Japanese Cybersecurity Start-Up CSC Rewarded For Bold Call To Press Ahead With March IPO

A Japanese cybersecurity start-up that bravely held firm to go ahead with its planned IPO at the height of the March stock market sell-off has been rewarded with a 670% surge in its share price since. 30-year-old founder Hikaru Ono’s bet that the Covid-19 pandemic would provoke a rise in cyber attacks has proven well founded and seen the company of just 45 employees reach a market valuation of $800 million in less than 3 months.

Cyber Security Cloud (CSC) listed on the Tokyo Stock Exchange on March 26, just days after the benchmark Japanese 225 index had sustained 20% losses in a spectacular crash. But heightened interest in the cybersecurity sector generally, along with a new surge in interest from retail stock market investors keen to ‘buy the crash’ and profit from the post-coronavirus recovery, has worked out well for CSC.

CSC listed on Tokyo’s Mothers index for start-ups, which can be compared to the LSE’s Aim sub-market. The success of CSC in particular, but reawakened retail investor interest in Japan more generally, has taken the Mothers index to almost a 12-month high this month.

CSC uses artificial intelligence (AI) to enhance the existing cybersecurity efforts of its clients. The start-up was granted permission to IPO in late February — just a few days before Prime Minister Shinzo Abe’s pivotal order to close all of Japan’s schools. For most companies in CSC’s position, that would have been enough to pull the plug on a listing. But Mr Ono was convinced that the shift to remote work for many office workers meant that cloud-based data and applications, CSC’s speciality, would be increasingly targeted by cyber criminals:

“And from that, it was obvious that if there were fewer people actually working in their offices, companies would become thinner and weaker in terms of their cyber security.”

Cybersecurity has been a lower priority for Japan’s C-Suite executives than elsewhere in the world. That’s left many Japanese companies dangerously exposed and Japan has few domestically based and owned cybersecurity companies. However, there is also reticence to entrust unlisted companies with jobs as sensitive as cybersecurity, which was another factor that convinced Mr Ono to push ahead with CSC’s listing. He comments:

“We are one of only a few Japanese cyber security companies anyway, so I thought if we didn’t go for it, there would be fewer of us around to protect Japan.”

Mr Ono’s forecasts provide accurate, with cyber security breach incidents leaping in Japan, with hackers targeting company laptops using unsecured home WiFi networks. Demand for CSC’s services has soared and so has the company’s share price.