Aiming to provide platform services for store operations

Hiroshi Yamamoto
Representative Director, Smaregi, Inc.

Aiming to provide platform services for store operations

Smaregi, Inc. is an IT venture that provides cloud-based POS cash register system called "Smaregi." Smaregi has been highly appreciated by many users thanks to its outstanding features, such as reasonable initial cost, flexible support for diversified payment methods and intuitive UI/UX. With a fee-paying ratio of more than 19% (as of April 2020), Smaregi has gained an astonishingly high level of support for a freemium SaaS. The following is an interview with Mr. Hiroshi Yamamoto, Representative Director of Smaregi, over the Company's history from its establishment, as well as its relationship with Mitsubishi UFJ Capital (MUCAP) and future prospects.

Background

—From contract development to a service-based business model

Smaregi stems from a website design/production team of two freelancers, who later became the Company's founder and full-time auditor.
In those days, I was running a music studio with some friends of mine and I met the two as a user who requested website production for the studio. We got along well from the beginning and interaction with them to learn about the Internet encouraged me to study programming with a view to getting involved in the online world. When they transformed their team into a corporation, they contacted me and proposed joining them, which resulted in my participation as an IT engineer.
After the establishment of the corporation, our business was focused on contract work for a while. But when demand for such work started to decline due to the impact of the collapse of Lehman Brothers, we felt that we had to find something else. We decided to take on a new challenge and started to work on system packaging. Among the targeted systems was Smaregi. We had developed a POS system for drugstores when we were involved in contract development. So, we had a pretty good idea of what the system was all about, including what it is used for and what functions were needed.
In those days, most business systems were not designed for the design aesthetics and were difficult to use in the first place. We decided to incorporate UI/UX that we had developed through website design. In addition, our original idea was to develop a cloud-based system as smartphone applications. Those features eventually served as a set of advantages over rival systems. Honestly speaking, we just took advantage of our own strengths to develop the system, which ended up as a series of successful products and services.

Encounter with Mitsubishi UFJ Capital

—Valuable advice on how to ride out difficult times

During the period from the launching of Smaregi in 2011, through 2013, our management underwent the most difficult times. We did not yet have the idea of raising funds through equity markets. All we knew about financing was our own capital and bank borrowing. Also, against the backdrop of the impact of the collapse of Lehman Brothers, we tried to find out how we could break the deadlock. One idea we encountered was to raise funds with the help of venture capitals. As part of our process of trial and error, we compiled business plans and visited various venture capitals. At that time, however, we were not yet sure how we could get along with venture capitals. For lack of capacity to give convincing presentation of our business plans, we did not receive any positive response.
In the meantime, I got an opportunity to give a presentation at an event featuring startups in 2013. In those days, I was desperately determined to find a way out by accepting whatever opportunities offered to us and the event turned out to be a window of opportunity: I met Mr. Sato of MUCAP. The initial encounter was just an exchange of greetings, but he then started to give us various advice probably because he got interested in us. The following year, he introduced to us a credit card company as part of his efforts to help us develop networking. This coincided with a gradual increase in the number of customers of Smaregi, which helped turn around our financial standing. This is how we started to develop our full-fledged relationship with MUCAP.

Relationship with Mitsubishi UFJ Capital

—Communication and enthusiasm unparalleled by others

In 2016, we were approached by other venture capitals, but contact with them convinced us that MUCAP was clearly different. The difference stems from MUCAP's willingness to support us. For example, from the time we first met, they gave us advice on various aspects of Smaregi as a product. Their sincere advice included a profound technical analysis of what an ideal architecture should be like and what kind of data should be possessed and how. How we could better develop business opportunities, such as partnership with a card company, was another area where their guidance was instrumental.
MUCAP gave priority to such discussion over investment, while most of the other venture capitals focused on outright sales approaches from the beginning. From the time when our name recognition was still poor, MUCAP displayed clear stance to assist us. To put it simply, their enthusiasm and communication were unparalleled by others, which encouraged us to choose MUCAP.
In 2016, MUCAP introduced to us Mitsubishi UFJ Trust and Banking prior to the issuance of stock options. When we had to reorganize our business structure in preparation for becoming a listed company, MUCAP supported us by introducing to us a prominent social insurance labor consultant, among others. All such efforts offered by MUCAP culminated in our successful listing in February 2019.

Future Prospects

—Aiming to provide platform services for store operations

We believe that the POS system will be placed in a leading position to provide store operations. Daily operation on the system is instrumental in tracking sales and costs on a daily basis. Our next step under consideration is the further development of Smaregi as a platform where various solutions for stores are collected. Many startups are creating applications and services for stores. So, our intention is to establish an ecosystem where Smaregi can serve as a receptacle for people and things concerned, ensuring we grow together in a win-win relationship. While venture capitals are indispensable players in this context, we may in tern play the role of investing. We would like to maintain positive relationship with MUCAP.
Currently, brick-and-mortar businesses are undergoing an extremely difficult time due to the novel coronavirus pandemic. Particularly serious is the environment surrounding restaurant operators who have no prospect for the future. As a listed company, we are concerned about our stock prices and corporate value. Nevertheless, in the hope of getting inspirations for a breakthrough, we are running a restaurant on an experimental basis from a scientific perspective based on my experience as an IT engineer. While we are listed, we still have a long and bumpy road ahead. We look forward to seeing what will emerge beyond those immediate challenges.

Interviewed in August 2020

Company

Smaregi, Inc.

https://corp.smaregi.jp/

Primary business activities

Planning, designing, development and provision of internet services/Smaregi/Data collection and analysis/E-commerce

Company History

2001	January	Founded in Kishiwada, Osaka
2011	August	Tokyo office opened
2011	September	Tablet POS System "Smaregi", released
2015	April	Closes contract business, such as web production and system development, and integrates them into service-based business
2016	November	Company name changed to Smaregi, Inc.
2019	February	Listed on the Tokyo Stock Exchange Mothers market
2020	July	Major Smaregi update, "Smaregi 4", released

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