Why has Fukuoka launched startup cafes?

“My plan is to move employment into the innovative industries”, says Soichiro Takashima, Mayor of Fukuoka, Japan. Fukuoka is an old city, but it wants to shift its focus.

It was founded back in 1889 when an industrial port merged with a town renown for its Samurai warriors. Now, like many others, it wants to be a startup hub.

The city plans to build a “Fukuoka startup” brand, the mayor says, and it has set up a pioneering startup cafe initiative as a “one stop facility for entrepreneurs”.

The initiative shows how government can support new businesses without directly funding them. The concept is simple: government organises a regular networking session that gathers venture capitalists and specialists like accountants and public sector officials to give free business advice and support.

Lawyers from the government’s employment centre also provide legal expertise on employment regulations.

Other help provided at the cafe include refining business plans; linking up entrepreneurs to human resource specialists and other companies; and introducing them to residence and office realtors.

It has a budget of $US0.5m (¥51m), and is intended to attract young entrepreneurs to this old and gracious city.

Why attract a younger crowd?

This initiative is part of a broader plan to boost new businesses in the city over the next decade. There are six steps to this plan. First, the city has implemented tax reduction schemes, where taxable income is reduced by 20% for five years.

Japan has one of the highest tax rates in Asia at 32.26%, clocking third place behind India and UAE, so this is helping to attract local players. Second, the city wants to attract foreign talent.

A startup visa, for instance, provides entrepreneurs with a six month window to establish their business. All they have to do is rent an office; employ at least two fulltime staff; and have a capital of at least US$ 47,000 (¥5m).

Third, the government provides subsidies. Loans are provided up to a cap of US$0.2m (¥25m); and financial aid as much as US$650 (¥70,000) are provided to fund residential units and business office rentals.

Fourth, the city government also organises contests for entrepreneurs to pitch business ideas, awarding up to US$9500 (¥1m).

“Winners can also get financial support for rental fees”, including office and residential spaces, Takashima says. Fifth, there has been a culling of regulation to make the city more business-friendly.

"Deregulation from the government” has allowed the city to commission work to the private sector, Takashima says. This includes the redevelopment of 30 old buildings in the Tenjin district - the city centre - over the next 10 years.

Sixth, the government is working on urban development with private companies to make the city more conducive for businesses.

Construction is required to increase spaces and improve the quality of buildings to give it a modern feel. “We need more space for greenery and wider pavements”, he says.

Once redevelopment is done, the city will have “1.7 times of space as we have now”. “If you have more floor spaces, you can get more tenants”, and from there “more money”, he explains.

“We’re welcoming more entrepreneurs and startup companies, but for that we need more office spaces and smart buildings.”

The city estimates that rebuilding the Tenjin district will generate US$2.8 billion (¥290 billion), and consequently bring about an additional US$8 billion (¥850 billion) once all buildings are complete, the Japan Times writes.

These initiatives, along with an innovative startup cafe approach, are expected to pay dividends over the next decade.

The city may attract tourists with its warm broths of ramen and blooming cherry blossoms, but it’s java beans and elbow grease that will support Fukuoka’s next phase of development. Sakura by Peter Enyeart, licensed under CC BY-SA 2.0