Digital transformation (DX) partner ROUTE06 raised 1.5 billion yen in funding ー Investment in enterprise API development and building a remote-first environment

ROUTE06, Inc. has announced that it has raised a total of 1.5 billion yen in Series A round funding. As of today, ROUTE06 has implemented third-party allocation of shares to a total of seven companies: ALL STAR SAAS FUND as the lead investor as well as JAFCO Group, Delight Ventures, Genesia Ventures, Mizuho Capital, SMBC Venture Capital, and Mitsubishi UFJ Capital.

Since its establishment in 2020, ROUTE06 has focused on supporting the launch and growth of digital businesses of large enterprises such as Sogo & Seibu and Mitsubishi Materials Corporation. The funds raised will be invested in the development of the business API platform for enterprises known as Plain, building a remote-first environment, and human resources development in order to further accelerate our efforts to date and realize the digital transformation of business transactions in all industries. We will also focus on expanding our internal infrastructure, including information security and internal controls, as well as improving operational efficiency.

Business background of ROUTE06

The evolution of digital technology has led to the emergence of new platforms one after the other around the world, driving the economies of various countries and giving rise to many human resources and startup companies that are taking on the challenge of solving social issues. On the other hand, challenges are becoming apparent for the conventional corporate system that has supported the Japanese economy until now at large traditional companies in Japan, and pessimistic discussions about the future of society and the economy have often been held. While this background has made it relatively easier to focus attention on start-up companies and entrepreneurs, there are many intrapreneurs who are taking on the challenge of solving major social issues by leveraging the world-class facilities assets, intellectual property, human capital, and other assets of large traditional companies.

Intrapreneurs are not necessarily well-versed in the latest digital technology, and there is often a shortage of human resources within companies who are skilled in business development, design, and engineering in the digital domain. As a DX partner for these intrapreneurs, ROUTE06 tackles the challenge of creating new business opportunities and economic value by leveraging the existing assets of large companies through our provision of the latest digital technology and system infrastructure as well as support from a team of digital business startup professionals.

Plain, a business API platform for enterprises

Product overview

Plain is a business API platform for the digital transformation of all business transactions. It contributes to the vertical launch and continuous service improvement of various digital businesses, including online marketplaces, whether they are B2C or B2B. Even for large traditional companies that do not have a well-developed digital product development system, Plain can significantly shorten system development time and facilitate agile development with internal and external development partners as well as day-to-day business operations. The back-end system meets the security standards required by large companies, and by providing a full range of reporting and monitoring functions, builds an environment in which client companies can focus on enhancing user experience and business operations with peace of mind.

Plain is a backend service that offers significant benefits particularly for digital businesses that require complex business operations and data integration, such as online marketplaces (B2C/B2B), order receipt platforms, OMO stores, cloud EDI, and business matching platforms. Its strengths in real-time, normalized data acquisition and integrated management enable flexible user experience design and continuous improvement, and contribute to the creation of new customer services and monetization methods that leverage new business data.

Plain has already been introduced in DX projects in various industries. Our track record includes support for retail, manufacturing, and real estate businesses that want to launch digital platform services utilizing real assets such as stores and factory facilities, as well as distribution and intermediary companies that want to launch matching platform businesses utilizing domestic and international business connection networks. We are aiming for more than 100 contracts over the next five years, mainly with large companies.

The concept behind the name “Plain”

The word “Plain” is defined as a flat, unadorned stretch of land with good visibility. Our product “Plain” is ultimately a foundation. By bringing together client companies and various partners who are the main business stakeholders to co-create new services and businesses with Plain, the landscape changes in diverse ways and has the potential to develop and expand over time. None of the digital services created by utilizing this product will be the same. We would like Plain to be a product that enables people and companies that are not necessarily skilled in digital technology to more than fully express their individuality and strengths, and to provide a stage for grasping new chances for growth and opportunities.

Service provision structure

A professional team of product managers, engineers, designers and others within ROUTE06 supports the introduction of Plain and provides the services necessary for the vertical launch of a digital platform business. We provide agile and practical business support, including UX design and UI design according to customer value, construction of a digital-first workflow, and data linkage, analysis, and visualization to each system using the data platform function.

Inquiries about introduction of Plain

Please send inquiries to the ROUTE06 Professional Services Division at [email protected]

ROUTE06’s aspirations as an organization

ROUTE06’s guiding principle is “Be a disruptor.” The creation of new business opportunities and economic value requires the ability to beneficially “disrupt” our clients’ businesses and organizations. In order to become an organization that can gently and smoothly spread its passion to all stakeholders, we will invest in building internal structures and human resource development. In the next five years, we aim to increase the number of employees to 200, about seven times the current number.

Initiatives to establish a remote-first environment

An environment that is asynchronous and easy to work in
We will pursue the creation of an asynchronous and easy-to-work-in environment by utilizing GitHub as the company-wide workspace and fully leveraging online collaboration tools such as Slack and Figma. In addition to the 20 days of annual paid leave granted upon joining the company, we use our systems that also allow sick leave, rest and relaxation leave, childcare leave allowance, and more so that employees can choose the way of working that allows them to achieve optimum performance. We will continue to expand and improve systems to ensure that each employee’s life is not compromised by their work.

