India and Japan have had a long history of friendly trade relations and in recent years, this has trickled down to the startup ecosystem. With investment funds such as the $100 Bn SoftBank Vision Fund and Akatsuki Entertainment Technology (AET) Fund, which launched a $50 Mn India investment fund in April 2019, have been working alongside the Japanese government\u2019s METI to bring Japanese investments and startups to the Indian market such as through the Indo-Japan Fund of Funds.\r\n\r\nIndia PM Narendra Modi\u2019s visit this week to the G20 Summit in Osaka to discuss global trade agreements, and the Modi governments past interactions with Japan PM Shinz\u014d Abe have emphasised the close relationship between the two countries.\r\n\r\nIn the private sphere, the Deloitte Tohmatsu Venture Support (DTVS) has been working in the Indian ecosystem for a number of years. DTVS\u2019s network currently consists of over 3,000 startups, 500 Japanese firms and conglomerates, VCs and government ministries. The company is looking to connect Japanese investors with startups and businesses in India to help develop business strategies, for fund-raising and M&A agreements.\r\n\r\nThis June, DTVS appointed Yuma Saito as the Managing Director. Saito had been serving as the General Manager of DTVS. He has been with Deloitte Tohmatsu in different roles since 2006 and was instrumental in the launch of a new business within DTVS in 2010. In 2016, DTVS had invited applications from Indian IoT startups for its accelerator programme in Japan. The 10 startups were selected for the program, so DTVS has had a presence in India for many years now.\r\n\r\nSpeaking to Inc42, Saito said that India represents an exciting opportunity for the startup ecosystem in Japan. \u201cWe do believe very strongly in a \u2018Startup First\u2019 philosophy and we built up the company on this principle for the greater good of the ecosystem,\u201d he said.\r\n\r\nHe further added \u201cJapan has the capital and tech advantage, and is seeking new growth opportunities. On the other hand, India is seeking more capital and expertise in this growth stage to satisfy the rising middle-class needs.\u201d\r\nIt is not always possible for corporate strategy teams sitting in Japan to know about good quality startups in far off ecosystems like Silicon Valley, Bengaluru, Singapore, and Israel. - Yuma Saito, Deloitte Tohmatsu Venture Support\r\nSaito started in Deloitte Japan as a certified CPA in the audit division and began assisting startups. He recalled he had difficulties getting his superiors and peers to support startups, but since his father was an entrepreneur in Japan, he had a passion for startups. \u201cSeeing the hardships faced by budding entrepreneurs in Japan back then, I had made up my mind to support startups in Japan in any way possible.\u201d\r\n\r\nIn a recent conversation with Inc42, Saito opened up about the sectors that have attracted Japanese investors to India, and the Indian startup sectors that look the most promising from an Indo-Japan collaboration point of view.\r\n\r\nBelow are edited excerpts from the interview.\r\nOn DTVS And Its Initiatives\r\nInc42: Deloitte Tohmatsu Venture Support supports startups, businesses and government agencies achieve collaborative innovation. Is it your opinion that the public and private innovation have to grow simultaneously, or does one define the other?\u00a0\r\n\r\nYuma Saito: In my humble opinion, from what we have seen work in Japan, the government and public sector\u2019s primary role is to understand what is lacking in the current ecosystem and then implement the policies that would alleviate the missing parts. Their job is not just to identify the shortcomings but to make the first model case. Governments should implement policy that would aid such innovation. Therefore, the question about the relationship is that the government always needs to be ahead of the private sector. For example, the case of Abenomics and how it implemented the policies in Japan to make startups more active even before they become popular content in the media. There are also other government-backed projects like J-startup led by the Japanese government have helped take Japanese startups to go abroad which had always been a desirable yet rare thing for them.\r\n\r\nInc42: What\u2019s the need for something like DTVS in the Japanese market? How has the ecosystem benefitted from DTVS initiatives?\r\n\r\nYuma Saito: Around 10 years ago when we started, startups were not really recognised by people in Japanese society. At the same time, Japanese companies were starting to lose their edge in the global market as well. They had the talent and business assets but not people who can challenge and risk money such as VCs or PE firms. On the other hand, startups and VCs have talent and risk money. They have complementary assets.