve the Satisfaction of Workers
- Description: Innovations aimed at enhancing individual fulfillment and productivity within a limited workforce.
- Insight: Addressing mental health and job satisfaction can lead to reduced turnover and increased overall productivity.
HR and Payroll Infrastructure Towards Improving Wages
- Description: Establishing systems for fair wage negotiations and enhancing transparency via HR/payroll databases and matching platforms.
- Insight: Fair compensation leads to higher employee morale and retention, crucial for maintaining a stable workforce.

Labor Population Measures

Reception and Support of Foreign Workers
- Description: Creating shared services and multilingual support systems to facilitate the integration of highly skilled foreign workers.
- Insight: Embracing talent from abroad can fill essential gaps in the workforce and promote diversity.
Reskilling of Senior Generation
- Description: Offering reskilling programs to enable older workers to expand their job options and remain active in the workforce.
- Insight: Utilizing experienced workers can provide mentorship and retain valuable knowledge within organizations.
Women's Empowerment in the Workforce and Femtech
- Description: Initiatives to diversify workplaces by addressing gender-related barriers through social change and technological advancements.
- Insight: Empowering women in the workforce not only promotes equality but can also help mitigate labor shortages.
Sustainable Energy and Raising Food Self-sufficiency
- Description: Advocating for renewable energy and agricultural technologies to improve self-sufficiency in energy and food production.
- Insight: Sustainability initiatives are likely tied to demographic stability, making them crucial for long-term population health.

Conclusion

These eight themes collectively provide a strategic approach to tackling population decline by improving labor productivity and expanding the workforce through innovative practices and inclusive measures. The integration of technology and focus on well-being and empowerment forms the backbone of these strategies.

Extended readings:

www.un.org

Harnessing the economic dividends from demographic change

www.imf.org

Latin America's Shifting Demographics Could Undercut Growth

www.americanprogress.org

Investing in Workers Can Further Ease Inflation and Boost Economic ...

Issues and Solutions in Employment of Foreign Workers in Japan

Fact

Japan has a declining workforce and is becoming a significant immigration destination, with immigrants comprising a crucial part of the essential workforce.
Foreign workers increased 2.5 times in the past decade.

Employment Filings Data (2008-2022)

Year	Foreign Workers (Thousands)
2008	486
2009	563
2010	650
2011	686
2012	682
2013	718
2014	788
2015	908
2016	1,084
2017	1,279
2018	1,659
2019	1,659
2020	1,724
2021	1,727
2022	1,820

Insight: The increase in foreign workers reflects a rising demand for labor in Japan, highlighting the country's struggles with a shrinking native workforce.

Percentage of Foreign Workers in Young Labor Force (Ages 20-39)

Sector	Percentage of Foreign Workers (%)
Agriculture	21
Fishery	18.8
Manufacturing	8.9
Construction	5.1

Insight: The data indicates that foreign workers are more prevalent in certain sectors, especially agriculture and fishery, which may signal areas where labor shortages are most acute.

Needs

Residency Management: Efficiently managing the residency status of foreign workers.
Multi-language Communication: Ensuring clear communication across language barriers.
Compliance Management: Adhering to regulations governing the employment of foreign nationals.
Online Visa Application: Streamlining the visa application process for foreign employees.

Insight: Addressing these needs is critical for companies striving to integrate foreign workers into their workforce effectively.

Solution: AIRVISA

Description: Cloud-based software designed to assist companies in managing and applying for visas for foreign employees.
Benefits: Offers one-stop support for research, management, and procedures related to the employment of foreign nationals.

Insight: Implementing advanced technologies like AIRVISA can help Japanese companies navigate the complexities of foreign labor laws and visa procedures effectively.

Contextual Challenges

Despite the growing number of foreign workers, securing employees is becoming more challenging due to the weak yen and competition from countries like South Korea.
Japanese companies need to improve their attractiveness as employers by offering support for visa processes and overcoming language barriers.

Insight: The interplay of economic factors and workforce dynamics necessitates innovative recruitment strategies to attract foreign talent.

Conclusion

Japan’s workforce challenges present both opportunities and challenges for foreign labor. By utilizing technology and addressing key needs, companies can successfully employ foreign workers and contribute to the economy's recovery amid demographic shifts.

