Japan's startup ecosystem has grown remarkably over the past decade, characterized by increased funding and exits. Total funds raised by VCs in Japan have increased 10-fold since 2013 to a record high of over 600 billion yen in 2022. The number of unicorns has grown to 78 and startup funding has increased 10-fold to over 877 billion yen in 2022. Corporations are increasingly collaborating with startups through CVCs and business partnerships. The government aims to further accelerate growth through its new 5-year startup plan, with goals of increasing total startup funding to over 10 trillion yen and producing 100 unicorns.

1. Copyright © Japan Venture Capital Association all rights reserved. 1
Japan Venture Capital Association
September 2023
Fast-growing Startup Market in Japan

2. Copyright © Japan Venture Capital Association all rights reserved. 2
1. VC Macro Environment – Evolution of the
Ecosystem in the Past Decade
Entrepreneurial
Talent
• Emerging professionals/engineers/researchers are
moving to startups
• Enhanced exposure to entrepreneurship through
University and Corporate initiatives has made
launching businesses more conveivable/accessible
Startups
2
• 78 unicorns over the past decade, comprising
publicly listed and private companies
• Promoting industry growth, leveraging skilled
professionals, science & technology advancements
VC
1
• 10x accumulated fund size and increased investment
from institutional investors over the decade
• Superior return performance (DPI) of Japan VC asset
class compared to other major countries
Opportunities for
careers and
commercializatio
n, Competitive
packages
Roles as
Entrepreneurial
CXOs/Founders
Risk Capital
Return from exits
Opportunities to start
businesses and boost
careers
Startup Support
Japan's startup ecosystem has experienced a remarkable transformation over the past decade,
characterized by synergistic growth among VCs, Startups, and Entrepreneurial Talent
3

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1. ①VC Industry - VC Fundraising
Total funds raised by VCs in Japan are on an upward trajectory, culminating in a record high in 2022
Source: Initial "Japan Startup Finance 2022"
200
400
600
800
0
2013 2014 2015 2016 2017 2018 2020 2021 2022
221.8
182.5
262.1
320.6
261.8
396.6
524.2
576.6
489.1
616.5
2019
+12%
Total amount raised by VCs in Japan（billion yen)

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1. ①VC Industry - DPI Performance by Region
The returns generated by Japanese VCs have exceeded those of their counterparts in North America
and Europe for vintage years 2012 and 2013, signifying the elevated potential of Japan's ecosystem
Note: Each data is compiled as of Augst 31, 2023. *Preqin-JVCA Domestic VC Benchmark Survey (conducted in August 2023)
Source: Preqin (Japan: Preqin-JVCA domestic VC benchmark survey conducted in September 2023)
DPI by Vintage (%)
2012 2013 2014
323.6
132.7
165.0
North
America
Europe
159.8
107.2
78.0
98.3
115.9
97.5

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1. ①VC Industry - Startup Fundraising
Startup Funding in Japan
Cumulative funding raised by Japanese startups has demonstrated consistent growth. The market
showed remarkable resilience in 2022, maintaining an upward trend despite a global decline
Startup Investment in FY2022
Source: CB Insight "State of Venture 2022 Report"; EY "Venture capital and start-ups in Germany 2022"; Axios "China's venture investing had a rough 2022"; Initial "Japan Startup Finance
2022"
200
400
600
800
1,000
0
2013 2014 2015 2016 2017 2019 2020 2021 2022
88
142
202
257
358
487
600
555
851
877
2018
+29%
Cumulative funding raised by startups has grown 10x in the
past nine years, reaching 877 billion yen in 2022
Startup funding （billion yen)
103
63
52 51
0
20
40
60
80
100
120
While startup investment in other countries decreased
significantly in 2022, Japanese market grew by 3%,
exhibiting strong resilience against economic downturns
Startup investment index in 2022
(FY2021=100)