\r\n\r\nDTVS is playing the bridge role; our uniqueness is that Deloitte has been working with large corporations for a long time and DTVS has been close to most Japanese startups in the ecosystem owing to its pioneering role. Our uniqueness is also our global scale and footprint which makes us able to send a startup overseas or bring them inbound into the Japanese market. We have the ability to help Japanese corporations find the right startups to invest strategically overseas.\r\n\r\nInc42: How does DTVS approach the Indian market? Is it mainly about working with startups or do you also have relationships with corporates here?\u00a0\r\n\r\nYuma Saito: Our first approach would be connecting the Indian startups and large Japanese corporations. In order to do so, I want to start by creating a successful collaboration case of matching an Indian startup to the Japanese industry. In other words, I want to make Japanese companies invest more in India. In the mid-long term, of course, we want to send not only large corporations but Japanese startups to the Indian market and do business with Indian large corporations so we will try to make more relationships with Indian stakeholders too.\r\n\r\nInc42: In addition to its investments, how does DTVS plan to support the Indian startup ecosystem through mentoring?\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\r\n\r\nYuma Saito: One of our focus areas is widening the corridor between Japan and India in terms of investments, M&A and collaborations \u2013- more capital in short. We will aim to get Indian startups actual sales from Japanese companies (as customers). There are several cases nowadays of corporates being venture clients first before deciding to become (or not become) investors.\r\n\r\nThis kind of paid proof-of-concept is mutually beneficial and lets the startup benefit from industrial expertise. Through the relationships we build, I want to expand to markets like Africa together with Indian startups.\r\n\r\nInc42: Do you have plans to conduct workshops and live sessions for the Indian entrepreneur community with some of DTVS\u2019s partners and mentors?\u00a0\r\n\r\nYuma Saito: As you know Morning Pitch is one of our main platforms to conduct\/expand our activities. We have recently been holding Morning Pitch in India and Singapore partnering with credible local stakeholders like Inc42 and CoWrks in India and SGInnovate in Singapore. Because of the established brand we have in Japan, we can use it to inspire CEOs and executives from the Japanese industry to come to India.\r\n\r\nInc42: Indian startups and VCs have been part of events such as CEATEC and the Deloitte Innovation Summit recently. What is your takeaway from your interactions with Indian startups?\r\n\r\nYuma Saito: The takeaways were not only about Indian startups; my insight or learning is that if I truly explained the strengths and opportunities of Indian startups then Japanese companies can invest in them.\r\n\r\nInvestors who invested in India have so far had a good impression of Indian startups. So if we do a credible job of bringing good quality information about startups in India there is a good synergy between the investors and Indian needs \u2013- a tangible, positive outcome is imperative.\r\n\r\nWe try to do events more regularly at a smaller scale through our flagship event Morning Pitch in India every two months. I have seen considerable interest from both sides, there are minor issues like the cultural and language barriers which are being bridged by several stakeholders on both sides.\r\nOn The Indian Startup Ecosystem\r\nInc42: What is your assessment of the Indian startup ecosystem in terms of areas of innovation? Is there a desync, in your opinion, between what\u2019s happening outside and the focus areas in India?\r\n\r\nYuma Saito: When I was in Mumbai a few years earlier, I visited one of the public sector hospitals and I could see that the density of doctors per capita was low and this affected timely healthcare needs of the people. And because of this situation, startups that are providing remote diagnostics have sprung up.\r\n\r\nIn India, people are trying to solve issues that are right in front of them, compared to Silicon Valley where people are trying to solve issues which exist at a higher layer of visibility. For example, startups in Silicon Valley are addressing problems which will augment the lifestyle or comfort whereas the Indian startups are focused on building the basic services which have been missing in the local offerings.\r\n\r\nInc42: Which are the sectors in India that look most promising for DTVS from a growth perspective?