Why Japan Is Becoming a Must-Watch Market for Startups

Japan is rapidly strengthening its position as one of the world’s most promising startup ecosystems, making it an increasingly attractive destination for entrepreneurs, investors, and global technology companies. Backed by major government funding, a growing number of scaleups, and rising international interest, the country is positioning itself as a key innovation hub in Asia.

Momentum around Japan’s startup ecosystem was recently highlighted during the inaugural Scaleup Summit Japan, organized by Mind the Bridge in partnership with JETRO, Japan’s government agency that supports international business expansion. The event was held alongside SusHi Tech Tokyo, one of Asia’s largest startup and innovation conferences, bringing together founders, investors, corporations, and policymakers.

The visit also included technology missions for international companies seeking opportunities to collaborate with Japanese startups and evaluate emerging technologies for potential investment and business partnerships.

A Growing Startup Ecosystem

Japan’s startup landscape has expanded significantly in recent years.

According to the Tech Scaleup Japan report, produced by Mind the Bridge in collaboration with Crunchbase, the country is now home to nearly 22,000 startups and approximately 2,300 scaleups.

Among them, 86 companies have raised more than $100 million, while six startups have achieved unicorn status, including two companies that have secured more than $1 billion in funding.

These figures place Japan alongside leading European innovation hubs such as France and Germany, demonstrating that its startup ecosystem has become a major player on the global stage.

Government Investment Driving Growth

A major catalyst behind Japan’s startup expansion is the government’s long-term commitment to innovation.

In 2022, Prime Minister Fumio Kishida introduced the Startup Development Five-Year Plan, an ambitious strategy designed to accelerate entrepreneurship and technological innovation.

Between 2023 and 2027, the Japanese government plans to invest 10 trillion yen into innovation initiatives.

The program aims to increase the country’s startup count to 100,000 companies, roughly four to five times today’s level, while expanding the number of unicorns to 100, representing more than a tenfold increase.

Although these goals are ambitious, Japan’s structured approach to long-term planning has strengthened confidence that meaningful progress can be achieved.

The ecosystem continues to show positive momentum. During 2024, Japan added 238 new scaleups and attracted approximately $5 billion in startup investment, even as many global venture capital markets experienced slower funding activity.

Strength in Deep Technology

Unlike many startup ecosystems that emphasize consumer internet companies, Japan has developed a strong focus on deep technology and hard-tech innovation.

These sectors often require larger investments and longer development timelines but have the potential to create significant long-term value.

Supporting this effort is NEDO, Japan’s national innovation agency, which plays an important role in funding and advancing emerging technologies.

International Interest Continues to Grow

Global organizations are increasingly recognizing Japan as an important innovation destination.

The United States currently maintains the strongest presence, operating 15 of the 41 international innovation outposts established in Japan.

European countries, including France and Germany, are also expanding their engagement. Industry leaders believe that shifting global economic conditions and evolving international partnerships could create new opportunities for deeper collaboration with Japan’s growing technology sector.

Large Corporations Embrace Open Innovation

Another important development is the changing mindset among Japan’s largest corporations.

Historically, many Japanese companies relied heavily on internal research and development. Today, however, more businesses are embracing open innovation by working with startups, venture capital firms, and technology partners.

Major conglomerates such as Mitsubishi are beginning to consolidate innovation resources, strengthen corporate venture capital initiatives, and establish specialized teams focused on emerging technologies, including artificial intelligence.

Japanese corporations also maintain a strong international presence and remain among the largest foreign corporate venture capital investors in Silicon Valley and the U.S. East Coast, giving them valuable insight into global technology trends.

A Market Startups Should Watch

Japan’s startup ecosystem is entering a new phase of growth driven by government support, increasing venture investment, expanding international collaboration, and greater corporate engagement.

With thousands of startups, ambitious national investment plans, and growing interest from global investors, the country offers significant opportunities for founders and technology companies looking to expand internationally.

As innovation activity continues to accelerate, Japan is becoming a market that startups and investors can no longer afford to overlook.

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