Extended readings:

jobsinjapan.com

Challenges in Japan's Labor Market | JOBS IN JAPAN

motto-jp.com

The Challenges of a Foreign Worker in Japan | Motto Japan Media

www.oecd-ilibrary.org

[PDF] 1 Summary of the evaluation of Japan's labour migration system and ...

Good and Bad Mindsets for SaaS Expansion

Overview

This document outlines the essential good and bad mindsets for Software as a Service (SaaS) expansion, particularly focusing on regional markets. Insights are derived from an interview with Mr. Kazuhiro Imamura, a pioneer in regional expansion.

Good Mindsets

Aspect	Good Mindset	Insights
Partner Relationship	Commit to the success of your partner	Establishing a strong partnership is crucial for mutual growth. Prioritize their needs and success.
Position of Cloud Services	While online communication is spreading, face-to-face interaction is more important than in Tokyo	Personal interactions can build trust and deeper understanding of the partner's needs.
Promoting SaaS	Understand the customer’s business, culture, and level of IT literacy and establish common ground using digital technology	Tailor your approach based on the cultural context and technological capabilities of your clients.
Setting Goals and KPIs	Collaborate with regional banks and create community through regional networks	Leveraging local networks can enhance credibility and build a supportive ecosystem.
	Correctly understand your market and the customer’s context before planning viable outcomes and steps	Researching market specifics ensures effective strategy and implementation.

Bad Mindsets

Aspect	Bad Mindset	Insights
Partner Relationship	Expect the partner to sell for you	This undermines the partner's role; success is a shared responsibility.
Position of Cloud Services	Assume that online communication is a given after the pandemic	Over-relying on digital communication can alienate partners who prefer direct engagement.
Promoting SaaS	Talk about the actual functions and benefits of the SaaS product itself	Focus should be on providing solutions to partners’ problems rather than on product features alone.
Setting Goals and KPIs	Conduct sales activities without engagement with the region	Lack of local engagement can lead to misunderstandings and ineffective strategies.
	Seek similar results to what was achieved in Tokyo from the first year	Expecting identical outcomes across different regions is unrealistic and can set up for failure.

Key Insights from Mr. Kazuhiro Imamura

The principal factor in regional SaaS expansion is a strong commitment to tailored sales activities that match the local context.
Even partnerships with established local IT companies require continuous effort and adaptability to thrive.
Understanding local markets and engaging deeply with local communities is essential for successful expansion.

Background of Mr. Kazuhiro Imamura

Joined Salesforce.com in 2004, leading regional market development, starting in Kyushu and Okinawa.
Served as an executive officer before joining Uzabase Group to focus on B2B SaaS.
Currently supports digitalization efforts in regional markets as an advisor for SystemForest, Inc.

Extended readings:

osf.io

https://osf.io/mepkc/?action=download

SaaS Annual Report 2023-2024

Innovation in a Depopulating Society

Key Points:

Title of Report: SaaS Annual Report 2023-2024
- This report focuses on the theme of innovation in the context of societal depopulation.
Main Theme: Innovation in a Depopulating Society
- Insight: Depopulation can lead to economic challenges, but it also opens avenues for innovation, particularly in technology and service delivery. Businesses may need to pivot their strategies to cater to a shrinking customer base.

Additional Information:

SaaS (Software as a Service) : A software distribution model in which applications are hosted in the cloud and accessed via the internet. This model allows for flexibility and scalability, which can be crucial in adapting to changing population dynamics.
Depopulation: Refers to the decline in population due to factors like lower birth rates, increased mortality rates, or migration. Understanding this trend is vital for businesses as they strategize for future growth or sustainability.

Contextual Note:

The report suggests that while depopulation poses risks, it concurrently serves as a catalyst for innovative solutions in various sectors, including healthcare, education, and technology. Companies must be proactive in embracing these challenges as opportunities for growth.

Extended readings:

SaaS Industry Report 2024: A Comprehensive Overview - OMNIUS

www.omnius.so

www.rib-software.com

Top 13 SaaS Trends That Will Disrupt 2024 & The Future

UB Ventures, Inc. Overview

Portfolio Companies

As of February 2024, UB Ventures, Inc. has a total of 32 portfolio companies. These companies span various sectors reflecting the innovative focus of UB Ventures, particularly in response to societal trends.