\u00a0\r\n\r\nYuma Saito: Although this is always a tough question to answer given that startups are evolving all the time, it is perhaps even more difficult for an ecosystem like India with the dynamics and the vast size of the country. For me personally, I see healthcare and consumer tech to dominate in a meaningful way. I have also seen manufacturing startups which is a pleasant surprise, as it will open so many more opportunities for India as a global industrial powerhouse in the coming decades.\r\n\r\nInc42: Do you think India is at the stage where large corporations will have to collaborate with startups for technology overhaul and user growth?\u00a0\r\n\r\nYuma Saito: Yes, and it is not unique to India. For two reasons: One, the startups are innovating at a speed that large corporations cannot catch up with. In order to speed up the innovation cycle, it is important for corporations to work with startups.\r\n\r\nThe second reason is talent acquisition \u2013- the most talented people go to startups these days and get incentives like ESOPs. The second tier of talent works in the successful models at a hired professional layer, while the third layer is the typical salaried staff who will provide operational value and functions.\r\nOn Indo-Japan Connection\r\nInc42: What are some of the industries or sectors in Japan that Indian platforms can capitalise on by entering the Japanese market?\u00a0\r\n\r\nYuma Saito: One obvious example would be a company which is a unicorn in the budget lodging\/hospitality space in India. Their business in Japan and India are quite different from each other. But it has huge potential. They entered the real estate industry in Japan which has not seen a disruption in business model in a long time. There are other industries which can only perhaps be disrupted by foreign startups. The banking industry and insurance sectors have been dominated by a few players for years and it would be interesting to see how Indian startups who bring a different set of efficiencies for the Japanese market. Payment apps like have also entered Japan in what I feel is a crowded but underutilised market right now.\r\n\r\nOne sector that could see some collaboration is space tech as this is one of those few sectors where India has considerable IP and Japan has seen a spurt of space startups recently.\r\n\r\nInc42: India has a significant number of Japanese investors, besides the SoftBank Vision Fund. In your opinion, what is the general view of India among the investor community in Japan?\r\n\r\nYuma Saito: There are still not many people in Japan who are aware of the potential of the Indian market and not many business people are looking at India as a serious destination for investment. So, one of my main missions after taking up the CEO role is to inspire more Japanese CEOs to explore India as an investment destination.\r\nIn 20 years or so, India might be one of the few markets in the world which is one of the main growth drivers for Japanese corporates. So, it is quite crucial to not miss this bus.\u00a0\u00a0\r\nInc42: How will Indian startups benefit from working with their Japanese counterparts?\u00a0\r\n\r\nYuma Saito: The visible benefits are obvious \u2013- capital, manufacturing expertise, sales. As for intangible benefits, because Japan is kind of a saturated mature economy, the norm in society is social impact - to start thinking about how to take care of other people in the world, and how to provide value to other emerging markets. Japanese companies also pay attention to social impact quite seriously because that has been the culture of the country for many generations.\r\n\r\nInc42: What do you mean by social problems and how can Indian startups help in this regard?\u00a0\r\n\r\nYuma Saito: Japanese social problems like ageing etc. are problems that are faced by Japan first but will eventually be faced by the rest of the world like China is at the brink of right now. So, if we can provide solutions to avoid these in advance to countries like India then we have a huge opportunity. In other cases, there are cases where the problem statement does not exist in Japan but does in emerging economies.\r\n\r\nInc42: How do you see the relationship between Japan and India progressing in the future?\u00a0\r\n\r\nYuma Saito: Japan and India have been allies historically and there is a feeling of trust and good chemistry between the two nations. It is a win-win for both nations. Last year Japanese investors made about $2.1 billion investment in Indian startups. This number is expected to grow multifold in the coming years as we get more exposure to the quality of Indian startups and more material about Indian startups is available for Japanese investors to read and understand.\r\n\r\nIndia has the unique position of being both the innovation hub as well as the market for opportunities which was last seen with China.