By Yuki Shirato, Managing Director of Techstars Tokyo Accelerator

You may have seen headlines about Japan’s growing entrepreneurial ecosystem, and much of what you’ve read is true.

1. Rising Startup Investments

Startup investments in Japan have seen impressive growth. From 2013 to 2022, the total investment surged nearly tenfold, reaching ¥966 billion in 2022. The downturns in 2023 and 2024 have been relatively mild (10-15%), especially when compared to the sharp declines in regions like the U.S., Europe, and China.

2. Government Support

The Japanese government, under the leadership of Prime Ministers Kishida and then Ishiba, has implemented a series of proactive measures to support entrepreneurship. This includes new funds like the Japan Innovation Corporation, numerous startup initiatives from JETRO (including Techstars), and major grants like NEDO, all aimed at fostering innovation and driving growth.

3. Cultural Shifts

Japan's younger generation is increasingly recognizing the value of entrepreneurship, challenging the traditional norm of lifetime employment with large corporations. Meanwhile, these large companies are also embracing "open innovation", creating more opportunities for collaboration and acquisition with startups.

4. Key Strategic Sectors for Startups

Japan remains globally competitive in industries like advanced manufacturing, materials science, robotics, anime, manga, and gaming. Many startups are emerging in these areas, making it an exciting time for innovation.

5. Top U.S. VC Investments

Notably, top-tier U.S. venture capital firms such as NEA, Lux, Khosla, and Bessemer have made their first investments in Japanese startups in 2024. Others are seriously considering similar opportunities.

Should You, as a Founder, Move to Japan?

Whether you're a founder just starting, in the middle of your journey, or pivoting to a new venture, should Japan be on your radar? For 2025, my answer is a strong "maybe." 

Here’s why:

1. Unmatched Safety & Stability

Japan is renowned for its safety and low crime rates, providing a stable environment to focus on your business without concerns for personal security. The country’s universal healthcare system also ensures high-quality medical care at affordable rates.

2. Cost-Effective Living in World-Class Cities

Thanks to a relatively weaker yen, Japan offers affordable living, especially in cities like Tokyo. You can access world-class amenities and opportunities at a fraction of the cost of living in cities like New York, London, or San Francisco. This allows you to maintain a high quality of life while keeping business overheads low.

3. Entrepreneur-Friendly Visa Policies

Japan has introduced policies that make it easier for foreign entrepreneurs and skilled professionals to stay in the country, including pathways to permanent residency within just a few years.

4. Exceptional Public Infrastructure

Japan’s efficient public transportation network, including trains, subways, and buses, means that getting around is simple, even without a car, especially within large cities.

5. Vibrant Social & Cultural Scenes

Japan offers an eclectic mix of activities, from enjoying authentic izakayas and Michelin-starred restaurants to exploring 1,000-year-old temples or contemporary art museums. You can also experience a growing English-speaking community and events featuring international artists.

6. A Creative Hub

Japan’s unique blend of tradition and modernity sparks creativity. Whether you’re wandering through tranquil gardens in Kyoto or navigating the neon-lit streets of Tokyo, you’re sure to find inspiration around every corner. This is why creatives like Steve Jobs and David Bowie have drawn inspiration from Japan, and why entrepreneurs, too, can find valuable insights and ideas.

One particularly inspiring example is the story of the founders of Notion, who, during a critical pivot phase, moved to Kyoto. In an interview with a Japanese publication, Ivan Zhao shared how their experience in Kyoto influenced their design philosophy and approach to company culture.

A Realistic Look at Japan’s Startup Landscape

However, it’s important to acknowledge that Japan is not the perfect fit for every founder. There are challenges that still persist:

• Bureaucratic Red Tape: Japan’s bureaucracy can often lead to time-consuming processes that drain resources for entrepreneurs.

• Regulatory Environment: The regulatory and tax systems are often more favorable to large corporations, which can be an obstacle for angel investors, founders, and stock option holders.

• Slow Decision-Making: The decision-making process, especially in large corporations and venture capital firms, can be slow and complex.

I previously wrote about the importance of diversity in driving innovation in Japan back in 2016. While there have been gradual improvements, the pace of change remains slow.

Why I'm Excited About Japan’s Startup Future

That said, I’m personally thrilled by the growing interest from top global talent, especially founders, in relocating to Japan. As part of an English-speaking program, Techstars Tokyo could be an excellent way for early-stage founders to explore the opportunities here (applications are open until May 14).

If you have any questions or would like to learn more, don’t hesitate to reach out to me!

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