Research Note: Open Network Lab
Open Network Lab (Onlab)
Executive Summary
Open Network Lab (Onlab) stands as Japan's pioneering seed accelerator program, established in April 2010 by Digital Garage Inc. as the country's first comprehensive startup incubation initiative. Onlab began in April 2010 as a pioneer of seed accelerator program in Japan with the purpose of incubating startups that can compete on a global stage. Since its founding, Onlab has supported and cultivated over 150 startups through its intensive three-month program, producing notable success stories including unicorn company SmartHR and IPO-achieved companies like giftee. The organization operates multiple specialized programs including the core Seed Accelerator, regional initiatives in Hokkaido and Fukuoka, sector-specific programs in real estate technology (Resi-Tech) and biohealth, and an ESG-focused investment fund called "Earthshot Fund." As a pioneer of accelerator programs in Japan, Onlab has held more than 30 programs since its launch in April 2010 and has produced more than 130 startups, including IPO and unicorns companies. With approximately 10 million yen in funding per startup and access to global networks spanning Japan, North America, Asia, and Europe, Onlab has established itself as a critical catalyst in Japan's startup ecosystem transformation from nascent beginnings to national strategic importance.
Source: Fourester Research
Corporate Overview
Open Network Lab operates as the accelerator and investment arm of Digital Garage Inc., headquartered at DG Bldg., 3-5-7 Ebisu Minami, Shibuya-ku, Tokyo 150-0022, Japan, with additional program locations in Shibuya, Daikanyama, San Francisco, and London. The organization was co-founded by Kaoru Hayashi, who serves as Representative Director, President Executive Officer and Group CEO of Digital Garage, and Joichi "Joi" Ito, who functions as Director, Senior Managing Executive Officer and Chief Architect of Digital Garage. Kaoru Hayashi is Co-Founder, Chief Executive Officer and President of Digital Garage since November 2004, and Chairman and President of Open Network Lab, Inc. since 2012. Joi Ito brings extensive entrepreneurial and venture capital experience, having created numerous Internet companies including PSINet Japan, Digital Garage and Infoseek Japan, and served as an early-stage investor in Twitter, Six Apart, Wikia, Technorati, Flickr, and other prominent Internet companies. Joichi Ito is a Japanese activist, entrepreneur, and venture capitalist who is a co-founder and board member of Digital Garage and was an early stage investor in Twitter, Six Apart, Wikia, Technorati, Flickr, SocialText, Dopplr, Last.fm, Rupture, Kongregate and other Internet companies. The organization operates through DG Incubation Inc., which manages three primary investment funds: Open Network Lab & ESG I "Earthshot Fund," Sapporo Innovation Fund, and Hamagin DG Innovation Fund, collectively focusing on seed and early-stage startups targeting global success. Under the leadership of this experienced founding team, Onlab has evolved from Japan's first accelerator program into a comprehensive startup ecosystem builder with specialized vertical programs and international expansion capabilities.
Market Analysis
The Japanese startup accelerator market has experienced significant transformation since Onlab's establishment in 2010, evolving from a nascent ecosystem to a nationally strategic priority. Japan's startup ecosystem has made great progress in a decade, and startups play a central role in national strategies. The Total Addressable Market for startup acceleration and early-stage investment in Japan has expanded dramatically, with the government declaring 2022 as "Startup Creation Year" and setting targets to grow investment amounts to 10 trillion yen by 2027. Within this broader market, the seed accelerator segment has grown from virtually non-existent in 2010 to encompassing multiple specialized programs across various sectors and geographic regions. Onlab operates in several interconnected market segments: the primary seed accelerator market serving general technology startups, the ESG startup investment market valued through the Earthshot Fund initiative, regional startup ecosystems in Hokkaido and Fukuoka, vertical-specific markets including real estate technology (Resi-Tech) and biohealth sectors, and the international startup market connecting Japanese entrepreneurs with global opportunities. Taking the advantages of the Digital Garage Group's global connection to North America, Asia, and Europe, we aim to build a new ecosystem in the ESG perspective by collaborating with players active in the ESG related-industry. The competitive landscape includes both domestic players such as other corporate-backed accelerators and international programs like Y Combinator, though Onlab maintains first-mover advantage and deep local market knowledge. Market growth drivers include increased government support for entrepreneurship, corporate digital transformation needs, growing venture capital availability, and Japan's strategic focus on innovation-driven economic growth. Regional expansion into Hokkaido and Fukuoka demonstrates market opportunities beyond Tokyo, while sector-specific programs in real estate technology and biohealth reflect vertical market specialization trends.
