Jun 20, 2018 (Nikkei) - Following Mercari's blockbuster stock market debut Tuesday, Japan's lineup of unlisted startups valued above $1 billion has shrunk to basically two, underscoring the domestic tech industry's persistent failure to cultivate unicorns.
Mercari's ended its initial session with a market capitalization of 717.2 billion yen ($6.53 billion), making it the new leader of the Tokyo Stock Exchange's Mothers board for startups. Now the only widely recognized Japanese unicorns left are artificial intelligence developer Preferred Networks, and MTG, the maker of the Sixpad wearable training gear.
Out of the 240 total unicorns throughout the world, the U.S. is home to 116 while China has 71, according to data from CB Insights. Non-Japanese unicorns that graduate to the trading floor also create a far bigger splash than Mercari. Spotify Technology's initial public offering on the New York Stock Exchange reaped a market cap of $26.5 billion at the end of the session, while Dropbox was valued at over $11 billion on the U.S. Nasdaq.
Meanwhile, even bigger heavyweights are preparing to go public. Uber Technologies of the U.S. and Chinese smartphone maker Xiaomi are both estimated to be worth more than $40 billion.
Prime Minister Shinzo Abe's government aims to produce 20 unicorns by 2023. But Japan is having a hard time raising such creatures because of "the scarcity of investment money and the low rate of establishment" of such enterprises, said Yosuke Nakamura at the NLI Research Institute.
Pension funds and similar traditionally oriented institutional investors tend to shy away from startups. The venture capital funds that startups received in the year ended March amounted to around 130 billion yen, or just over $1 billion, a far cry from the roughly $80 billion spent annually in the U.S.
