Key Points
- Keisuke Murakami, former Digital Agency official, argues for a “Stage 2” of regional revitalization that moves away from government subsidies toward self-sustaining local finance.
- The strategy involves shifting from Profit & Loss (PL) thinking to Balance Sheet (BS) thinking, leveraging local real estate and brand assets to secure investment.
- A successful case study in Mitoyo City, Kagawa Prefecture, demonstrates how community-based investment and DAO-like structures can revitalize shopping streets and lodging.
- Murakami highlights the structural drain of regional capital into global markets and proposes a “Local IPO” model to keep wealth circulating within the community.
Full Transcript (English)
Guest (Keisuke Murakami): I believe “Stage 2” is about creating a state where these people can raise funds through their own strength. It shouldn’t matter whether the “fourth or fifth frog” follows them or not; they should be able to move forward on their own. In my book, I argue that the keys to this are using real estate effectively and moving away from global finance toward what I call “Goriaku Finance”—finance limited to those who actually love the project. If we can complete these two elements, those few pioneers who jumped out first will be able to survive without subsidies. When those pioneers start to become self-propelled, others will follow with peace of mind. This allows the “Titanic” to eventually win against the “current.” That is what I want to test in Stage 2.
Host: That is exactly what you discuss in Chapter 2: how to proceed with reconstructing the business model. You mentioned moving from government grants—which act as the initial spark—to a package that supports everyone. But to become self-propelled, you need a new financial scheme. Could you elaborate on what you mean by “real estate” in this context?
Guest (Murakami): To a finance professional, this might sound amateurish, but to someone unfamiliar with finance, it might sound confusing. It is about moving from “PL” to “BS.” “PL” (Profit and Loss) is about the daily flow of sales. “BS” (Balance Sheet) is about the underlying assets—the shops, the retained earnings, the cash, and the deposits. Every business can be divided into “flow” and “stock.” However, when managing a business in a local region, people are often so busy chasing the “flow” that they lose sight of the “stock.”
Guest (Murakami): When I was in elementary school, local greengrocers had baskets hanging from the ceiling. They would throw sales money in there and grab cash from it in the morning to go buy stock. Many small and medium-sized enterprises (SMEs) still operate similarly. When the money in the basket runs low and they can’t pay staff next month, they go to the bank to borrow. The bank asks, “Do you have collateral?” But the truth is, the real estate of the shop has value. The “noren” (brand reputation) of what you are using has value. If you use things that can be evaluated as “stock” as the reason for fundraising, you can actually raise money. However, this requires professional skill. Local financial institutions often only do “flow” lending, so they can’t do this. If we establish one company in a region that can properly handle the “BS” and manage the local assets collectively, they could raise funds for renovations or acquiring vacant houses on behalf of the owners. By creating a system where people who see the “blessing” (Goriaku) in that project provide support at a low cost, the “frogs” who jumped out can do their own finance.
Hima Furuta (Umari): By the way, we have also acquired this place. The condition is good, so instead of a guest house, we are making it a place where people who come for drinks can stay, since there aren’t many taxis. It will be a membership-based system where you can take a nap. Over here is a brewery. And here, a yakitori shop just opened. This is a sushi shop. It’s amazing, right? This is a bike shop, and this is a Japanese restaurant. 150 years ago, this was a bustling shopping street. We are recreating that shopping street.
Hima Furuta (Umari): This is the share house space that only DAO members can use. It’s not a whole-house rental for the public; it’s strictly for members. The point is that one “share” is 100,000 yen. If you invest 100,000 yen, you can stay for 5 nights a year for 10 years. We have 400 shareholders this time, which covers 2,000 nights. The remaining 1,650 nights are used as a sort of “currency.” If people help us with things we need done, we give them a night’s stay. It builds “trust assets.” When you’re in trouble, someone in the community helps you. That’s the kind of region we are building.