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1. ②Startups - Fundraising by Country
Despite the limited fundraising size, the number of startup fundraising deals in Japan for FY2022
reached 3717, showing a net increase. The number of fundraising deals per GDP of one trillion dollars is
757, surpassing other leading markets
Source: CB Insight "State of Venture 2022 Report"; EY "Venture capital and start-ups in Germany 2022"; Axios "China's venture investing had a rough 2022"; Initial "Japan Startup Finance
2022 had a rough 2022"; Initial "Japan Startup Finance 2022"
Number of startup fundraising deals by country
12,141
6,186
3,717
1,008
0
3,000
6,000
9,000
12,000
15,000
479
311
757
237
0
200
400
600
800
1,000
Number (deals)
Number of deals per GDP
(cases/$1 trillion)
198.4
46.6
6.6 10.1
0
50
100
150
200
Startup Funding by Country
Amount of Funding ($ billion)

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1. ②Startups - Unicorns by Country
The primary reason for the low number of unicorns in Japan is the prevalent trend of startups opting
for IPOs at an earlier stage. There are over 5x as many companies with a market capitalization of 100B+
Yen when “listed unicorns” are included
Source: CB Insight "State of Venture 2022 Report"; Initial "Japan Startup Finance 2022"
554
174
64
43
26
12 68
0
200
400
600
10
78
Numbers of unicorns by country (as of June 2022) Startups in Japan
Number of listed unicorns
The ease of listing in the TSE Growth
market (500M+Yen free-float market
capitalization) encourages startups to
pursue public offerings at earlier
stages with lower market
capitalizations
Between 2013 and 2022, out of the
463 startups that went public, 68
companies attained "unicorn" status
by momentarily surpassing a market
capitalization of JPY 100 billion. When
factoring in unlisted companies, the
cumulative number of unicorns is 78
Listed unicorns (only Japan)
Unicorns
Unicorn companies by country (companies)

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1. ③Entrepreneurial Talent – Full-time Employees in
Japan
Due to the increasing female participation in workforce, Japan has seen a surge in full-time employees
since 2014 after a 20-year decrease. Compared to the US, Japan's full-time female employment rate is
still ~10% lower, indicating potential for growth in the next 10+ years.
Number of full-time employees in Japan
Full-time employees in Japan by gender (# of 2014 = 100)
Source: Ministry of Internal Affairs and Communications‘ Statistics Bureau “Labor Force Survey” (Basic Aggregation, Annual Average) , Bureau of Labor Statistics “American Time Use Survey -
2022 Results”
Full-time employees in Japan (million, 1984-2022)
Women's Participation in Full-Time Employment
90
100
110
120
130
2014 2015 2016 2017 2018 2019 2020 2021 2022
Male full-time
Female full-time
(female ratio
2014: 31.0%→2022:34.7%)
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
32
34
36
38
40
The full-time workforce in Japan has been on a steady rise since
2014, adding 3 million workers over the course of eight years up to
2022
The increase in full-time employees is primarily due to female
employment participation, with a female ratio of 34.7% in full-time
employment in Japan compared to 43.8% in the US.

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1. ③Entrepreneurial Talent – Startup Compensations
and Job Changes
The wage gap between startups and listed companies is widening, with startups offering high-paying
jobs. There is a trend of talented professionals transitioning from established corporations to startups
Source: President, "Ranking of the Top 500 Companies in Japan with the Highest Average Annual Salaries 2022"; Nihon Keizai Shimbun, "Seven times more people change jobs from large
companies to startups, as the gap in annual salaries shrinks"; "Startups' annual salaries exceed listed companies by 7%, at ¥6.5 million".
Average Salary by Company Type Percentage of job transitions to startups
The average salary gap has widened from JPY 90,000 to JPY 580,000
between 2020 and 2022. The proportion of positions with an annual
income of JPY 10 million or more is ~1.6x higher at startups (21%)
compared to listed companies (13%)
The proportion of job transitions from large corporations to startups
has increased by around 2.5x over the three years from 2018
8.6%
12.1%
16.7%
21.4%
0%
5%
10%
15%
20%
25%
2018 2019 2020 2021
62%
49%
25%
30%
13%
21%
Listed
companies
Startups
>10 M yen
>8 M yen
>4 M yen
2020 2022
593
602
622
680
+9
+58
Listed companies
Startups
Average salary
(10k yen)
Percentage of startups in job change (%)

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1. ③Entrepreneurial Talent – Diverse Background of
Entrepreneurs
Prominent Japanese startups have been founded by individuals with diverse professional backgrounds not only
limited to consulting firms, investment banks, and IT corporates but also including Japan’s traditional
organizations such as big trading companies and the Japanese government
Consulting Firms Investment Banks IT Corporates
Big Trading Companies Japanese Government
Note: Listing mainly startups that have gone public or raised more than 1 billion yen in funding.

