Japan aspires to become Asia s largest start up hub but goal remains elusive

NAGOYA/OSAKA – Japan lags behind other Asian nations in the start-up scene, but it has big dreams to change that.

It aspires to be home to 100,000 start-ups, including 100 unicorns, by March 2028, with start-up investments growing tenfold from 2022 levels to 10 trillion yen (S$89.92 billion) annually.

The goal is to “make Japan the largest start-up hub in Asia and one of the world’s leading clusters of start-ups”, a Cabinet Office policy paper said in 2022.

The national government’s ambitions have spurred competition among Japan’s regions that are dreaming of nursing the next unicorn: an unlisted start-up with a valuation of at least US$1 billion (S$1.33 billion).

As a result, one-stop business support and consultations in English, as well as subsidies and business-matching advice, are now the norm across cities with start-up ambitions, from Tokyo to Sapporo.

Even rural regions are getting in on the action.

Yamaguchi prefecture, known for its fugu, or puffer fish, in 2024 launched an entrepreneurship programme. On March 4, its local Saikyo Bank announced an “innovation fund”.

But Japan has some way to go in the start-up realm.

Start-up investments fell from 989 billion yen in 2022 to 779.3 billion yen in 2024, according to Japanese market research consultancy Uzabase.

As at December 2024, there were just eight Japanese start-up unicorns, according to CB Insights market consultancy, putting it behind the 162 in China, including 62 in Beijing, or the 16 in Singapore and 14 in South Korea.

There are no reliable figures on overall start-up numbers in Japan, currently estimated to be more than 10,000. This means it has about 81 start-ups per million people; comparatively, Singapore, with 4,500 start-ups, has about 745 start-ups per million people.

Japan’s stifling bureaucracy, overwhelming aversion to risk, and comparatively high taxes have been blamed for