Japanese govtech startup raises 600 million yen (US$4M) in funding

A release from the Tokyo-based digital ID firm Cross ID says it has raised a total of approximately 600 million yen in funding – almost $4 million U.S. – for a digital mail service.

Styled as xID, the firm says the investment, led by Hamagin DG Innovation Fund and underwritten by Resona Capital Co. Ltd., will be used to accelerate private-sector expansion of SmartPOST, “a digital postal service that solves postal service issues for local governments.”

The firm’s business rests on Japan’s My Number ID cards. It works with governments and partner companies “to promote initiatives to make the use of My Number cards more convenient and easier, mainly in the public and administrative sectors.” That includes its xID digital identity product and SmartPOST. An overview on Pitchbook frames xID as a one-stop-shop blockchain product for digital identity: “an API that can securely and simply implement login authentication, digital signature, identity verification (e-KYC), and submission of their number, enabling businesses to eliminate unnecessary costs and ensure fair transparency of information.”

Digital way to manage physical mail

Investors clearly see potential in SmartPOST, which xID says is a response to Japan’s aging population and the resulting financial strain on public services. The digital option cuts costs and makes municipal postal operations more efficient. That’s critical in the context of staffing shortages that are only expected to increase as Japan’s birth rate trends downward.

In language translated from Japanese by Google, SmartPOST is described as “a business process as a service (BPaaS) that can realize digital postal delivery, where senders can centrally realize and manage analog and digital notification methods and recipients can respond to a variety of delivery methods.”

Working in conjunction with the xID digital identity app, it digitizes notifications from local governments to residents. Per the xID website, “because it utilizes the public personal authentication service of the My Number card it is possible to ensure that messages are sent digitally to the targeted residents.”

“Furthermore, the xID app can be linked to the My Number card, allowing anyone to easily create a digital ID. Residents can use the app to verify their identity on their smartphone and carry out administrative procedures without having to go to city hall.”

Ryobi, DNP among investors that prompt hiring blitz

SmartPOST is being rolled out in cities across Japan. The goal is to grow business in the financial sector and to position SmartPOST and xID as part of “a new social infrastructure for the digital age.”

In addition to Hamagin DG Innovation Fund and Resona Capital, participating investors include Sumitomo Mitsui Banking Corporation, Ryobi Systems, SocioFuture and Dai Nippon Printing (DNP) – the latter two new to the fold.

To support its quick growth and financial ascent (xID started in 2020, although its origins go back to 2012), the firm is hiring. “In conjunction with this funding, we will further strengthen our product team,” it says. It seeks infrastructure engineers, back-end engineers and technical support to “help us develop the xID app, SmartPOST, and other new services in Japan’s Govtech field!”

Use cases already emerging in childcare, financial sector

A current project sees it being introduced into the Childcare DX Demonstration Project in Meiwa Town, Mie Prefecture – “a system for digital applications and visit reservation systems as part of the ‘Municipal Front Yard Reform Model Project’ promoted by the Ministry of Internal Affairs and Communications.”

“For those raising children, there are a wide variety of procedures that must be completed on a daily basis, such as submitting birth registrations and applying for childcare facilities, and they have to visit the office multiple times to complete each procedure.”

“We will create a next-generation government office that is easy because you don’t have to go to the government office, smooth because you don’t have to wait, and easy because you don’t have to write anything.”

In a recent interview, Hikaru Kusaka, CEO of xID, says he was inspired to create xID by his time living in Estonia. “The pillar of our business,” he says, “is how to utilize digital IDs to bridge the gap between the public and private sectors.”

Article Topics

digital government  |  digital ID  |  funding  |  identity verification  |  investment  |  Japan  |  My Number  |  xID