From Tsukuba to the World's Premier Science City, Mr. Otsuka, Tsukuba Center Inc.

Interview with Mr. Otsuka, Venture Industry Support Department, Tsukuba Center Inc.

In Tsukuba, a city of 250,000 residents known as one of the world's leading research and development hubs, 29 national research institutions operate alongside 20,000 researchers. With international residents comprising 4% of the population, the city is leveraging its multicultural environment to establish itself as a global hub for deep tech startups. We spoke with the Director for International Affairs of Startup & SME Support Department at Tsukuba Center Inc. (TCI) about their efforts to strengthen partnerships with Taiwan and other overseas countries, enhance entrepreneurship education, and build an ecosystem that's truly open to the world.

Could you introduce yourself and tell us about the Tsukuba Center Inc.?

I'm Kaz Otsuka, the Director for International Affairs of Startup & SME Support Department at TCI. We're a regional startup incubator specifically focused on supporting the creation and growth of deep tech startups utilizing technology seeds developed by research institutes in Tsukuba city. While our primary function is providing office and laboratory spaces, we offer extensive hands-on support to local startups.

TCI’s Startup & SME Support Department plays a pivotal role in Tsukuba’s startup ecosystem. My role extends to various support activities as well as building alliances with domestic and international venture capitals and other key players in the startup ecosystem. I am also in charge of building alliances with other overseas startup supporters, and now focusing on building in-depth relationships with Taiwan startup key players such as the Industrial Technology Research Institute (ITRI) and National Yang Ming Chiao Tung University (NYCU).

Could you tell us more about the specific support you provide?

Tsukuba is renowned as one of Japan's strongest regions for research and development. We attract a high concentration of deep-tech startups, including the space industry, material industry and robotics industry compared to other areas.

Deep tech startups have different characteristics from tech SaaS and other software startups. While those tech startups typically focus on the service sector and target domestic markets, deep tech startups developing industrial products often look beyond Japan's borders. Targeting overseas markets to achieve larger scale is a common goal among our startups.

Our role is to act as a bridge and gateway, connecting these startups with VCs and key players from various countries.

What makes Tsukuba unique as a city?

Among Tsukuba's population of 250,000, about 12,000 (4%) are international residents as of 2023. This international character is particularly evident within our education system. Some public school enrollment orientations in the city center are fully bilingual, and, at one elementary school, more than 10% of students are non-Japanese nationals—which is quite unique for a Japanese public school system.

We also have Tsukuba International School, an international school that has been operating for over 20 years and serves many researchers' children. The second international school will open this year as well.

The international exchange within our center among our tenant startups is also vibrant. We host casual gatherings like tea parties two or three times a month. Our tenant startups can enjoy opportunities to exchange ideas and information with other companies. Some software and website development companies employ staff from India and other countries, making our gatherings multinational events.

This rich international environment has even attracted talent from Tokyo. We're seeing professionals from consulting firms and startups relocating to Tsukuba, facilitated by the Tsukuba Express train line. For those with families, the combination of career opportunities, desired work content, excellent educational environment and international atmosphere makes Tsukuba an attractive choice.

Does Tsukuba collaborate with cities overseas?

Yes, we're particularly focused on Taiwan. While Taiwan’s economy is not as big as large countries like G20, it's central to the global semiconductor supply chain with companies like TSMC, and their government is also prioritizing the biotech industry. Also, the economy is very open to international players.

We have a specific partnership with Taiwan's Industrial Technology Research Institute (ITRI), which is equivalent to Japan's National Institute of Advanced Industrial Science and Technology (AIST). We've signed an agreement with their Industrial Service Center to promote startup exchange. We also support Tsukuba deep tech startups exhibiting at Taiwanese technology trade shows through preferential arrangements.

We're also developing ties with the National Yang Ming Chiao Tung University (NYCU) in Taiwan. This university is Taiwan's equivalent to the Tokyo Institute of Technology, particularly renowned in semiconductors—about 80% of their graduates join TSMC. We're creating opportunities for Tsukuba startups to connect with Taiwan's key industry players and venture capital through this university.

What about domestic collaborations?

TCI was established in the 1989 as a public-private partnership. Our distinctive feature is that we support the commercialization of local technology seeds across institutions rather than focusing on any single research institution or university.

We co-host events with the University of Tsukuba and organize advanced technology exhibitions in cooperation with AIST. With 29 national educational and research institutions in this science city, we work across these organizations to create exhibition opportunities and facilitate matching with external stakeholders.

