The Startup Ecosystem of Japan

With a proven record of innovation, Japan is a tech pioneer. Apart from its historic success in building global companies such as Sony and Panasonic, the country also recognizes the importance of startups. However, the shift from building massive industrial consumer electronics and automobile companies towards startups is a difficult one. 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. The abundance of high-quality corporate jobs and a tight job market are creating a scarcity of talented and motivated entrepreneurs. With an aging population, Japan could benefit from attracting more foreign talent.
The low number of unicorns could signal a lack of investment in the startup ecosystem. Yet interestingly, a daring and revolutionary VC venture is based in Japan. Softbank, led by Masayoshi Son, has had its ups and downs but made a massive impact on the landscape of global investment. Japan is gradually advancing its startup ecosystem with more investment and a mindset change of encouraging entrepreneurship, mainly boosted by a government that understands the importance of successful and innovative entrepreneurs. Japan also needs to develop structures that would 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 includes focus areas on the promotion of advanced and emerging technology, and offers 120 trillion yen in R&D investment to create Society 5.0.
With support from the government, the J-Startup Program has set out to promote Japanese startups to the global market and help create 20 unicorns by 2023, which will be difficult considering current market conditions. Japan boasts a rich network of support organizations in multiple hubs in the country. One of them is the Japan External Trade Organization (JETRO), which helps startups go global through the Startup City Acceleration Program. In addition, the Tokyo Metropolitan Government, Startup Fukuoka City, Startup City Sapporo, and Shibuya Startup Support are all committed to boosting their startup ecosystems. 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 and Kobe City.
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. Moreover, the country’s strong relations with the US has produced a partnership that could boost Japan’s startup scene through initiatives such as the U.S.-Japan Competitiveness and Resilience (CoRe) Partnership. With fintech and healthtech showing a lot of promise in Japan, we hope to see the country’s startup ecosystems attract more global recognition.