"Entrepreneurs' Aspiration" tells a story of their passion to start a business, the background and difficulties to overcome until the business gets on track, and their desires to realize through the business.
In this 40th installment of " Entrepreneurs' Aspiration," Kentaro Yamamoto, President of SoVa Inc. talks about the future challenges of his business with a perspective from Kota Tanahashi, a capitalist in charge of SoVa.
【Profile】
Kentaro Yamamoto, President of SoVa Inc.
After passing the CPA exam in his third year of college, he taught CPA courses at a major career school. After graduating from college in 2016, he joined Aoie Corporation which was founded by his friend. He was responsible for the launch of the bathhouse business and later became Director and CFO, supervising back-office activities and finance operations. After leaving Aoie Inc. in 2019, he established SoVa Inc. and became CEO and Representative Director.
What's SoVa Inc.
SoVa provides a one-stop service that enables users to research "what, when and how to do" for administrative procedures including tax, lobor and registration as well as accounting operations on the product, and to carry out actual paperwork such as downloading actual documents. In June 2023, an automatic document creation function was released, which enables the fully automated creation of documents to be submitted to government offices on the product. .The company is going to update the payroll calculation function and release an automatic sorting function.
"SoVa" solves issues for both entrepreneurs and professionals.
What kind of service does SoVa, the so-called accounting firm in the DX era provide?
Yamamoto We are a new type of accounting firm that combines the work of professionals such as tax accountants, and labor and social security attorneys with AI technology. With our mission to "increase the accessibility to expertise and create a society where people can take on challenges without worry," we aim to provide services which stand "SoVa" or beside entrepreneurs and business persons who are taking on new challenges. Back-office operations involved in corporate management are very complicated. Normally, you must ask various administrative tasks to each specialist, like a tax accountant for taxation and accounting, a labor and social security attorney for labor service, a judicial scrivener for registration, and so on. However, SoVa enables users to check how to conduct each procedure and download necessary documents on a single system, and the fee plan is reasonable, starting at 9,800 yen per month. Currently, the product is adopted by about 300 companies, mainly early-stage start-ups, restaurants, factories, farmers, and a wide range of other industries.
Yamamoto Previously, the main functions of SoVa were those to "let you know what needs to be done and when," including a calendar function, a notification function, and a chatbot function that provides documents according to situations, but in June 2023 the product was updated with an automatic document creation function.
Until then, the administrative procedures using SoVa required users to create documents by themselves, referring to original examples of entries created by our company, and to input basic information such as company address and a name of the representative director by themselves for each procedure.
The new automatic document creation function automatically creates PDF documents based on the basic information entered when registering with SoVa. Although new information may be required for certain procedures, once the information is entered into SoVa, it will be automatically reflected for the next use. This is the new function which embodies the unique value we, a virtual accounting firm, can offer, that is, more you use SoVa, easier the procedures will be.
In the case of procedures for a new employee, a document is completed simply by entering "information of the new employee " in the red frame, as shown above.
Yamamoto We are also going to release a new plan in August that will perform payroll calculation and bookkeeping on behalf of our clients. In addition, while we are working to streamline these functions, we will provide assistance related to subsidies and grants, and further update our tax support menu in our medium-term plan.
I heard that it took about two years to develop a system that provides necessary support according to each user's situation. What did you find difficult?
Yamamoto For example, when you move your headquarters, there are about 1,000 different procedures depending on where you move to, what your articles of incorporation is, whether you have a board of directors, and so on. In addition, you have to submit each document to an appropriate office, such as Legal Affairs Bureau, a tax office, a pension office, and so on. There are also many other procedures to be completed according to such occasions as when a new director joins the board or when an employee joins or leaves the company. So, I had to research everything, create a database, develop it, and so on. Two years just passed while I was doing all those things (laughs). In back-office operations, there are things that can be done more quickly and error-free if left to machines, and there are things that can only be done by people. One of our features is a structure that we check out everything one by one and our specialists handle all services other than those that can be provided by the system.
That period of steady development enabled you to create a service with a high barrier against other entries. It will not only support entrepreneurs, but also help reduce workloads of professionals.
