Investment in startups in Japan has grown tenfold over the past decade, with startups raising a total of nearly 7 billion USD in 2022.
Yet, with only 11 unicorns in 2022,Japan's startup scene has earned little attention in global headlines, especially when compared to its economic peers.
Part of the answer lies in the exit specifics of Japanese startups. The Tokyo Stock Exchange offers lenient listing rules that enable companies to go public much earlier than elsewhere. Japanese startups have been keen to leverage this early-stage IPO opportunity to secure financing, giving up their startup label in the process, as the companies are no longer privately held. That's why analysts often talk of Japan's hidden – or listed – unicorns, which can add up to more than 40 companies, depending on how you look at it.
Though we have located Japan's missing unicorns, it's only half the answer to why Japan's startup ecosystem has been flying under the radar.
The other half is that its scene has historically been very self-contained, as companies have struggled to go global due to language barriers and business specifics. This has also made attracting international startups and entrepreneurs more challenging, hindering valuable collaboration and knowledge exchange opportunities.
But now, the Tokyo Metropolitan Government is looking to turn things around by massively expanding the local startup ecosystem, as well as opening it up to international entrepreneurs and investors.
10x10x10 innovation
In 2022, the Tokyo Metropolitan Government revealed its “Global Innovation with STARTUPS” plan – a new strategy underpinned by a “10x10x10 Innovation Vision for the Future'' that has set as its goal an ambitious 10x increase in the number of unicorns, startups, and public-private partnerships by 2027.
“Under the strategy of "Global Innovation with STARTUPS," the Tokyo Metropolitan Government is working on various measures to revitalize the startup ecosystem by creating innovation through the attraction of domestic and foreign investment in order to strengthen Tokyo's international competitiveness,” explains a Tokyo Metropolitan Government representative.
The key word here is “international”, as Tokyo's aim to attract global startups and investors is a cornerstone of the strategy and a necessity for achieving its high-reaching goals. It also seeks to foster a global mindset among its own entrepreneurs, combating low self-confidence prevalent in the younger generations, which was highlighted in particular in the executive summary of the strategy.
The strategy consists of a mix of high-level goals, cross-sectoral initiatives, specific events, and more.
It also aims to build on Tokyo's strengths. The Tokyo metropolitan area is home to about 14 million people, making it the largest population area in the world, and the city has earned many accolades for its innovativeness, business customs, infrastructure, and convenience.
Part of the new mission is to further systematize the many benefits of building a technology business in Tokyo and make them accessible to international entrepreneurs, too.
Let's take a look at two specific initiatives that are taking shape in 2024.
1. Tokyo Innovation Base – opening doors to local and international founders
The Tokyo Innovation Base (TIB) is being developed as a multi-functional hub in the very heart of Tokyo for all startup ecosystem participants with the goal of “becoming a node for innovation around the world”. It features open working spaces, exhibitions of startup products, and various conference rooms, which will be used for diverse globally-oriented events and programs.
TIB will also have English-speaking staff well-versed in Tokyo's startup ecosystem that will be available to assist founders and their teams with solving practical challenges and navigating any bureaucratic hurdles.
By bringing everyone under one roof, the Tokyo Metropolitan Government hopes to foster
networking, collaboration, and other connections between investors, students, universities, big corporations, as well as local and international startups.
TIB recently saw its first event. On February 15th 2023, it hosted a discussion about startup growth between a panel of ecosystem stakeholders.
The grand opening, however, is scheduled for May 2024 and will coincide with SusHi Tech Tokyo 2024 Global Startup Program – a global innovation conference and the second significant initiative to highlight.
2. SusHi Tech Tokyo 2024 Global Startup Program
SusHi (Sustainable High City) Tech Tokyo 2024 Global Startup Program is the spiritual successor to 2023's City-Tech.Tokyo event, which was an international startup innovation event in Tokyo of its kind and scale.
Last year's event attracted nearly 27,000 participants, including 328 startups and 288 investors. SusHi Tech Tokyo 2024 Global Startup Program is aiming even higher, expecting to welcome over 40,000 participants and facilitate 3,000+ meetings across two days on 15-16 May.
The conference will feature:
- City of the future sessions led by experts and business leaders from Japanese and international organizations in startup ecosystem
- exhibition booths showcasing the latest innovations of startups, cities, and companies from all over the world,
- a pitch contest with a 10 million Japanese Yen (~62k EUR) cash prize, among other supplementary prizes from event sponsors (Tentative)
- as well as business matching and various networking opportunities.
Having recently closed pitch competition entries, the organizers now have a lengthy screening process ahead of them to narrow down the more than 500 applications from 43 countries to 20 semi-finalists, who will get to pitch at the event and compete for the main prize.
More than just placing Tokyo on the global must-attend startup event circuit, the program is focused on encouraging open innovation among Japanese and international startups, investors, corporations, local government, and aspiring student entrepreneurs.
“The SusHi Tech Tokyo event is held as a place to connect with the global ecosystem, to attract investment from Japan and abroad, and to activate open innovation for economic impact,” comments a Tokyo Metropolitan Government representative.
Learn more about Tokyo Innovation Base here, SusHi Tech Tokyo 2024 here, Invest Tokyo here
Read other Tokyo Metropolitan Government initiative here
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