Human resources development
With an eye on hiring new graduates, we will expand training support and other programs that encourage learning opportunities for individualized career development, such as improvement of product development skills. In addition, we will create assets on GitHub of internal documents such as various guidelines for onboarding and other matters as well as knowledge gained through projects to aim for an organizational environment in which everyone can obtain essential information when necessary, as well as to promote an open source culture where people can propose improvements in a flat manner and actively learn from one another.

Security
Since our first year of operation, we have focused on our information management system, including the introduction of mobile device management (Jamf Pro), in order to achieve both the reliability of a listed company and the agility of a start-up company. In addition to continuing to strengthen our corporate engineering team, we will obtain ISMS certification and other certifications by the end of FY2022, and invest toward achieving SOC2+ report level internal controls in the future.

Comments from investors

***ALL STAR SAAS FUND
Hiro Maeda, Managing Partner* In order for large companies to achieve digital transformation, there are many requests calling for linkage with existing systems, and the availability of this has a significant impact on the speed of DX promotion. Amidst this situation, we believe that ROUTE06, which serves as a “hub” for system linkage and provides services that are flexible enough to meet detailed needs, will be an important presence in accelerating the spread of DX in the future. The philosophy and culture of the management at ROUTE06 always pursues the essential and takes an earnest, careful approach to customers. This permeates the entire organization and is one of ROUTE06’s major strengths and appeals. We feel that this approach of the entire organization is a major factor in the very high evaluation it receives from many customers. We are looking forward to working with ROUTE06 while fully supporting its growth journey. ***JAFCO Group Co., Ltd.
Shozo Isaka, Partner* In recent years, the number of DX-related professionals working on enterprises has grown dramatically, and we feel that the environment for a full-fledged “digital shift” is now in place. ROUTE06’s PaaS product is a software platform that enables flexible UI/UX design and continuous improvement after service release. As a service that transfers various business transactions to a digital platform, it has been adopted by Tier 1 companies in various industries, including trading, retail, and manufacturing. We expect that ROUTE06’s team of professionals who are skilled in lean business startup and agile development will provide strong support for DX for large companies and thus contribute to the enhancement of Japan’s national power. We are pleased to be able to co-invest with Mr. Nagahara, with whom we have worked hard since 2007. ***Delight Ventures, Inc.
Kentaroh Nagahara, Principal* It seems only a short while ago that Mr. Endo, who had been a member of Delight, told me in 2019, “I am thinking of starting a business in this area. What do you think?” Since that time, Mr. Endo has always said that if he was going to do it, he wanted to compete in a major way in a major market. We are very pleased that over the past two years, he has been able to accumulate a track record of achievements centered on large companies while forming a strong team, and achieve ideal Series A funding. As DX of large companies is just beginning, we are greatly looking forward to the future developments by this team which is well versed in the sense of the challenges that large companies are facing. We at Delight Ventures will continue to give our full support. ***Genesia Ventures, Inc.
Shunsuke Sagara, Investment Manager* In March 2020, when COVID-19 was suddenly becoming a menace, there was no prototype product and we decided to invest in the lead in a pre-seed round with only a team and a theme. I fondly remember that at the time, the reactions of those around were uniformly unfavorable, asking, “How is the systems integrator different?” and “What is the competitive advantage?” We are pleased that we were able to form a Series A round with the best possible lineup about two years later. At the same time, we are greatly looking forward to the discontinuous growth that will come when the product is ready to bloom. Go ROUTE06! ***Mizuho Capital Co., Ltd.
Toshiya Sonoda, Investment Manager, 6th Investment Department* With the increasing importance of DX at companies these days, ROUTE06 is supporting the promotion of DX in companies centered on business transactions with a completely different approach from the past. We believe that the culture of approaching work with sincerity is deeply rooted in Mr. Endo and all the executives and employees, which has led to them being able to always more than meet their clients’ needs. Going forward, we will continue to support the further growth of ROUTE06 while fully utilizing the Mizuho Group’s knowledge and client base. ***SMBC Venture Capital Co., Ltd.
Yuta Watanabe, Deputy Department Manager, Investment and Sales Department 1* ROUTE06 is steadily building a track record as the DX partner of choice for large companies amid the trend toward the inevitable digitization of customer contact points. We invested in ROUTE06 because we resonated with the company’s stance of aiming for further growth as a presence that provides a high level of solid support from system conception to agile development and its operation. In addition, the high level of perspective of Mr. Endo and the rest of the team, as well as their attentive communication, are also worthy of special mention. We at the SMBC Group, including my company, will continue to make every effort to contribute to the realization of the world that ROUTE06 is aiming for. ***Mitsubishi UFJ Capital Co., Ltd.
Ken Shinohara, Deputy Department Manager, Investment Department 3* While interest in DX has been growing recently, the current situation is that progress is not as fast as expected due to various issues such as cost, timeframe, and human resources. Particularly in the area of aggressive DX (reform that involves stakeholders and the ecosystem), there are only a limited number of players to consult with. Amidst this, ROUTE06 declares itself to be a digital transformer (“DXer”) and promotes DX for companies with an unprecedented approach. Our company became interested in ROUTE06 because of its strong team, including Mr. Endo, and the fact that it has achieved significant results soon after its establishment for prestigious large companies. We will continue to provide full-fledged support for the further development of ROUTE06 by making full use of the MUFG’s group strength.