The Startup Ecosystem of Japan

Like other economies in the region, a risk averse mindset is a challenge for the growth of Japan’s startup economy, in addition to a need for improved English skills to allow entrepreneurs to target international markets. This is reinforced by the abundance of high-quality corporate jobs, which creates a scarcity of talented and motivated entrepreneurs. With an aging population, Japan could benefit from attracting more foreign talent.

Japan’s low number of unicorns could signal a lack of investment in the startup ecosystem. Interestingly, a daring and globally recognized VC venture is based in Japan: Softbank, led by Masayoshi Son, has made a massive impact on the global startup landscape, with investments in companies ranging from Uber and ByteDance, to WeWork or FTX. In an effort to increase and attract startup capital, the government has taken an active role with plans to introduce a five year residency visa for angel investors and venture capitalists. This shows that Japan is nurturing its startup ecosystem with more investment and promoting entrepreneurship, signaling an understanding of the importance of successful and innovative entrepreneurs. But Japan also needs to develop structures that will allow businesses the flexibility to compete in the global economy among rapidly changing industries. The Integrated Innovation Strategy 2022: Making Great Strides Toward Society 5.0 aims to address this by including focus areas on the promotion of advanced and emerging technology, and offers 120 trillion yen in R&D investment to create Society 5.0. Another initiative aimed at increasing global competitiveness of Japanese startups, the J-Startup Program promotes local startups to the global market.

Japan has a rich network of support organizations across multiple national hubs. One such organization, the Japan External Trade Organization (JETRO), helps startups globalize with the Startup City Acceleration Program. In addition, the Tokyo Metropolitan Government, Startup Fukuoka City, Open Yokohama, Startup City Sapporo, the Kyoto Startup Ecosystem Promotion Council, and Shibuya Startup Support are all committed to boosting entrepreneurship. Japan’s clear strategy of creating competitive startup ecosystems shows that the country is moving in the right direction. Japan’s Startup Visa is already being implemented in a number of locations, such as Fukuoka City, Kyoto, and Kobe City. Japan also hosts several startup events that connect different stakeholders, such as the Growth Industry Conference, Y Ship, and the Yoxo Festival.

The Japanese government has been active in Japan’s startup economy development with the promotion of Tokyo, Yokohama, Fukuoka, Kyoto, and Kansai as leading startup cities, in addition to state-sponsored funding and accelerator programs for startups. The country’s strong relations with the US have produced a partnership that could boost Japan’s startup ecosystem even further with initiatives such as the U.S.-Japan Competitiveness and Resilience (CoRe) Partnership and the Japan Innovation Campus in Palo Alto. With fintech and healthtech showing a lot of promise in Japan, we hope to see the country’s startup ecosystems attract more global recognition in the future. Japan startup ranking, Japan innovation ecosystem, Japan tech innovation, Japan startup funding opportunities.