In recent years, there has been an accelerated movement toward digitalizing B2B commercial transactions. However, transformation of business firms alone cannot change traditional business practices. It is necessary to work on digital transformation (DX) together with financial institutions, which are at the heart of the economy.
Emerada Co., Ltd. is a fintech company that partners with regional financial institutions to offer services to small and medium-sized enterprises (SMEs) and is taking on the challenge of establishing a new financial ecosystem. In this interview, we spoke with Shintaro Ino, President & CEO of Emerada, together with JAFCO investment professional Kota Tanahashi and JAFCO partner Haruyoshi Onuma, about the company's business and organizational structure.
【Profile】
Shintaro Ino, President & CEO, Emerada Co., Ltd.
Shintaro Ino joined Emerada in 2019. After mainly leading new product development as product owner, he was appointed as president & CEO. Prior to joining Emerada, he worked as a financial and operations consultant for corporations and owners in the retail division of Nomura Securities, where he was in charge of a wide range of companies from SMEs to listed companies. He received five in-house awards during his four years at Nomura Securities. He is a graduate of Keio University's Faculty of Economics.
【About Emerada Co., Ltd.】
With the vision of "financial freedom for all," Emerada develops platforms that enable business money to circulate at high speed. The company offers Emerada Cash Manager for SMEs to manage daily funds and share information with financial institutions. It also offers Emerada Smart Bank Assistant, a BaaS to support CX of financial operations, as well as Emerada Analytics for financial institutions to evaluate customers' creditworthiness. In 2024, the company plans to release Emerada Payment, a payment service to improve the B2B cash conversion cycle.
Providing financial systems to 15,000 SMEs via financial institutions
ーTo start, could you please give us an overview of the services provided by Emerada?
Ino Our Emerada Cash Manager (ECM) is a service designed for SME owners and accounting staff. It automates accounting tasks, making financial management more efficient. The data can also be shared with financial institutions. They can use Emerada Smart Bank Assistant (ESBA) to view customer data and accept loan applications.
Basically, we first partner with regional financial institutions and have them adopt ESBA, and they then recommend ECM to their customers. This approach of providing systems as a set, with a back end (ESBA) and the front end (ECM), is a defining feature of our approach. As of August 2024, we have partnered with nearly 80 financial institutions and have implemented our system with approximately 15,000 SMEs.
Our third service, Emerada Analytics, uses AI technology to perform semi-automated credit evaluations based on the data accumulated in ECM and ESBA. These three services aim to promote DX in both commercial transactions and financial operations, creating a financial ecosystem where money circulates rapidly to support corporate growth.
Additionally, we are planning to release Emerada Payment by the end of 2024. This service will offer SMEs a "buy now, pay later" experience, similar to using a credit card, through financial institutions.
ーEmerada's stance is to spread this new financial platform with financial institutions as the hub, correct?
Ino Yes. Financial institutions are at the heart of the capitalist economy, so for a fintech startup like us, it doesn't make sense to gather IDs on our own. It's crucial that financial institutions upgrade their systems and launch services with us that can be widely disseminated in society. We will continue to roll out new services, waiting for financial institutions to take their "fighting stance."
Shintaro Ino, President & CEO
ーYou joined Emerada three years after its founding and later became its president & CEO. Can you tell us about that journey?
Ino I grew up in a family of entrepreneurs, so I always believed that I would become a CEO one day. To prepare for that, I joined Nomura Securities right out of university, where I became aware of the issues in Japan's financial market. I was puzzled by how financial services were not being fairly distributed due to information asymmetry.
Initially, I planned to start my own business, but then I was introduced to Taiga Sawamura, the founder of Emerada, who shared similar goals. At that time, Emerada was offering different services than today, but since we had a similar outlook, I decided to join.
I had a strong belief that Japan wouldn't change unless financial institutions change. After joining, I launched ECM and worked as a product owner to develop relationships with financial institutions. When ECM started to gain more traction than the existing services, we shifted our main focus, and I became CEO.
Reinforcing hiring for CTO, HR leader, and engineer positions with business expansion
ー It's been three years since you became CEO in 2021. What is the current organizational structure of Emerada?
Ino We are structured into three divisions: business development, engineering, and corporate. We have about 25 full-time employees. The engineering division also includes about 10 outsourced members. When I became CEO, I revamped the organization, so most of the current members, except for co-founder and COO Naoki Furukawa, were hired by me.
ーI'm sure that you'll increase the number of employees as your business expands. Are there any positions in particular that you would like to strengthen recruitment for?
Ino Up until now, I've been responsible for skill development and shaping the company culture, but as the organization grows, I want to delegate these responsibilities. However, it's been difficult to do so because, as CEO, I naturally have the widest capacity for managing diversity. Therefore, hiring leadership positions, particularly a CTO, is a high priority.
We also urgently need to hire an HR leader to create a better working environment. Currently, we outsource HR, and I manage it, but we plan to delegate this role to a new hire.
Additionally, we want to strengthen the engineering division to support the development of both existing and new services.