Furthermore, Tsukuba City is particularly focused on nurturing deep tech startups. As part of this initiative, we've established the Tsukuba Startup Ecosystem Consortium, which functions as a subsystem of the Tokyo Consortium and is jointly operated by Tsukuba City and Ibaraki Prefecture. The consortium promotes regional knowledge sharing and exchange by bringing together universities, national research institutions, and diverse private sector stakeholders. As a region home to world-class advanced research, we aim to become a global hub city for deep tech startups.

A notable initiative is TCI Venture Award, the startup pitch contest hosted byTCI, now in its fifth year. It has two tracks: a startup track for established companies and a seeds track where researchers present technologies with commercialization potential. Seeds track winners can engage with venture capitalists to develop commercialization strategies. After launching their businesses, they can participate in the startup track to create opportunities for investment and open innovation with major corporations.

Could you share some notable success stories from the startups you've supported?

Creating a unicorn company in this region is an aspiration shared by all startup-ralated stakeholders in Tsukuba. One past success was CYBERDYNE (https://www.cyberdyne.jp/), a medical device startup from the University of Tsukuba that was listed on the Tokyo Stock Exchange Mothers market in the mid-2010s. While we've seen other exits since then, we feel the numer of successful exit cases are still limited compared to the number of technology seeds born in the region.

A recent standout example is Thermalytica (https://www.thermalytica.com/), which developed the novel insulation material "TIISA." Traditional insulation materials were very expensive and, while highly effective at blocking heat, were difficult to be widely used in commercial context. Thermalytica developed technology to manufacture these materials at lower costs. They won the grand prize at the third TCI Venture Awards competition. Afterwards, they also won at Singapore's major deep tech event, 'Slingshot,' and took first place globally in KPMG's Global Tech Innovator Competition 2024.

What's particularly noteworthy is that TIISA's founder, Rudder Wu, is Taiwanese-Canadian who previously worked as a researcher at Tsukuba's National Institute for Materials Science (NIMS). Their international team composition and superior technology have been highly praised, making them a success story that epitomizes Tsukuba's international research environment.

As an example of international collaboration, we have a case involving a Taiwanese medical device startup. They're developing software that uses smartphone cameras to regularly record facial expressions and color changes as a life log, using AI to diagnose potential illnesses. They began joint research with the University of Tsukuba last year and have an office in one of our incubation facilities. We hope to see more such collaborations with companies coming from overseas to Tsukuba.

What challenges do you face in supporting startups?

Tsukuba has 29 national research institutions and 20,000 researchers in a city of approximately 200,000 people. The researcher-to-population ratio is among the highest in Japan. There's a saying here that 'if you throw a stone, you'll hit a researcher' (laughs)", which illustrates our uniquely high concentration of research talents.

However, despite this abundance of research, we haven't seen many large-scale successes like unicorn companies. We believe this might be due to a shortage of management talents rather than researchers. While we have excellent facilities and environments for scientific research and development, there are still challenges in turning these innovations into businesses.

To address these challenges, Tsukuba City and Ibaraki Prefecture endeavours to further strengthen the regional startup ecosystem. Although we're some distance from Tokyo, we're actively attracting startup support players, including venture capitals and accelerators. For example, we're collaborating with Cambridge Innovation Center (CIC) Tokyo in Toranomon to provide startup mentoring and leverage their network to connect regional startups and technology seeds with diverse players.

Finally, do you have a message for those considering starting a business in Tsukuba?

Tsukuba is one of world's premier R&D zones, particularly known for attracting highly skilled multinational researchers. At TCI, we're committed to supporting the emergence of promising startups from this region.

When international startups consider entering the Japanese market, Tokyo is often the easy and convenient option. However, Tsukuba is an excellent choice for those interested in joint research with Japan’s top-level research institutions. We regularly receive visitors from various countries—not just Taiwan, but also delegations from the UK, Germany, Italy and France. Tsukuba City has also established close agreements in the space industry sector with Luxembourg, among other global cross-border initiatives.

Moreover, the Tsukuba Startup Park (https://tsukuba-stapa.jp/) offers consultations in both Japanese and English, regarding how to start a startup. For international entrepreneurs, we provide one-stop support for administrative procedures such as business management visas, working with administrative scriveners who have experience in the local legal affairs bureau. We also assist with guidance to Japanese research institutions and address a wide range of inquiries within our capabilities.

‍