Japan’s downbeat startups need a lift

昔日辉煌与今日困境

Morita Akio, a physics graduate, co-founded the Tokyo Telecommunications Engineering Corporation, an electronics-maker, in 1946. The startup’s 20 employees toiled in a small room in a firebombed department store in Tokyo, handmaking heated cushions and voltmeters. Determination and resourcefulness turned the firm into a $140bn electronics giant today called Sony. Other well-known Japanese firms such as Honda, launched in a ruined factory also in 1946, or more recently SoftBank, beginning in 1981 as a small software distributor run by 24-year-old Son Masayoshi, have similar tales of battling against the odds. Yet in recent decades Japan has lost its knack for producing startups that make an impact.

Only six of the current 1,400 unicorns (startups worth over $1bn) worldwide were born in Japan, according to cb Insights, a research firm. The country has yet to spawn a “decacorn”, a startup worth more than $10bn. South Korea and Australia have bred five and six, respectively, and also lead in unicorns by size of population (see chart). A new wave of venture capitalists and entrepreneurs, backed by the state, are trying to put that right. They will have to confront three problems.

资本短板与过早上市的怪圈

The first is Japan’s shortage of risk-taking venture capital. A decade ago traditional vc funds were rare. In 2015 only $1bn in vc capital was deployed across fewer than 500 deals, according to Pitchbook, a data firm. Though vc fund-raising has grown to around $6bn in 2025, that compares unfavourably with markets such as Australia, an economy half the size of Japan’s which raised $5bn last year. Seemingly natural backers of Japanese startups, such as Softbank’s vc arm, plough the vast majority of their funds into overseas firms.