Product Analysis
Open Network Lab's core offering consists of an intensive three-month seed accelerator program that combines funding, mentorship, workspace, and network access to transform early-stage startups into investment-ready companies. Participating teams can receive around 10 million yen to fund their activities, depending on the company's situation and performance, along with workspace in Shibuya, Daikanyama, San Francisco, and London for up to 2 years free. The program architecture includes two distinct tracks: JAPAN Track for startups focusing on growth within the Japanese market, leveraging Onlab's 15 years of local expertise, and GLOBAL Track for startups expanding internationally from day one, utilizing incubation centers in San Francisco and London with access to global networks. Beyond the core accelerator, Onlab operates specialized vertical programs including Open Network Lab Resi-Tech for real estate technology startups in partnership with major Japanese real estate and construction companies, Open Network Lab BioHealth focusing on biotechnology and healthcare innovations, and regional programs in Hokkaido and Fukuoka addressing local economic development through startup cultivation. This fund will invest in promising startups in Japan and abroad—focusing on Onlab participants and companies related to the ESG field—and provide follow-up investments to investees with high potential for growth. The investment component operates through the Open Network Lab & ESG I "Earthshot Fund," which provides seed and early-stage funding with ESG focus, complemented by extensive post-program support including alumni network access to over 160 CEOs and numerous CXOs with IPO and exit experience. The comprehensive service portfolio includes access to discounted startup-essential services covering infrastructure, development tools, hiring platforms, and back-office solutions, along with specialized mentorship from industry experts, entrepreneurs, and investors. Competitive differentiation stems from the program's integration with Digital Garage's broader ecosystem, providing unique access to payment platforms, marketing technology, and corporate partnerships unavailable through standalone accelerators.
Technical Architecture
Open Network Lab's technical infrastructure leverages Digital Garage's comprehensive technology platform and global network to deliver integrated acceleration services across multiple geographic and vertical markets. The organization operates through a hub-and-spoke model with primary facilities in Tokyo (Shibuya and Daikanyama), international locations in San Francisco and London, and regional centers in Hokkaido and Fukuoka, each equipped with co-working spaces, meeting facilities, and startup-specific resources. Participating teams can use the Open Network Spaces in Daikanyama and Kamakura, and can use the incubation space in San Francisco at a discounted price. The digital infrastructure includes portfolio management systems for tracking startup progress, mentor matching platforms connecting entrepreneurs with appropriate advisors based on industry expertise and experience, and investor relations systems facilitating demo day presentations and follow-on funding activities. Technology support services encompass access to cloud infrastructure providers, development tools, and software platforms through negotiated startup-friendly pricing arrangements with major technology vendors. Onlab offers special discounts and plans for various services that startups often need to better focus on developing and growing their products, including infrastructure, development tools, hiring, and back-office tools. The operational framework integrates with Digital Garage's broader technology ecosystem, including payment processing platforms, marketing technology tools, and enterprise software solutions that provide portfolio companies with competitive advantages. Quality assurance processes include regular mentor sessions, milestone-based progress tracking, and peer review systems among cohort participants to ensure program effectiveness. International connectivity leverages Digital Garage's Global Incubation Stream, providing seamless access to markets and resources across North America, Asia, and Europe through established partnerships and local presence. Innovation support includes access to DG Lab's research and development capabilities in blockchain, artificial intelligence, virtual/augmented reality, cybersecurity, and biohealth sectors, enabling startups to incorporate cutting-edge technologies into their solutions.
Strengths
Open Network Lab's primary competitive advantage stems from its pioneering position as Japan's first seed accelerator, providing 15 years of accumulated expertise, institutional knowledge, and market credibility that newer entrants cannot replicate. We launched The Open Network Lab (Onlab) 12 years ago as "Japan's first" accelerator program to create a startup ecosystem similar to Silicon Valley. The organization's exceptional track record includes producing unicorn companies like SmartHR, which secured ¥15.6 billion in Series D funding and achieved unicorn status, along with successful IPOs including giftee, demonstrating consistent ability to identify and nurture high-potential startups. In 2013, he founded KUFU, which later became known as SmartHR, and by 2021, the company secured ¥15.6 billion from international investors in a Series D funding round, joining the ranks of unicorn companies. Strategic integration with Digital Garage provides portfolio companies unique access to Japan's leading payment platform, comprehensive marketing technology services, and extensive corporate partnership networks unavailable through standalone accelerators. The alumni community represents a powerful sustainable advantage, comprising over 160 CEOs and numerous CXOs with combined experience in IPOs, acquisitions, and scaling challenges, creating an invaluable peer support network for new participants. Onlab's alumni community comprises over 160 CEOs and numerous CXOs with experience in IPOs, exits, and tackling significant challenges, providing an unparalleled entrepreneurial community. International expansion capabilities through established operations in San Francisco and London, combined with the Global Incubation Stream connecting North America, Asia, and Europe, provide portfolio companies with genuine global market access rather than theoretical international support. Program diversification across multiple verticals including ESG (Earthshot Fund), real estate technology (Resi-Tech), biohealth, and regional initiatives (Hokkaido, Fukuoka) demonstrates market adaptability and reduces dependence on any single sector or geographic market. The comprehensive support ecosystem extends beyond traditional accelerator services to include specialized technical resources from DG Lab's research in blockchain, AI, VR/AR, security, and biohealth technologies, providing startups with access to cutting-edge innovation capabilities.