11. Copyright © Japan Venture Capital Association all rights reserved. 11
Academia
3
Japanese universities are renowned for their global
top-ranking status and Nobel Prize laureates. There is
an increasing trend of innovative startups spun off
from university research labs
Government
A "Startup Promotion Five-Year Plan" has been unveiled,
aiming to boost investment in startups to a magnitude of
JPY 10 trillion by 2027, which is 10x the current level of
funding
The annual R&D expenditure exceeds JPY 5 trillion, with technology-driven
Japanese companies increasingly focusing on collaborating with startups. The
Tokyo Stock Exchange (TSE) also plays a supportive role in fundraising efforts,
given its substantial circulating funds and streamlined listing process
2. Startup Ecosystem
Corporations, government agencies, and academia are bolstering their support for startups, leading to
continued acceleration in the growth and development of the entrepreneurial ecosystem
Corporations
1
2

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2. ①Corporations – R&D Expenditure and PCT
applications
The cumulative R&D expenditure of Japanese companies is in the range of 20 trillion yen. Among the
top 50 companies filing PCT applications, 15 companies are Japanese, representing the highest
concentration of any nation
R&D spending by Country (2020) Top 50 PCT filers by country
15
13
10
4 4
0
5
10
15
20
Distribution of top 50 PCT filers by country
Among the top 50 companies filing PCT applications, 15 are
Japanese, representing the highest concentration of any nation,
including Mitsubishi Electric, Sony, Panasonic
0
20
40
60
80
61.3
51.5
17.3
13.2
10.0
Source: OECD "OECD data: Gross domestic spending on R&D"; Nikkan Kogyo Shimbun "218 company R&D survey"
R&D spending (trillion yen)
The total expenditure of Japanese companies is on the scale of 20
trillion yen, which is among the highest levels globally

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2. ①Corporations – Collaboration with Startups
Corporations are actively cultivating partnerships with startups by leveraging CVCs and business
partnerships
Establishment of CVCs by Japanese corporations Business Tie-ups with Startups
412 459
712
1,050
1,531 1,572
1,909
0
500
1,000
1,500
2,000
2014 2015 2016 2017 2018 2019 2020
Number of business alliances with startups
Collaborations between startups and corporations have become
increasingly prevalent, taking various forms, such as strategic
investments and spin-outs, enabling startups and large corporations
to work together effectively.
Source: Japan Venture Capital Association; Initial "Japan Startup Finance 2022"; Ministry of Economy Trade and Industry "Data on R&D Investment in the Private Sector in Japan".
CVC has gained significant traction, with the number of CVC
members in JVCA expanding to 114. Notably, large corporations
such as Sony and Toyota have also established CVCs intending to
achieve synergies with their existing businesses
44 46 55 65 75 85
23
38
56
70
85 95
0
50
100
150
200
250
300
2
2013
6
2014
15
2015 2016 2017 2018
102
2019
120
2020
123
2021
114
143
2022
Number of JVCA members (companies)
CVC
VC

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2. ②Policy/Government – Characteristics of TSE
Growth Market
TSE Growth Market exhibits superior liquidity and market value performance compared to Hong
Kong GEM and Singapore SGX Catalist
Note:1 Converted at the exchange rate at the end of December 2019
Source: Tokyo Stock Exchange; Hong Kong Stock Exchange; Singapore Exchange
Number of listed companies Annual trading value
Total market capitalization
of listed companies
316
378
216
TSE Growth
Hong Kong GEM
SGX Catalist
24.9
0.7
0.2
6.45
1.49
0.79
Listed companies
(Companies, 2019)
Annual trading value
(Trillion yen1, 2019)
Total market capitalization
(Trillion yen1, 2019)