Notable Portfolio Companies:

Company Name
Alp, Inc.
alt
ASIOT
Canly
CarbGem
Commune
Conocer
Cloudpick
Denta Light
DIGGLE
EventX
Flyle
Harmonia
Kuzen
LayerX
Monochrome
Monoxer
ONE CAREER
Peco
PR Table
PRONI
Quando
Realm
Retreat
Restar
SoftRoid
SpreadY
Veer
WorkCircle

Insights

Focus on Depopulation: The theme of addressing depopulation indicates a strategic investment direction aimed at tackling demographic challenges, particularly relevant in countries like Japan.
Diverse Portfolio: The range of companies shows a variety of innovative technologies, suggesting that UB Ventures is looking for disruptive startups that can create significant societal impact.
Expansion Potential: With a focus on both Japan and Asia, there's potential for cross-border collaborations and investments, enhancing their reach and influence.

Conclusion

UB Ventures, Inc. positions itself as a forward-thinking venture capital firm, dedicated to harnessing technology to solve modern societal issues. The diverse portfolio illustrates a strategic commitment to innovation in critical areas.

Extended readings:

medium.com

UB Ventures establishes 10 Billion Yen innovation-focused fund for ...

tracxn.com

UB Ventures - Top portfolio companies (Jul, 2024) - Tracxn

globalventuring.com

Japan's Uzabase launches $64m second investment fund -

Notes on Japan's Social Infrastructure and Depopulation Issues

Paradigm Shift Due to Declining Workforce

Japan is experiencing a significant transformation in its social infrastructure primarily due to a declining workforce.
This shift necessitates innovative solutions to address emerging challenges.

Severe Labor Shortages

Affected Industries:
- Drivers
- Mechanics
- Construction workers
Impact:
- Shortages in thousands, leading to dependency on experienced elderly workers.
- Failure in transferring skills results in mass business closures.
- Breakdown of logistics, infrastructure, and maintenance networks.

Lifeline Costs Skyrocketing

Bridges:
- 52% of bridges are projected to be over 50 years old by 2029.
Water Costs:
- Water bills anticipated to be 1.4 times higher by 2040.
- Increasing costs of providing utilities (electricity, gas, water) in remote areas.
Cargo Shortages:
- 1.1 billion tons of cargo (approximately one-third of total demand) cannot be delivered due to projected driver shortages by 2030.

Entering a Super-aging Society

Demographics:
- One in five individuals will be over the age of 75 by 2025.
Implications:
- Workforce distribution increasingly strained due to heightened demand for nursing care.
- Insufficient infrastructure to support a society with an expected 1.6 million deaths annually.

Innovation as a Solution

Core Message:
- "Innovation is essential in a depopulating society."
Focus Areas for Startups:
- Vertical Focused: Innovation within legacy industries to modernize practices.
- Future of Work: Development of new working models to adapt to changing demands.
- Hardware Enabled: Integration of advanced hardware solutions to improve efficiency.
- Industrial AI/IoT: Utilization of industrial sensing technology to enhance operational capabilities.
- Product-Led: Strategies centered around product innovation to tackle emerging needs.
- Automation: Enhancing processes through automation to mitigate labor shortages.
- Marketplace and Metaverse: Exploring digital solutions to connect supply and demand in innovative ways.

These notes underscore the critical situation Japan faces due to its declining workforce, highlighting both the challenges and the innovative avenues that can be pursued to mitigate the effects of depopulation.

Extended readings:

carnegieendowment.org

Japan's Aging Society as a Technological Opportunity

pmc.ncbi.nlm.nih.gov

Population aging in Japan: policy transformation, sustainable ...

eastasiaforum.org

Combating depopulation in Japan | East Asia Forum

SaaS is Now a Mature Industry. Will It Serve as Infrastructure to Support a Depopulating Society?

Overview of the SaaS Market in Japan

Growth Despite Stock Price Declines:
- In 2024, Japan's top SaaS company exceeded JPY 30 billion in Annual Recurring Revenue (ARR).
- Strong fundamentals indicate SaaS has become a significant industry in Japan despite investor concerns.
M&A Activity:
- The number of Mergers and Acquisitions (M&A) reached a record of 16 in 2023, reflecting a trend toward consolidation among leading SaaS companies.
Market Drivers for Growth:
- Multi-product offerings and expanding sales to large enterprises and SMEs (Small and Medium-sized Enterprises) drive growth.
- Traditional sectors adopting SaaS for efficiency.

