Raksul Is Changing Printing In Japan And Just Scored $33.7M

“No matter how much the web progresses, paper is not going to disappear,” says Raksul CEO Matsumoto. In fact, the conventional wisdom that there is no future in paper is proving to be a boon to him.

Photo Credit: Tech in Asia/ Founder and CEO Yasukane Matsumoto (l) with prize hire and new CFO Yo Nagami. Nagami is a DeNA and Carlyle alum 

Last week, Metaps’ online payment system and app monetization know-how powered it to a hefty US$36 million series C funding round. In roiling markets like China or India, 36 million might not stand out, but in Japan it’s rare for even one startup to get that sort of cash per year. 2015 might turn into a special one – today Raksul, a startup that lowers printing costs, publically confirmed it scored US$33.7 million for its own series C.

Ten firms joined the funding round. Repeat investors were Opt, Global Brain, World Innovation Lab, Itochu Technology Ventures, ANRI, Dentsu Digital Holdings, and GMO Venture Partners. The new faces are Link and Motivation Group, Gree Ventures, and Global Catalyst Partners. This funding follows a US$14.3 million series B in February 2014.

Printing may not seem sexy, but Raksul has hit onto something. Speaking with Tech in Asia, Raksul founder and CEO Yasukane Matsumoto confirms his firm is now serving about 100,000 clients. The company’s statement also mentions that revenue has grown five times over. When we last spoke with Matsumoto he said that sales had hit US$1 million in March 2014. He declined to reveal the current monthly revenue figures, but simple mathematics puts Raksul on target for roughly US$60 million this year.

Raksul’s disciplined growth can offer some lessons for young entrepreneurs today. “[To build a business] you need to put the goal at the highest point and keep revising upward. The thing that we are aiming for – we need to keep changing it. IPO is not the goal, it is just a tool. What size, impact can our business have? That is the goal we need to decide,” Matsumoto says.

How Raksul grows in a shrinking sector

Matsumoto does not shy away from the fact that digitization is a creeping reality. “[But] no matter how much the web progresses, paper is not going to disappear,” he says. In fact, the conventional wisdom that there is no future in paper is proving to be a boon to him.

According to Matsumoto, the printing industry Japan is worth JPY 6 trillion (US$50.5 billion). Even if that loses a third of its value, US$33.6 billion is still a lot of space to play in. And that’s before Raksul executes an expansion outside of Japan. “For the next year, we will look overseas. The printing market [elsewhere] in northeast Asia is three times larger than Japan’s [alone],” he explains. There is no firm timeline for the move, but Matsumoto did note that he expects Taiwan will be a welcoming market.

Raksul thinks that Taiwan and Northeast Asia, unlike Southeast Asia, are holding on strongly to “paper culture.” That means there are plenty of small to mid-sized businesses that can rely on Raksul to facilitate their advertising. Matsumoto has seen that neighborhood businesses – think your local dry cleaners, the pub down the street – flock to his service.

Matsumoto used a Japanaese izakaya (casual restaurant) to explain why. “It’s difficult for izakayas to do advertising on the web. If you get four stars on Tabelog [Japan’s Yelp], sure it’s no problem. But if you are just a typical store, it’s very tough to stand out and get customers […] 99 percent of stores don’t have a Michelin rating.” This explains the common sight of shop employees handing out flyers on almost every street in Japan.

He sees this tradition as entrenched but inefficient. Last year, the company released a new service that allows the user to upload (or outsource) a flyer design, then select an address and designate a radial area from that point. After choosing the number of desired copies, the user can send, for instance, 20,000 flyers to the mailboxes of residents within a one kilometer radius of the selected address. The flyers can be sent solo or packaged inside one of Japan’s major newspapers.

This way, a shop owner can mass mail the individuals in their area without needing to hand out each flyer individually. Currently, this workflow accounts for only five percent of Raksul’s revenue, but Matsumoto wants to see it rise to 30 percent this year.

Thanks to a business model that can change how SMBs advertise and global ambitions, Raksul has lined its war chest and is ready to dig in and keep growing the company.

Just don’t expect a pivot to 3D printing anytime soon. In response to a question he constantly fends off, he says, “We are not really thinking about 3D printing. Even if we don’t enter the market, the innovation will continue. We’d rather work where no one else is focusing.”