15. Copyright © Japan Venture Capital Association all rights reserved. 15
2. ②Policy/Government – 5-year Startup
Development Plan
In November 2022, the government announced the "Five-Year Plan for Start-up Promotion" in response
to a proposal put forth by the JVCA.
Source: Cabinet Secretariat "Five-Year Plan for Startup Development"
Increasing startup funding 10x in 5 years
To produce 100 unicorn companies, the plan aims to increase the
total amount of funds raised, which has grown more than tenfold
over the past nine years, to over 10 trillion yen in just five years
Funding （billion yen)
(1) Building entrepreneurial talent and network
• Expansion of support programs by mentors
• Increasing the number of overseas startup incubation
centers
• Supporting startup creation in universities and among
elementary, middle, and high school students
• Promotion of domestic startup community
(2) Strengthening funding and exit strategies
• Enhancing investment capabilities of public and private
funds (incl. Public procurement)
• Encouraging investment from individuals to venture
capitalists
• Establishment of an environment for stock options
• Encouraging circulation of personal financial assets, GPIF,
and other long-term investment funds into venture capital
(3) Promoting innovation
• Tax measures to encourage open innovation
• Review of public offering rules
• Establishment of private restructuring laws and
regulations for business restructuring
• Expanding the optional application of international
accounting standards to promote M&A
5-year Startup Development Plan - Three Pillars
...
...
0
2,000
4,000
6,000
8,000
10,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2027
x10

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2. ③Academia – Japan’s High Scientific and
Technological Capabilities
In the 21st century, Japan has secured the second-highest number of Nobel Prizes in natural sciences
globally. In 2021, Japan ranked third globally for PCT applications
Natural Sciences Nobel Laureates
PCT (International applications based on the
Patent Cooperation Treaty)
Japan accounts for 18.1% of the total PCT filings worldwide,
firmly holding the third place with a significant lead over those
ranked 4th or below
Source:MEXT "MEXT Statistical Abstract"; "Science and Technology Review"; WIPO "PCT Yearly Review 2022"
Japan lagged behind other nations in producing Nobel Laureates in
the 20th century, with only six recipients. However, in the 21st
century, Japan has made remarkable strides, creating 19 Nobel
Laureates in just 22 years
Number of natural science Nobel Prize winners
in the 21st century (persons, 2001-2021)
77
19 17
10 9
0
10
20
30
40
50
60
70
80
Percentage of PCT applications worldwide (%)
25.1%
21.5%
18.1%
7.5%
6.2%
0%
5%
10%
15%
20%
25%
30%

17. Copyright © Japan Venture Capital Association all rights reserved. 17
2. ③Academia – Number of PCT Applications by Region
The Tokyo area is the leading region globally for PCT applications, accounting for over 10% of the
total, and representing the highest concentration of technological activity in the world
Source: WIPO "PCT Yearly Review 2022"
Rank Area Country
Number of
applications
Share
1 Tokyo-Yokohama Japan 122,576 10.7%
2
Shenzhen-Hong Kong-
Guangzhou
China/Hong Kong 94,340 8.2%
3 Seoul (in South Korea) Korea 46,273 4.0%
4 San Jose - San Francisco
United States of
America
42,884 3.7%
5 Osaka-Kobe-Kyoto Japan 34,738 3.0%
6 Beijing (China) China 32,016 2.8%
7 Shanghai-Suzhou China 22,869 2.0%
8 San Diego
United States of
America
19,363 1.7%
9 Nagoya Japan 18,623 1.6%
10 Boston-Cambridge
United States of
America
16,172 1.4%

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2. ③Academia – University Spin-offs
University spin-offs are on the rise, surpassing 3,000 companies in 2021. Many such startups have
achieved IPOs through the application of high technical expertise cultivated at universities
Source: Japan’s Ministry of Economy, Trade and Industry “Report on the Results of the Survey on University-Developed Venture Businesses 2022
University spin-off startups are on the rise
Success Cases (IPOs)
(Market cap: as of 31 Aug 2023)
1,749 1,773 1,846
2,093
2,278
2,566
2,905
3,306
0
1,000
2,000
3,000
4,000
2014 2015 2016 2017 2018 2019 2020 2021
Number of startups originating from universities
(Companies)
Drug discovery R&D
Market cap:
243 billion yen
Power generation from
renewable energy
resources
Market cap:
109.3 billion yen
Fuel and food
with Algae
Market cap:
94.4 billion yen
AI Solutions
AI SaaS
Market cap:
80.3 billion yen