Vertical SaaS and Social Issues

Emerging Trend of Vertical SaaS:
- There is an increasing number of SaaS solutions targeting social issues specific to Japan, diverging from U.S. models.
- This trend is described as "time-machine management," focusing on addressing Japan's unique challenges, such as labor shortages in legacy industries (construction, manufacturing, logistics).
Labor Shortages:
- Japan has the fastest-declining population globally, leading to a pronounced labor shortage.
- Legacy industries are compelled to either increase workforce numbers or enhance productivity per worker, raising expectations for vertical SaaS to deliver solutions.

Report Structure and Focus Areas

Sections of the Report:
- Overview: Latest data on the SaaS market in Japan.
- Vertical SaaS: Analysis of growth drivers within this rapidly growing sector.
- Depopulating Society: In-depth examination of challenges and opportunities presented by a declining population.
Macroeconomic Trends:
- Japan's economic conditions differ from those in the U.S., including interest rate disparities and demographic shifts, prompting a unique path for SaaS development.

Opportunities and Challenges

Japan as a Case Study:
- Japan's experience with depopulation presents an opportunity to develop innovative solutions that could be models for other countries facing similar challenges.
SaaS Industry Maturity:
- The SaaS sector is reaching a stage of maturity, prompting questions about its ability to address significant social issues arising from population decline.
Value of Each Player:
- The potential of SaaS companies will be tested as they tackle pressing societal problems and demonstrate their true value in the evolving landscape.

Key Insights from Osamu Iwasawa

Role of Leadership:
- Osamu Iwasawa emphasizes the creation of innovation to address the challenges of a depopulating society, drawing from experience in investment and technology.
SaaS Evolution:
- There is a shift from purely quantitative growth metrics to qualitative changes within the SaaS ecosystem, indicating a move toward sustainable and impactful solutions.

By focusing on these key themes and insights, stakeholders in the SaaS industry can better navigate the complexities of a mature market while actively addressing societal challenges.

Extended readings:

Osamu Iwasawa on LinkedIn: SaaS Annual Report 2023-2024

photes.io

SaaS Resilience in Japan's Depopulating Landscape - Photes.io

"Japan SaaS Insights 2023" Released - One Capital, Inc

Top Vertical SaaS Startups in Japan by Valuation

Overview

The chart presents the top 20 vertical Software as a Service (SaaS) startups in Japan based on their valuations. It highlights funding received in 2023 versus before 2023 and reveals trends in various sectors.

Key Insights

Vertical SaaS: These are specialized SaaS solutions tailored for specific industries. The growth of vertical SaaS indicates how technology is being integrated into traditional sectors to improve efficiency and services.
Funding Landscape: Despite challenges in large-scale financing, startups continue to attract investment, particularly in key industries like manufacturing and healthcare.

Top 20 Vertical SaaS Startups by Valuation

Rank	Company	Valuation (JPY mn)	Sector	Funded Year
1	ANDPAD	85,380	Construction	2023
2	CADDi	66,016	Manufacturing	2023
3	atama plus	52,198	Education / Study Support	2023
4	KAKEHASHI	42,309	Wholesale/Retail	Before 2023
5	Linc well	32,058	Healthcare/Welfare	2023
6	NUR*VE	31,693	Real Estate / Goods Rental	2023
7	CBcloud	31,248	Transportation / Postal Service	Before 2023
8	Ubie	31,181	Healthcare/Welfare	Before 2023
9	iYell	22,163	Real Estate / Goods Rental	Before 2023
10	FairyDevices	21,101	Information/Communication	Before 2023
11	Unifa	17,428	Healthcare/Welfare	Before 2023
12	WealthPark	14,864	Real Estate / Goods Rental	Before 2023
13	Frontier Field	12,472	Healthcare/Welfare	Before 2023
14	Toreta	12,158	Accommodation/Restaurant Services	Before 2023
15	hacomono	11,999	Lifestyle Services / Entertainment	Before 2023
16	Nealle	11,770	Real Estate / Goods Rental	Before 2023
17	Hacobu	10,619	Transportation / Postal Service	Before 2023
18	Monoxer	10,101	Education / Study Support	Before 2023
19	DennoKotsu	8,942	Transportation / Postal Service	Before 2023
20	Mnes	8,593	Healthcare/Welfare	Before 2023

Additional Information

In 2023, CADDi and KAKEHASHI led in valuations, with significant fund inflows marking their growth.
Key sectors such as manufacturing (represented by FairyDevices) and mobility (represented by Nealle) are emerging as vital areas for innovation and investment.
The funding climate remains challenging, but there are still positive signs of investment, as seen with OPENLOGI, which secured JPY 3.55 billion in February 2024 for its Series D round.

