Nov 7 2017 How to identify ‘good’ startups in Japan

Within Japan’s “Startup bubble” there are startups and ventures that are eager to hire talented international people. With so many companies claiming to be the next AirBnB or Google, however, we look at key factors to consider when job-hunting in startup companies.

  • Do they have the good funding or products/services that successfully sell?
  • Do proper work contract and work rules (shugyo kisoku) exist?
  • How does the company/CEO view employees?


Although synonymous with tech giants like Sony or large manufacturing companies like Toyota, Japan is also experiencing an exciting rise in the number of startups. In the midst of this ‘startup boom’, although the majority of startups that have good working conditions there are, as with any other country, those that exploit or overlook legal regulations. Startups by nature, do have some risk as they are betting their ideas in the market. In fact, one-third of newly established companies are predicted to go bankrupt, and only 15% of these companies are likely to survive more than 5 years.

In this article, we are not going to define “good” startups as the ones that will survive or experience a huge success. We will instead focus on how key factors we consider when screening startups as clients – to avoid startups that may exploit its employees. Believe us, we have had members who have come looking for new job opportunities because their companies were not paying their salaries; or times when their bosses expect them to keep working as “unpaid interns”. While risk is an inherent part of the startups as a business, it should not be at the expense of its employees.

Does it have the good funding or a promising service/product?

It is not difficult to start a company in Japan. All you have to do is to prepare necessary documents and have some amount of money and submit the paper. Done.

However, to keep running the company properly, you need to have a constant flow of money (or have enough money to keep running). Without money, said startups cannot keep paying your salary. However passionate you are about the product/service of the startups, as an employee, you have a right to receive at least the legally set minimum salary.

To identify if the startups can keep paying your salary or not, you can check
1) How much VC funding startups have received so far.
2) If the company has a good product/services and a strong customer base.
For the funding, you can see if the company has reached Series A or B (or even more) stages or are still in their seed round phase. This is very important, especially if the company has not secured the required number of customers to break even or make a profit. If the company has a consistent number of sales from their own product/service, it provides stability and ensures they can constantly pay your salary.

Wait! Have you signed the proper documentation before working?

In Japan, it is necessary for a company to clearly indicate the work conditions covering all the necessary points in a written document that abides by the standard set by the Japanese Labor law.

There are many cases where the CEOs full of vision persuade or resonate with candidates who, in turn, entrust their skill and knowledge to their startups, only to find that they were deceived and exploited for their naiveté and good nature. This is by no means the fault of their own, but approaching an opportunity with caution and calculated steps will ensure that the vision matches their honesty.

Even for companies that might give a great first impression, some red flags we have seen in the past include situations where your starting salary is different to what with a different salary than originally agreed; if your payments are delayed; if you are being set unreasonable tasks and requests that go beyond your scope of work as agreed in your contract. For such cases, unless you have a proper labor contract that you have signed, it is hard for you to prove that they are not honoring their contract. If the company is not able to pay your salary, it is likely that even a lawsuit may result in no financial return.

We encourage you to check the written labor contract before you start working and also ask for work rules (Shugyo Kisoku in Japanese) after you start working, would be critical for you. If the company does not even have this, it is likely that the company is ignorant about handling legal aspects, which puts you at risk of exploitation.

Does the company/CEO treat employees with respect?

When it comes to leadership and management, there are situations where employees are reduced to being treated like replaceable resources. Unfortunately, this is not only unique to startups but also companies around the world

In one instance, there was a case where a CEO of a company that would threaten or shame employees who were underperforming or in the bottom 10%. In some cases, they are pressured to leave and are made dispensable by managers. This kind of work harassment has, in the past, led to depression amongst some employees. Combined with excessive work hours and an exaggerated focus on flaws and mistakes demonstrates can perpetuate a total lack of empathy in a workplace.

We recommend doing your best to find out as much as possible what the work environment is like before and during the interview – ask what the average overtime is; how performance is evaluated; what ‘consequences’ or ‘penalties’ exist in the event that these are not met; how management support new employees when they first join, etc.

This is not to make you run for the hills when it comes to applying for jobs with start-ups. Many are making genuine steps towards changing work environments in Japan for the better. Compared to larger companies’, startups tend to be agiler in their decision-making; have a strong passion for the mission/vision and be more open to new ideas. In fact, these are the companies we try to work with, especially those that are open and valuable contributions and skill sets of people from different backgrounds. Sadly, there are still incidences of exploitation in new startups that can have severely damaging prospects for foreigners who wish to work and continue to live in Japan. For example, if an immigration officer finds out that you have not been receiving a salary properly, they would suspect you were unable to make a living here thus asking questions on how you were able to live in Japan.
We hope these three pointers will help you in stay vigilant when startup job options that you may have. We encourage you to look for companies that not only fits well with your career interests and aspiration but, one that will also be as eager to promote the growth of the business as well as your professional and personal growth in Japan!

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