Weaknesses
Open Network Lab faces significant competitive challenges from well-funded international accelerators like Y Combinator and Techstars that offer larger funding amounts, more extensive global networks, and higher-profile mentor pools, potentially attracting Japan's most promising startups away from domestic programs. The organization's funding levels of approximately 10 million yen per startup appear modest compared to international standards, potentially limiting its ability to attract startups requiring larger initial capital investments or those with global ambitions requiring substantial market entry funding. Participating teams can receive around 10 million yen to fund their activities, depending on the company's situation and performance. Geographic concentration in Japan, despite international offices, may limit the program's appeal to startups seeking primary access to Silicon Valley networks, European markets, or other major international startup ecosystems where local presence and relationships are crucial for success. Sector specialization in areas like Resi-Tech and biohealth, while providing vertical expertise, may create resource allocation challenges and limit the organization's ability to support startups in rapidly emerging technology areas outside these defined verticals. Language and cultural barriers could impede the attraction of top international startups to Japan-based programs, despite Onlab's global ambitions and English-language programming capabilities. The organization's dependence on Digital Garage's corporate strategy and financial performance creates potential vulnerability to parent company decisions that might not align with optimal accelerator operations or investment strategies. Limited public information about fund sizes, portfolio performance metrics, and exit outcomes compared to more transparent international competitors may hinder the organization's ability to attract top-tier startups and investors seeking verifiable track records. The three-month program duration, while intensive, may be insufficient for deep technology startups requiring longer development cycles, particularly in biohealth and other technical sectors where product development timelines exceed typical accelerator frameworks.
Client Voice
Portfolio company testimonials consistently highlight Open Network Lab's transformational impact on startup development, with SmartHR founder specifically crediting the program's intensive structure and mentorship quality for the company's eventual success. "SmartHR" was born through ten pivots during our time at Onlab. Without Onlab, SmartHR wouldn't exist today. The strong pressure from the mentors and the time constraint of having a Demo Day in three months brought an incredible speed to our development. Entrepreneurs particularly value the mentor patience and expertise in helping founders understand investor perspectives and business fundamentals, with specific praise for guidance on pitch development and strategic business advancement in the Japanese market. The alumni community receives exceptional feedback for providing ongoing support beyond the formal program period, with graduates emphasizing the value of connecting with experienced CEOs and CXOs who have navigated similar challenges including IPOs, exits, and scaling difficulties. Our mentor treated us very well and was very patient, helping me understand from an investors' point of view why it made sense to do a 5 minute pitch, and what investors expect to see. International startups appreciate Onlab's role as a bridge to the Japanese market, with portfolio companies noting the organization's effectiveness in facilitating partnerships with major corporations and providing cultural and regulatory guidance essential for market entry success. Giftee's founding story demonstrates the program's impact on business model development, with the company evolving from a C2C service to a comprehensive B2C platform through strategic pivots and market insights gained during and after the accelerator experience. Giftee achieved IPO on the Tokyo Stock Exchange Mothers in September 2019 and started international expansion, becoming a prominent company attracting attention domestically and internationally. Participants consistently mention the value of peer learning within cohorts, citing the diverse startup community and collaborative environment as crucial factors in their development and continued success. The comprehensive support ecosystem receives praise for providing practical resources including workspace access, legal guidance, and technical infrastructure that enable startups to focus on core business development rather than operational complexities. ESG-focused startups particularly value the Earthshot Fund's specialized expertise in sustainability and social impact, noting the unique combination of financial support and strategic guidance for companies addressing environmental and social challenges.
Bottom Line
Target Customer Profile: Open Network Lab is most suitable for seed and early-stage startups with strong technical foundations and global ambitions seeking comprehensive acceleration support within the Japanese market ecosystem. Ideal candidates include technology companies with established founding teams, validated product concepts, and specific interest in leveraging Japan's corporate partnerships, payment infrastructure, or regional market opportunities for growth and expansion. Companies operating in ESG sectors, real estate technology, biohealth, or general technology applications will find particular value in Onlab's specialized programs and vertical expertise.
Investment Threshold Considerations: Organizations with technology budgets exceeding $100,000 annually and strategic objectives involving Japanese market entry, Asia-Pacific expansion, or corporate partnership development should prioritize Onlab engagement. Startups requiring cultural and regulatory guidance for Japanese market navigation, along with access to established corporate networks in finance, real estate, and technology sectors, will realize significant ROI through program participation.
Industry-Specific Recommendations: Financial technology companies seeking integration with Japan's advanced payment systems, real estate technology startups targeting major Japanese developers through the Resi-Tech program, biohealth companies requiring regulatory navigation and partnership development, and ESG-focused organizations aligning with the Earthshot Fund's sustainability mission represent optimal customer segments.
Implementation Success Factors: Successful engagement requires minimum six-month commitment to program participation, organizational readiness for intensive mentorship and rapid iteration cycles, and willingness to adapt business models based on market feedback and cultural considerations. Companies must demonstrate coachability, execution capability, and genuine commitment to the three-month acceleration timeline with Demo Day preparation requirements.
Risk Mitigation and ROI Optimization: To maximize investment value, participating companies should leverage the comprehensive alumni network actively, maintain engagement beyond the formal program period, and utilize ongoing support resources including follow-on funding opportunities and corporate partnership facilitation for long-term growth acceleration and market success.