Yamamoto SoVa is a service that the professionals have longed for. For example, the average age of Japanese licensed tax accountants is over 60, and the number of applicants for the Certified Public Tax Accountant exam has decreased by half over the past decade. If machines can take over what they can handle and the professionals can focus on the work they should do, the manpower shortage can be resolved. For entrepreneurs, SoVa will enable them to focus on their businesses, which will in turn lead to the creation of new value for society. Our goal is to improve society by solving issues of both entrepreneurs and professionals, and this is the future we are aiming for.
How did you get started in your entrepreneurial career?
Yamamoto Since I majored commerce at college, I started studying for a CPA without thinking very much, and I passed the exam in my third year. I had no idea on what I wanted to do, so I thought, "I will be free to do whatever I want!" until I became 26 years old which is the average age of those who pass the CPA exam. I started working as an instructor at a career school while I was still in college.
I started thinking about starting my own business when I was working as a CFO of a start-up company run by a friend of mine while teaching CPA courses after graduating from the university. At the time, I was often asked for tax and accounting advice by entrepreneurs around me, and one of them said to me, "I'm sorry to keep asking you for help. It would be easier if there were a virtual Yamaken (Yamamoto's nickname). As the CFO, I myself was keenly aware of the complexity of back-office operations on a daily basis, which led me to an idea of commercialization.
Do you feel that your experiences in your startup days have helped you after starting your own business?
Yamamoto During my startup days, I learned the importance of experiences of on-site operation. Since the company operated share houses, I actually visited the properties to judge whether they were good or bad, changed wallpapers, and did so many other things while working as the CFO. During the period of SoVa's founding, too, I tried to do each job by myself at least once to understand what the person in charge of the job valued before communicating with him/her. If I didn't understand it, the way I communicated would completely change and I might hurt him/her, so I am very conscious of that.
Investors are the ones who will sail the SoVa ship together.
Yamamoto and Kota Tanahashi (left), Capitalist in Charge of SoVa
In March 2023, you raised a pre-series A round fund of 225 million yen led by JAFCO. Please tell us about your encounter with JAFCO.
Yamamoto I could see a winning strategy to push the business one step further by expanding the functions of SoVa, so around the fall of 2022 I started communicating with VCs through such activities as participating in pitch competitions. In fact, Mr. Tanahashi first contacted me earlier, around July. He seemed to have heard about me through the pitch competitions and interview articles, and I received a DM via Messenger and had a meeting with him, but at that time we did not discuss about concrete fundraising.
Tanahashi That's right. But even after that, I was always conscious of SoVa. I had realized back-office pains through my experience as an internship in my school days as well as from the stories of my mother, who had engaged in administrative work all through her career, and so I was interested in the services that could solve those issues . In particular, I felt that there were few services, like those of SoVa, which could carefully handle various back-office operations required at the time of founding for small companies and so there would be high demand.
In addition, it is common for CPAs who are Keio graduates to go straight to be professional CPAs. But, Mr. Yamamoto joined a start-up company in his school days, started his own business, and even spent two years in developing his product. I was also interested in his uniqueness as an entrepreneur. 
What happened then till JAFCO appeared to be a potential investor?
Yamamoto Mr. Tanahashi contacted me again early this year, and we had a meeting again with Mr. Fujii (Atsushi Fujii, a business partner) From that point, JAFCO began to seriously consider investing in our company.
Tanahashi A unit price of SoVa's services was low and their functions were limited at the initial interview stage, and so I found challenges in terms of profitability. However, in the meeting at the beginning of this year, the company's visions for automated document creation, payroll calculation functions, future business development and so forth were clarified, and I had the impression that the business had made a rapid progress.
Yamamoto From that time, we had to work up a storm on due diligence. The schedule for fundraising was so tight that we communicated closely with each other two days in every three days. Among other things, I was surprised when he asked me to send him all of my past journal entries.
Tanahashi That might be burdensome, but the most detailed raw numbers traced back from the financial statements are the journal book data. It is JAFCO's basic approach that we closely check money coming in and going out to make a business plan by ourselves and discuss on it.
