Japan’s innovation landscape is fast evolving. According to the newly released “Tech Scaleup Japan – Startup and Corporate Venturing in Japan 2025 Report” by Mind the Bridge, with the support of JETRO and Crunchbase, the country is showing encouraging signs of growth in its tech startup scene. However, when it comes to scaling companies to maturity, challenges remain. The report was presented today in Tokyo, as part of the first Mind the Bridge Scaleup Summit Japan hosted by JETRO and organized in partnership with SusHi Tech Tokyo 2025 and A2A.
“Japan has long been a powerhouse of industrial innovation. Today, it faces a critical transition: evolving from an R&D-driven tech economy to one fueled by open innovation,” said Alberto Onetti, Chairman of Mind the Bridge. “The data points to a solid foundation and growing momentum — a shift that has been notably supported by the new government’s five-year plan announced in 2022, which has increasingly prioritized entrepreneurship, startup creation, and the scaleup economy as core pillars of national economic strategy. But to truly compete on the global innovation stage, Japan needs more super scalers, more venture capital, and stronger connections with international ecosystems. That’s exactly the role initiatives like the Scaleup Summit and SusHi Tech Tokyo can play.”
Japan’s Scaleup Ecosystem: Solid Ground with Untapped Potential
The country has a long-standing reputation for technological leadership in industries like automotive, robotics, and consumer electronics. However, its dominance is waning—its share of Fortune Global 500 companies dropped from 22% in 2000 to just 8% today. The nation is facing a crucial transition from a risk-averse, R&D-driven economy to a more dynamic, entrepreneur- and investment-led scaleup ecosystem.
The report highlights the growth of Japan’s tech scaleup landscape: nowadays 2,268 tech scaleups have raised a total of $46B, collectively. Despite the Venture Capital pullback in 2022–2023, 2024 marked a strong rebound with 238 new scaleups and $5B in investments—defying the global “black year of innovation” and bucking the global trend of innovation slowdown. Yet Q1 2025 data shows only 38 new scaleups and $0.6B raised, suggesting a need for ongoing vigilance and targeted policy.
“Understanding Japan’s startup and scaleup ecosystem is key to unlocking its full potential”, commented Noriya Tarutani, Head of JETRO Startup. “This Report highlights the rapid growth in startup activity, including global engagement, and emerging sectoral shifts are shaping the future of Japan’s startup ecosystems. We hope it will serve as a valuable entry point for global ecosystem players to engage with and support Japan’s next wave of innovation.”
However, despite its high number of scaleups, Japan still trails in scaleup density (1.8 per 100k people) and VC funding as a percentage of GDP (0.7%), compared to other regional ecosystems such as South Korea (3.2 and 0.9%), Australia (3.5 and 0.8%), and Singapore (5.4 and 0.9%). While it ranks third in the APAC region in terms of innovation maturity—behind only China and India—Japan is still working to catch up in producing tech giants, with just 2 “super scalers,” compared to 19 in the UK, 10 in Germany, and 4 in France.
Tokyo Leads – But the Gap Widens
Among the country’s innovation hotspots, Tokyo dominates the national landscape and has reached international prominence by joining the global elite as one of just 16 “Nova Star” hubs in Mind the Bridge’s “Innovation Ecosystems Life Cycle framework”. Meanwhile, regional ecosystems such as Osaka, Fukuoka, and Kyoto remain in the early stages of development. This concentration reflects both opportunity and risk, as younger entrepreneurs gravitate toward urban centers, leaving many regions at risk of being left behind.
IPO as a Preferred Exit Rout
As per the funding journey, Japan’s domestic venture capital market remains underdeveloped, slowing down funding at scale, despite global reach—especially through players like SoftBank. Japanese scaleups rely more heavily on IPOs than in other regions—25 scaleups have gone public, accounting for 17% of capital raised through IPO, the vast majority being listed domestically on the Tokyo Stock Exchange (TSE).
On the Corporate side: Open Innovation, International Presence and Engagement
In terms of approach to open innovation, Japanese corporates favor procurement-based engagement with startups (90% use the Venture Client model) and CVC investments (86%).
Their strategy is characterized by a strong global outlook: 32 (80% out of the 40 Japanese firms listed in the Fortune Global 500) have one or more innovation outposts in Silicon Valley or other major hubs.
In parallel, Japan is increasingly attracting foreign multinational companies hunting for innovation. To date, 41 Fortune Global 500 companies – 5 from the US, 19 from Europe, 4 from China and 3 from South Korea – have set up 46 open innovation outposts in Japan (mainly Biotech&Pharma, IT&Software, Electronics, Automotive, and Aerospace). 78% of the hubs are established in Tokyo. More than half (26) of the Outposts are R&D centers.