Understanding these trends can provide insights into the future of vertical SaaS in Japan and highlight opportunities for growth in various sectors.

Extended readings:

onecapital.jp

Osamu Iwasawa on LinkedIn: SaaS Annual Report 2023-2024

onecapital.jp

Japanese Vertical SaaS Industry Landscape 2022 Edition

SaaS Annual Report 2023-2024

Overview

The document pertains to the SaaS (Software as a Service) Annual Report for the fiscal year 2023-2024.
SaaS is a cloud-based service where instead of downloading software on your desktop PC or business network to run and update, you instead access an application via your web browser.

Key Components

SaaS Model:
- Providers host applications and make them available to customers over the Internet.
- Common benefits include reduced costs, scalability, automatic updates, and accessibility from anywhere with an Internet connection.
UB Ventures:
- The report is published by UB Ventures, suggesting involvement in technology investment or consulting within the SaaS sector.

Insights and Ideas

Market Trends:
- Increasing migration of businesses to cloud-based solutions due to flexibility and cost-effectiveness.
- Enhanced focus on security and compliance standards as regulations evolve.
Investment Insights:
- Investors should be aware of key players and trends within the SaaS market, potentially leading to identifying promising investment opportunities.
Future Projections:
- The year might witness innovations in AI-driven SaaS applications that enhance user experience and operational efficiency.

Conclusion

This report serves as an essential resource for stakeholders interested in the SaaS landscape, helping them understand market dynamics, investment opportunities, and technological advancements expected in 2023-2024.

Extended readings:

www.globenewswire.com

North America Software as a Service Analysis Report 2024:

www.custify.com

The Future of SaaS: Top Trends and Predictions in 2024 and Beyond

Top SaaS Trends to Watch in 2024: AI, Low-Code, and More

UB Ventures SaaS Annual Report 2023-2024

Overall Direction

Representative Director, Managing Partner: Osamu Iwasawa
- The key figure responsible for guiding the strategic direction of UB Ventures.
Principal: Takuya Oshika
- Oversees specific principal functions, likely focusing on investment strategies.
Chief Analyst: Akio Hayafune
- Responsible for analyzing market trends and SaaS performance.

Editing, Research, Production Assistance

Senior Associate: Shinya Iwashita
- Involved in high-level editing and research to ensure quality.
Entrepreneur-in-Residence: Takuya Maehashi
- A role typically filled by an experienced entrepreneur who provides insights and guidance.
Intern: Atsushi Kawazoe
- Supports with various tasks, gaining experience in the field.

Design

Designer: Hajime Aomatsu (sukku)
- Responsible for the visual aspects of the report, ensuring it is professionally presented.

Interviewees

Kazuhiro Imamura, CSO, SystemForest Inc.
- Provides insights regarding cybersecurity or system management within SaaS.
Gafar Ahmed, CEO and Founder, AIR VISA Inc.
- Focuses on the intersection of travel technologies and payment solutions in SaaS.
Hiroki Nozaki, CEO, SoftRoid Inc.
- Represents advancements in software solutions and automation.

Data References

INITIAL: Initial
- Likely a data provider or analytics firm referenced in the report.
Next SaaS Media Primary: Next SaaS Media
- A media platform that may offer insights and reports on the SaaS industry.

Inquiries

Contact: contact@ubv.vc
Website: UB Ventures

Copyright Information

This report is the copyrighted work of UB Ventures, Inc. and is protected by copyright law. Unauthorized reproduction, adaptation, or distribution is prohibited. The contents of this report are not investment recommendations.

Insights

The report appears to offer significant insights into the SaaS industry, with a focus on expert interviews, highlighting the importance of informed perspectives in strategic decision-making.
The diverse roles suggest a comprehensive approach toward both analytical research and hands-on entrepreneurial experience, which are critical in navigating the fast-paced SaaS landscape.

Extended readings:

Chiamin Lai on LinkedIn: SaaS Annual Report 2023-2024

x.com

UB Ventures - X