JAPAN Trends and Developments Contributed by: Sadao Maeda, Yusuke Hayashi and Masato Tanaka, TMI Associates
fiscal year 2025 Fiscal Investment and Loan Programme draft allocates JPY80 billion for industrial investment to enhance risk capital availability for start-ups. SME Support, JAPAN’s LP investments • Since fiscal year 1998, SME Support, JAPAN has been providing LP investments to VC funds to stimulate the domestic risk capital market, promoting start-up formation and new business development among SMEs. • Commitments of JPY319.7 billion have been made to 241 VC funds, leading to 308 port - folio companies achieving an Initial Public Offering (IPO(s)) on domestic emerging markets. More than ten of these IPO compa - nies have exceeded a market capitalisation of JPY100 billion (as of March 2024). • In fiscal year 2023, under the “Global Startup Growth Investment Program” , which allocated JPY20 billion from the fiscal year 2022 sup - plementary budget, two investments were made in global VC funds to support the inter - national expansion of Japanese start-ups. • In June 2024, the “Young Capitalist Devel- opment Fund of Funds” programme was launched to cultivate emerging VC talent, with applications now being accepted. Surge in overseas investment and market entry in Japan’s start-up ecosystem Japan’s start-up ecosystem is experiencing a notable surge in interest from overseas inves - tors, driven by proactive government policy sup - port. Below is a detailed overview of the invest - ment and market entry trends.
Investment highlights • October 2022: Caisse de dépôt et placement du Québec (CDPQ) invested in Shizen Energy. • July 2024: KKR invested in SmartHR, and the Ontario Teachers’ Pension Plan also made an investment. • September 2024: Khosla Ventures and NEA invested in Sakana AI, while Bessemer Ven - ture Partners and Hillhouse Capital invested in Dinii. Market entry highlights • December 2023: Techstars, a US-based ven - ture capital-backed accelerator, established a presence in Japan. • May 2024: Vertex Ventures expanded into the Japanese market. • June 2024: Eurazeo, a leading French venture capital firm, entered Japan. • September 2024: BLOCK71, a major Singa - pore-based accelerator, launched operations in Japan. Investment trends The data indicates a significant increase in overseas investment in Japanese start-ups dur - ing 2024, particularly in the technology sector. Investments from major pension funds highlight the strong confidence in the Japanese start-up market. Market entry trends The period from 2023 to 2024 has seen a series of international VC firms and accelerators estab - lishing a presence in Japan, which is expected to foster stronger global partnerships and accel - erate the international expansion of Japanese start-ups.
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