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While Japan used to be hesitant to invest in conflict-ridden Israel, its substantial presence at CyberTech and support of Israeli startups in the last few years indicate a shifting of tides

The Tel Aviv offices of one of Israel’s biggest firms Herzog Fox & Neeman hosted a rather unique event on Monday night, bringing out some of the biggest names in cyber security to meet with representatives from Japan’s business community who were in Israel to attend the annual CyberTech convention.

Sponsored by HFN, the Japanese External Trade Organization (JETRO), Japan’s embassy, and a number of Japanese-Israeli business bodies, the 200 plus person event signified Japan’s newfound interest in Israel’s startup and cyber security scenes.

Dr. Nimrod Kozlovski, a partner at Herzog Fox & Neeman, spoke with Geektime at the event, explaining the numerous challenges facing the startups in looking to partner with Japanese firms.

“There is a cultural challenge since many of the companies are still at an early stage where they are not yet well organised,” said Kozlovski.

“They don’t have the documentation of the product, the specification is loose, and the work on the product is an ongoing process rather than a firm version. Many of the decisions are not yet taken like the pricing and integration schemes or the road map. I can attest as an investor that many times it’s a work in progress, certainly if it’s a startup in its first steps. The Japanese market expects you to be much more mature,” he added.

He explained that traditionally Japanese companies have expected to see a lot more preparedness and a clear path to the future from companies that they are intending to work with before signing deals.

Part of the challenge in doing business with Japanese partners he says is bridging the gap between their expectation and the realities of the startups in that they run a different type of course both in their development of the product as well as a company.

“It’s still a startup, that it has a very innovative and disruptive approach towards the problem it’s trying to solve, but it’s still not a mature company like they’re used to buying from that have more solid operations,” he said, explaining how it is important to present Israeli startups to Japanese companies.

Another issue that Kozlovski raises is that the products are not generally at the stage where Japanese companies are used to being involved, noting that they prefer to come in at very late stages.

A cultural hurdle that Kozlovski said needs to be overcome is the issue of trust. It can take time for them to appreciate your expertise in a certain domain. However in the field of cyber security, Israeli companies have an advantage to vault over the normal processes because the Japanese acknowledge that they need the Israeli innovation.

While information and vulnerability-sharing has become an integral part of the new cyber security landscape, Kozlovski said that Japanese companies are still catching up on this trend, having a history of keeping closed gates around their internal operations. There is a shift occurring now as they understand that their assumptions surrounding how to run security are changing to meet the new environment.

What is clear is that the ecosystem in Japan is feeling the burn to address threats to their cyber security that became apparent after major hacks like the one that hit Sony. Kozlovski says that this is leading them to look for innovation from startups that is lacking from the big vendors.

The path that many of the Japanese companies are taking appears to be in working with local integrators to facilitate the inclusion of the new solutions, basically making them Japan ready.

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Making their mark on CyberTech 2016

Arriving at the exhibition hall, JETRO and the Japanese delegation left a clear footprint at the event. At their booth, they ran sessions for visitors about how to start doing business in Japan, and the represented companies spoke with people walking by about their products.

Milling about between the different vendors, the Japanese businessmen could be seen exploring the different booths, looking for their prospective partners.

Kei Takagi, who serves a manager at JETRO in their Tel Aviv office, backs Kozlovski’s view that the atmosphere in Japan is changing.

He notes that the exits of Waze and Prime Sense to Google and Apple respectively garnered a lot of press in Japan, helping to make Israel a more important destination for Japanese companies.

In the past, many Japanese firms were cautious of coming to Israel due to security concerns. Mitch Nozaki, a manager on Murata’s technology marketing team who is based in Herzliya, told Geektime that the conflict keeps many companies trepidatious about sending their personnel.

Takagi explains that he has noticed a change in the past ten years in how the Japanese view their risk in coming to Israel. He told Geektime that whereas Japanese businesses would quickly uproot themselves during times of conflict like the operations in 2009 and 2012, he was receiving phone calls during the last round of violence in the summer of 2014 from companies still looking to make their way out here seeking business opportunities.

Kozlovski and Takagi both point to the visits of Japan’s Prime Minister Shinzo Abe exactly one year ago, and Minister of Economy, Trade, and Industry Toshimitsu Motegi six months before that for high level meetings as a signal to their country that Israel is a safe location to do business. Joining the two men were large entourages of industry leaders who came to scout the landscape for themselves.

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Author’s impressions

First and foremost, Israeli cyber companies need to know that Japan is open for business. While there have been significant issues in the past when it came to working with both startups and Israel in general, Japan is hungry for new innovative solutions, and they are willing to break their own rules to get them.

From conversations with some of the Japanese business leaders that attended the convention, they are here on the lookout for partnerships that will make their existing products better. As a manufacturing powerhouse, they have woken up to the need to integrate cyber security into their products, whether they be to improve MuRata’s small electrical components or prevent corporate hacks.

While risk and startups in Japan have generally been considered as taboo, pushed aside in favor of stable companies, the Japanese are now studying Israel’s startup ecosystem, possibly with hopes of modeling their own system on it in the future. In particular, Takagi explains that they are impressed by Israel’s ability to build products that are by nature aimed at scaling globally.

For startups who are already thinking about looking to Japan, there are resources available like the Chief Scientist’s Office who are offering funding and matchmaking for young companies. One piece of advice that was offered by experts is to establish relations early. Set up offices and have local representation that can not only provide links to the ecosystem, but will also know how to package the company and product for the Japanese market, bridging the gaps.

In speaking with industry sources that are connected to Japanese companies and investors, Geektime has gleaned that there is a series of big deals currently in the works that are expected to be rolled out later in the year, some of which could potentially include cyber warfare cooperation due to Japan’s push toward re-militarisation.

Until then, we can expect that the flow of delegations like the one that came for CyberTech, as well as those who will venture here independently, will only continue to expand as both sides discover opportunities for profitable partnerships.

The article Japan comes looking for Israeli cyber security startups was first published on Geektime.

The post Japan comes looking for Israeli cyber security startups appeared first on e27.

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