Yamamoto That is amazing. As Mr. Fujii said, "All economic activities of a company are always shown in journal books and financial statements," there are many hidden stories behind the numbers, and more closely you check the numbers, more deeply you can understand the business and organizational situations. Mr. Fujii and Mr. Tanahashi understood completely what our company's numbers meant, which was surprising even from an accountant's point of view.
What were the decisive factors in ultimately selecting JAFCO as the lead investor?
Yamamoto I believe that fundraising is the same as hiring. Superstar-level people who would normally never be hired by us are here, not only willing to invest in us but also going to board the ship SoVa with us. In that sense, the ideal candidate was someone who could understand our values and on top of that we could discuss how to make a profit. Mr. Tanahashi always gave us his opinion based on what was best for SoVa. In this respect, he was the ideal person for us.
As he is also a person who checks every detail by himself, he often asked me many sharp questions that were difficult for an entrepreneur to answer, but I was rather pleased it because I wanted to discuss those details which I was also concerned about. He shares our approach to the products in many aspects, which brought me a feeling of trust.
Did your impression of JAFCO change before and after the fundraising?
Yamamoto Before the fundraising, I had an image of a company that only invests in big companies and was a bit unapproachable. A lion, so to speak (laughs). But in fact, he checked and evaluated our business in great detail, and sympathized with an unsophisticated and steady side of startups. I guess it was because he himself is also engaged in steady investment activities.
Tanahashi We deeply engage in the business of our portfolio companies, work together on sales, recruitment, and back office operations, and then run together for the next fundraising . I am very happy that Mr. Yamamoto has chosen us as a partner, evaluating these features of JAFCO..
Creating Japan's best and largest professional firm
Now that you have completed the fundraising, what are you planning for the future?
Yamamoto Our goal is "to create the best and largest professional firm in Japan" by the time of our IPO. First, we will pursue the highest quality service, aiming to be "the best accounting firm" for small companies with less than 10 employees. If we can achieve the best service, there is no reason not to deliver it to many more people, so we will gradually expand a range of our target companies. Currently, the largest accounting firm in Japan has about 12,000 clients, and we hope to expand our clients to that scale by 2028 to achieve "Japan's best and largest."
What kind of society do you want to realize through your business?
Yamamoto Through SoVa, we would like to increase the number of entrepreneurs who can focus on their businesses and new entrepreneurs, and indirectly improve Japanese society. As more and more data on corporate activities is accumulated through the use of SoVa, we are also considering and preparing for providing necessary services in accordance with the life stages of companies in the future.
Jack Ma, the founder of Alibaba, said that when he was in a local restaurant, a stranger approached him and thanked him, saying, "Our company has grown thanks to your service," and treated him to food and drink. I would like to realize a future where all of our company members would have such a kind of experience at least once.
Lastly, what do you value as an entrepreneur?
Yamamoto Mr. Yosuke Tsuji, the president of Money Forward, taught me about management. He said managers' task is to understand management in terms of people, products and money and directly attack and solve the biggest bottleneck. Among them, I take responsibility for people and money, which are directly related to survival of the company while other executives are in charge of producing and selling products. I create an environment and structure that can maximize the potential of our members. I have prepared a strategy for as far as the fourth arrow to prevent bankruptcy under any circumstances. I am always thinking and executing it.
In terms of mindset, from the very beginning of founding, we have a mission and principles (a summary of what members of SoVa are expected to aim for) that serve as the axis for all decision-making, and the principles are revised once a year through discussions among all the members. A philosophy is the keystone of a company's fan, in a sense. Without a strong keystone, the organization would not be stable and expand. I believe that a corporate philosophy is an important point for the growth of a company, which small start-ups should formulate at the beginning precisely because they are small. .
Comments from : Kota Tanahashi
For businesses of all sizes, there's no need to say that issues related to back-office operations, such as tax, labor, registration, and accounting are so complicated. Although they have been partly simplified by various new cloud software and some administrative work made available online, no single company could have solved all issues thoroughly by technology. SoVa is a company that tackles the aforementioned challenges head-on with a team of experts, including accountants, and the latest technology. I believe that there is a great potential for further business expansion once they become an infrastructure that supports business activities of more than 3.7 million companies in Japan. I am very pleased to be able to work with them on this major initiative. I will do my best to provide hands-on supports to SoVa.
