How Government Money is Hurting Japanese Startups

Japanese university and government venture funds play a much larger role in Japan than in the West. I've always considered this difference to be, on balance, neutral, today's guest makes a convincing case that these funds are actually hurting the startup ecosystem here. Today we sit down and talk with Hiroaki Suga, co-founder of PeptiDream.  PeptiDream is now a $7 billion biotech company, but it started out as a couple of university faculty members funding operations out of their own pockets. PeptiDream succeeded by using a very different model than that used by either the current generation of university spin-outs or biotech startups in the West. It's an interesting blueprint that other biotech firms might want to copy, but only if they are really sure that their technology will actually work. It's a great conversation, and I think you will really enjoy it. Show Notes Japanese Univstities' problems with applied research The challenge in moving from academia to startup operations How to hire a CEO What most professors don't know they don't know about business How to land large sales contracts as a small startup How to sell new technology to Japanese pharmaceutical companies Why biotech investment is so hard in Japan Why you want to step away while you are on top Japan's next biotech unicorn Why most Japanese government startup money is misused Links from the Founder Dr. Suga's Lab Everything you ever wanted to know about PeptiDream Hiroaki's new project MiraBiologics  Leave a comment Transcript Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero and thanks for joining me. We’ve talked a lot before about how there are not many life sciences startups in Japan and what can be done to change that. But there are, of course, some and some incredibly successful ones. PeptiDream is one of those startups. Founded by a small team at a university lab, PeptiDream has grown from nothing to a $6 billion company. Today, we sit down with the founder of PeptiDream and fellow guitarist, Hiroaki Suga, and he’ll explain how they’re working with pharmaceutical companies all over the world to discover new drugs and new treatments. We also talk about the rather unusual business strategy that allow them to scale up with relatively little financing and to land deals with global drug companies a lot sooner than most biotech startups can. And I’ve got to say, my conversation with Dr. Suga really changed my mind about the role the Japanese universities and the government should play in fostering startups and innovation here. It’s a fascinating and unique perspective from inside the system, and I guarantee you, it’s not what you think it is. But you know, Hiroaki tells that story much better than I can, so let’s get right to the interview. [pro_ad_display_adzone id="1411"  info_text="Sponsored by"  font_color="grey"  ] Interview Tim: I’m sitting here with Hiroaki Suga, the cofounder of PeptiDream. So, thanks for sitting down with me today. Hiroaki Suga: Sure. Very welcome. Tim: PeptiDream is a peptide discovery platform but what is that exactly? Hiroaki: So, the technology started from over 25 years ago. I had idea. Is that okay? I want to develop RNA catalyst. The so-called ribozymes. I did a post doc with Professor Jack Szostak in Harvard Medical School. I run the techniques for the in vitro selections but I didn’t really get major success, but I was fortunate enough that I get an academic position in State University in New York Buffalo. So, I succeeded in developing we call “flexizimes” so that the first two patents are owned by SUNY Buffalo, but it wasn’t really quite useful yet. Tim: So, you were working on this for 20 years plus? Hiroaki: Pretty much, yeah. Tim: Did you have an end target in mind saying, “This is how I’m going to commercialize it, this is why it’s useful”?