Challenges

Siiibo meets the following needs on the part of companies seeking funding:
- Diversification of financing methods
- Less burden of negotiations with financial institutions
- Reduced hurdles to debt financing
- Flexibility in use of funds
- Fast financing
- Building relationships with investors

At the same time, Siiibo also meets the following needs on the part of investors:
- Balanced risk/return investment
- Avoidance of financial instrument’s mechanisms and risks’ complexity
- “Income-gain” (as opposed to capital gain) investments
- Meaningful Investment
- Connections to investees
- Reduced taxes on profits

Primary target

Which group does your product/service primarily target?

Description of Innovation

Corporate bonds are traditional financial instruments, but publicly offered ones are limited both in terms of the investors and the issuers. What makes Siiibo different is that we are expanding the corporate bond market by using “private placement” (as opposed to public offering) to expand both users utilizing the Internet to connect them and optimizing the operations.
In terms of the market environment, on the investor side, the demand for investment online and “income-gain products” is growing. Unlike P2P lending, corporate bonds allow investors to invest directly in a company and therefore avoid the risk of an intermediary. In addition, the taxation applicable to the interest on bonds is more attractive to high earners than that on P2P lending.
At the same time, on the issuer side, the need to diversify funding which cannot be covered only by loans has become increasingly apparent. In this context, corporate bonds have an advantage over other forms of financing in that they can be raised quickly and at a low cost. Furthermore, detailed corporate and financial information can only be disclosed to a small number of people. Moreover, raising corporate bonds can help to demonstrate creditworthiness externally. Siiibo is an online investment platform specialized in corporate bonds. The platform connects retail investors with bond issuer companies, especially startups considering venture debt in Japan.

Results

The financing methods for Japanese startups are equity-oriented and the venture debt market is still immature in Japan. In the US and Europe, debt financing accounts for 20-30% of equity financing, while in Japan it is estimated to be less than 10%. Given the size of the equity market, and assuming that the debt market expands to levels similar to those in the US and Europe, the Japanese venture debt market should have room to grow to around 300 billion yen. Siiibo has the potential to be a business worth tens or hundreds of billions of yen if it can capture a percentage of that market.