ーWhat type of person do you think would be a good match for Emerada?
Ino Some people may think of startups as glamorous, but at our company, we have many members who are truly passionate about their work, with a craftsman-like mindset, like engineers who think about how to write code even in their dreams.
We welcome those who share our vision and want to create something they would want to use themselves. However, since there are many challenges unique to enterprise services, I believe people who find fulfillment in digging into their daily tasks are a good match.
ーWhen you have a team of specialists, it seems like it could be challenging to unify the organization. How do you manage that?
Ino We have created a culture book and defined our principles properly, and I think some of our members are familiar enough with the principles to be able to advocate them. These are published on a private, in-house media platform, and we share the URL with potential hires during interviews.
Also, our company employees operate fully remotely. Nowadays, startups of our size often solve organizational challenges by meeting up, but we've intentionally avoided that. Anticipating a future where full remote work becomes the norm, we're working on creating systems that allow smooth communication and alignment without face-to-face meetings. We've been inspired by GitLab, known as the world's largest all-remote organization, and have implemented a handbook system where you can find all of the processes, and a communication method that helps us understand each other's thoughts, strengths, and weaknesses.
What I aim for is an organization where everyone can continue to respect each other's professionalism. There are still challenges, but I want to keep searching for the best methods for our company.
▶️ for more information on Emerada's hiring (Japanese only)
JAFCO investment professionals' respect for business managers
From left to right: Haruyoshi Onuma (JAFCO), Shintaro Ino (Emerada), Kota Tanahashi (JAFCO)
ー In July 2024, you raised funds through a lead investment by JAFCO, bringing your total funding to approximately 1.9 billion yen since the seed stage. What made you choose JAFCO?
Ino I first met with Mr. Onuma through an introduction from a shareholder, and since then we have had a series of interviews with Mr. Tanahashi as well. I've met with many VCs in the past, but the one who showed the most respect for entrepreneurs was JAFCO. Rather than feeling like we were being evaluated, I got the impression that they were genuinely trying to understand our company and support us, which made me want to work with them.
Additionally, since we hadn't had a lead investor in previous rounds, we wanted JAFCO to take leadership this time and help manage our relationships with shareholders.
ーWhat did JAFCO find attractive about Emerada?
Onuma First, their business model of providing services to SMEs through financial institutions. Regional banks and credit unions have strong relationships with local businesses, so the approach of spreading services through financial institutions is a very rational business decision. Emerada has also partnered with Shinkin Central Bank, the central bank for credit unions nationwide, to develop a portal service connecting credit unions with SMEs, which I see as another promising initiative.
Mr. Ino had always aspired to start his own business, and after joining Emerada, he expanded the company as a product owner. I was interested in how someone with that entrepreneurial spirit had successfully driven Emerada's "second founding." I'm thrilled to have the opportunity to invest and join him in the challenges ahead.
Tanahashi When I first met Mr. Ino, he said something along the lines of, "Our customer is the Japanese economy itself." That left a strong impression on me. I felt that he was someone who was seriously thinking about solving the core issues of SMEs and financial institutions.
As Mr. Onuma mentioned, their business model is efficient, but another notable feature is that their services are user-friendly for SMEs. Many SMEs struggle with cash flow, and even when they introduce cloud services, they often can't fully utilize them. Emerada's ability to provide services that are genuinely needed by SMEs is a major strength.
ーWith this fundraising, you're likely to further expand your business. What kind of society are you ultimately aiming to achieve?
Ino Whether for corporations or individuals, I want to create a society where, with just one bank account, you can access any service. It might take decades, but that's what I'm aiming for. Right now, you have to open an account, register an ID and password, and pay for each service. But if you had a bank account linked to your creditworthiness, you could use that account to disclose your information, verify your identity, and borrow money freely.
In the future, I think we'll reach a point where personal information and authorization are tied to a single ID, and that ID will allow access to various digital services. While Google or Amazon might manage such IDs globally, in Japan, I believe financial institutions will become the hub, as the government will want to oversee the flow of assets.
Since we should enter areas with the greatest challenges with regard to the venture business, we are targeting SMEs for the time being. But ultimately, the goal is to achieve financial freedom for both corporations and individuals.
Onuma Emerada is a company that provides the framework to advance and enhance financial services. Their services only work if both financial institutions and SMEs go digital, but I believe financial institutions have a strong sense of mission to revitalize the local economy, so I expect their adoption of Emerada's services to continue growing. I look forward to seeing how Emerada's financial ecosystem, which currently focuses on financial institutions and SMEs, will eventually spread to individuals as well.
Comments from the investment professional in charge, Haruyoshi Onuma and Kota Tanahashi
With the full enforcement of the revised Electronic Book Preservation Act and the introduction of invoice reporting, SMEs are being pushed toward DX. Meanwhile, cloud adoption and embedded finance are advancing within the financial system. In this time of great change for both SMEs and financial institutions, Emerada is a startup tackling these challenges head-on. We have high expectations for the new financial system that President Ino and Emerada are building, and we will continue to support them wholeheartedly.
