Japan has long faced low economic growth, but the nation is now prioritizing innovation through startups and established organizations. Both central and local governments are actively working to build a thriving startup ecosystem, using the Global Startup Ecosystem Report (GSER) by GEN and Startup Genome as a benchmark to measure progress.
While these efforts are still in their early stages and significant challenges remain, Japan is committed to creating an environment where entrepreneurship can thrive.
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Thank you for joining our session exploring the dramatic transformation of Japan's startup landscape. Our expert panel offered invaluable perspectives on where the ecosystem has been, where it stands today, and the exciting opportunities that lie ahead.
Brief Summary
This session provided a deep dive into the rapid evolution of Japan's startup ecosystem over the past decade. Featuring insights from seasoned entrepreneurs, innovation leaders, and government advisors, the discussion highlighted significant growth in investment and the number of startups, a shift towards internationalization, and the emergence of specialized regional ecosystems beyond Tokyo. The panelists discussed the crucial role of government policy, deep tech opportunities, and the changing culture surrounding entrepreneurship and collaboration with global partners.
Outline
• Introduction: Welcome and speaker introductions, outlining the session structure (past, present, future opportunities).
• Panelist Backgrounds: Diverse experiences shared by speakers from Google, FinTech, Plug and Play, Startup Ecosystem Association Japan, Cambridge Innovation Center (CIC), World Bank, Japanese government ministries, JETRO, and academia.
• The Past (10 Years Ago): Discussion of the state of the ecosystem a decade prior.
• The Present:
◦ Rapid growth: Doubled investment to over $5 billion annually, more than 9,000 startups (depending on the database).
◦ Increase in university spin-outs: Shift in culture and aggression from universities in commercializing research.
◦ Government strategy: National and Tokyo Metropolitan Government 5-year strategies announced ~3 years ago.
◦ Internationalization: Dramatic change from a domestic mindset to thinking globally, increased presence of Japanese companies abroad (e.g., 400-500+ in Silicon Valley compared to 50-60 ten years ago), and welcoming foreign engagement in Japan.
◦ Tokyo's Global Ranking: Ranked 15th among 300 global ecosystems two years ago, jumping to 10th last year.
• Ecosystems Beyond Tokyo:
◦ Discussion of various prefectures and cities with growing, specialized ecosystems.
◦ Examples: Aichi (manufacturing, robotics), Fukuoka (internationalization, Southeast Asia focus, young population), Hokkaido (space, agriculture), Sapporo (food tech), Kumamoto (food tech), Osaka/Kyoto (biotechnology, industry).
◦ Specialization based on local strengths, often linked to universities, research institutes, and existing industries.
◦ Consortiums connecting universities and stakeholders across regions.
◦ Role of prefectural/city governments in building local ecosystems and involving local industries.
• Government Commitment:
◦ Strong commitment from national and local governments, viewed as an "aircraft carrier" turn that is now accelerating.
◦ National government role: R&D budget, culture change, supporting international expansion.
◦ Local government role: Building specific local ecosystems, involving local industries, often more flexible.
◦ JETRO's role: Attracting international accelerators, supporting globalization of regions and startups.
◦ Prime Minister's announcement of new global startup ecosystem cities, emphasizing globalization of non-Tokyo cities.
• Opportunities & The Future:
◦ Growth in startup valuations reaching $50M-$200M+.
◦ High-quality, deep tech startups with unique, often monopolistic technologies from university research.
◦ Examples of successful deep tech companies: Astroscale (space debris, satellite refueling), Gitai (autonomous space robotic arm), Sakana AI (evolutionary AI model for corporates).
◦ Deep tech as a major focus: Government and corporate investment, easier entry for foreign deep tech startups due to reduced language/culture barriers.
◦ Leveraging Japan's culture of precision and quality for deep tech manufacturing.
◦ Opportunities for foreign investors (need more angel investors, policy is improving but still work needed).
◦ Opportunities for foreign business-minded CEOs to work with Japanese engineers/researchers on new companies.
◦ Government's ambitious goals: 100,000 startups and 100 unicorns in the coming years (currently ~25k startups, ~8 unicorns).
◦ Collaboration with large Japanese corporations open to open innovation, though sometimes conservative.
Audience Engagement / Q&A
◦ Identifying audience segments (founders, investors, policy makers, others).
◦ Question on growing ecosystems in isolated/conservative areas: Importance of long-term education, infrastructure, connecting local ecosystems (universities, researchers) with larger networks and social capital hubs.
◦ Question on Japanese startups entering the US market: While Silicon Valley is popular, JETRO and others are directing startups to specialized markets like Boston/San Diego (life science/bio), exploring Europe (Paris, London, Germany). It's an education process to consider diverse US locations beyond the coasts.
◦ Question on connecting foreign (Peru) provincial ecosystems (mining, agriculture) with Japan: Recommend using established hubs like CIC, JETRO (global offices), Startup Ecosystem Association Japan (connections to local gov), and potentially exploring sister city relationships or soft landing programs, but finding programs can be difficult without using a hub.
Notable Quotes
• "In the last 10 years... we doubled the investment as a total. Now we have more than 5 billion US dollars annually in Japan. And we also having many... early stage startups. Now we have more than 9,000 startups."
• "Tokyo is now recognized one of the top 20 ecosystems in the world."
• "It's like a like an aircraft carrier that when it turns it goes very very slow but then it turns and really moves everything together. That's what happened with Japan and now that the turn has happened and everybody's moving so it goes from the central government to the prefecture and everybody's aligned. What you're seeing now is the implementation andit's going to go exponential."
Key Takeaways
• Japan's startup ecosystem is undergoing rapid and significant growth, marked by increased investment and a surge in the number of startups, especially those emerging from universities.
• Beyond Tokyo, specialized regional ecosystems are developing, each leveraging unique local industry strengths (e.g., manufacturing in Aichi, internationalization in Fukuoka, biotechnology in Osaka/Kyoto).
• Government commitment is strong and aligned across national and local levels, actively driving policy changes, funding R&D, and supporting both domestic growth and internationalization efforts.
• Deep Tech is a key area of opportunity, benefiting from Japan's precision culture and attracting significant government and corporate interest, making it potentially easier for foreign deep tech startups to enter the market.
• Collaboration and connection are crucial for both Japanese startups going abroad and foreign entities entering Japan, with established hubs and government agencies playing a vital role in building these bridges.
Resources Mentioned
• Startup Genome and GEN's Global Startup Ecosystem Report: An annual report ranking global ecosystems.
• Cambridge Innovation Center (CIC): Mentioned as a large startup campus and network hub in Japan.
• JETRO (Japanese government trade agency): Highlighted for its role in globalizing the Japanese ecosystem and supporting international connections.
• Startup Ecosystem Association Japan: An association working to support and connect the ecosystem.
• Nidle: A funding agency in Japan supporting deep tech.
Action Items
• Consider connecting with hubs like CIC, JETRO, or the Startup Ecosystem Association Japan for guidance on navigating the Japanese market or finding partners.
• If interested in specific industries or research areas, explore opportunities in specialized regional cities beyond Tokyo.
• For those building ecosystems in isolated areas, focus on building social capital and connecting your community to larger networks through events and partnerships.