Hima Furuta (Umari): Once it’s built to this level, people say, “I want to invest” or “I want to participate.” But when it was a total wreck, no one gathered. Companies also find it hard to invest in “cafe operating costs,” but if it’s “real estate” that will be used by everyone in two years and generate rent, it can eventually be switched to a bank loan. If we ask them to cover just the first two years, it’s much easier for them to invest. This is the “Vacant House Model” of local finance.
Host: They are taking old folk houses and local lodging facilities and turning them into assets that can raise sustainable funds. They aren’t just looking at a run-down place; they are adding value and building a brand until anyone can see it’s a good thing. Only then do they seek external funding. It’s a very staged approach. But there aren’t many people who can do that.
Guest (Murakami): The way they explained it at Mitoyo’s Urashima Village was very clever. Local people who had never invested in someone else’s business—people who weren’t supermarket owners or timber merchants—invested 5 million yen of their own money into a new business. They learned what “investment” means. Then, they created a fund for the real estate and sold it. It cost 200 million yen to build, but it was bought for over 300 million yen. Those who invested early learned about the “exit.” That 300 million yen was supported by individual investors contributing 1 million yen each, many of whom were locals.
Guest (Murakami): How did Hima Furuta explain it to them? As a financial product, the fund only had about a 2% yield. You might as well buy government bonds. But, you get to stay one night a year for free. In the summer, a night there costs about 160,000 yen. So, if you put in 1 million yen, you get 160,000 yen worth of lodging plus a 2% return. That’s over a 16% return. But even that is a “finance” explanation. Hima told them: “Grandpa, if you move that 1 million yen you have sitting in the post office over to here, your grandkids can stay for free when they come to visit.”
Host: That is so easy to understand! The time spent with children and grandchildren is the most precious. If staying at home is a burden for the grandmother, having them stay nearby for free is perfect. You just move the money from the post office to this project.
Guest (Murakami): Exactly. The financial know-how is basic—off-balance-sheet leasebacks and specific funds—but the key is how you explain it. Another reason Mitoyo is working is the generational succession. You have Hima’s generation, then Soichiro Imagawa connecting locals with Hima, then Hayate Tajima handling transportation, Yuichi Yokoyama doing “re-farming,” and Shohei Kodama handling education. Now, the next generation sees them and says, “I want to start a business too.” They are launching an average of two crowdfunding projects a month. The flow of people is well-constructed.
Host: Furuta is more of an educator than a producer now, pushing the younger generation to explain things in their own words and refining their business plans. I recently visited a prefecture in Kyushu and spoke with a former official involved in “Cool Japan.” He noted that they lacked the “fund manager” talent because they couldn’t offer high enough rewards, and the personnel changed every few years, so no one took final responsibility. Mitoyo is different because Furuta moved his home and even his family grave there. He’s not running away. That gives the local investors peace of mind.
Guest (Murakami): This leads to the theme of my next book: the “hierarchical structure of the finance market.” Culture and global finance are inherently incompatible. Until the 1990s, Japan had the “Main Bank” system where bank officials sat on company boards. They knew the internal workings, so they just lent money. There was no need to raise funds from the “market.” That’s how Japan achieved the world’s highest GDP per capita and labor productivity in 1990. But when the bubble burst, banks lost that power. Japan shifted to direct finance—stocks and bonds. Because Japan was number one then, money gathered easily. But this forced everyone into a “single standard” of global finance.
Guest (Murakami): Global finance demands “corporate governance” and “accounting standards” identical to the West, regardless of whether it’s good or bad. It’s designed so investors can evaluate a business without ever visiting the site or understanding the local culture. In this single market, money flows toward the highest perceived returns—like semiconductors or AI. Regional economies, at the edge of this system, have their capital sucked out. Local banks only lend out half of the money they take in; the rest is invested in the global finance market because the Financial Services Agency tells them they must earn a profit to pay interest. Even large companies that want to support regions are told by their boards, “Why move 30 million yen to a zero-return project when we can get 5% elsewhere?” To fix this, we need to build a “ladder” of financial markets. We need a limited market for people who understand the value of a specific local shopping street—like a DAO. Then a slightly broader market for regional revitalization. We need to create these steps so that regional wealth isn’t just sucked up to the top.
