Guide to Startup Companies in Japan 

Introduction

Japan’s startup ecosystem continues to strengthen its global standing, ranking between 15th and 18th worldwide in 2025 according to major reports as the Global Startup Ecosystem Report (GSER).

Tokyo now sits among the top 15 global startup hubs, climbing steadily from 15th to around 10th place in recent years. Nationally, Japan ranks #18, with more than 3,400 startups and over $5.5 billion in total funding. Within East Asia, Japan holds the #2 position, behind China, for ecosystem strength and innovation capacity.

This article highlights Japan’s most successful and promising startup companies, exploring how they are growing within this evolving environment. It also examines the funding trends, government initiatives, and regulatory changes influencing their success, along with the challenges startups continue to face as they scale in one of Asia’s most competitive markets.

Top 20 Startups in Japan

The Japanese startup ecosystem has been on a 10-year bull run, showcasing a robust and growing environment for investment and innovation. Startup investments in Japan have grown about 5–6x over the past decade, rising from ¥140 billion in 2014 to around ¥780 billion in 2024, indicating a Compound Annual Growth Rate (CAGR) of roughly 19-20%. 

Japan’s startup ecosystem in 2025 continues to show resilience and innovation, with emerging companies leading advancements in AI, robotics, fintech, sustainability, and space technology. These startups reflect Japan’s growing ability to merge world-class research with market-ready solutions while expanding their global reach.

The following 20 startups stand out for their technological innovation, rapid growth, and international potential in 2025.

Beyond the leading startups listed, Japan’s ecosystem continues to expand its roster of unicorns and soon-to-be-unicorns. As of 2025, Japan counts around nine unicorns, including SmartNews, SmartHR, Spiber, TBM, Astroscale, and Mujin, with new contenders such as ANDPAD, Gojo & Company, and Sakana AI expected to join their ranks in the coming years. This steady rise in billion-dollar startups underscores Japan’s growing ability to scale globally competitive ventures across industries ranging from AI and space technology to sustainable materials and fintech.

Disrupting Industries: Spotlight on PayPay

One startup that has made significant waves in its industry is PayPay, a mobile payment service. PayPay, as reported by the Financial Times, has been instrumental in disrupting the traditional finance sector. The company has been successful in promoting digital payments in a country that has long been cash-dependent, demonstrating that startups can indeed challenge and change longstanding customs and practices. PayPay’s success can be attributed to a combination of strategic marketing, efficient logistical planning, and the application of technology to enhance efficiency. The company has shown how startups can leverage these elements to make a significant impact in their respective industries. 

How PayPay Disrupted Traditional Customs in Japan

PayPay’s disruption of Japan’s traditional cash-based economy provides a fascinating case study on how startups can drive societal changes. According to a Reuters report, PayPay’s user-friendly platform and aggressive marketing campaigns, often offering substantial discounts and rewards, have encouraged Japanese consumers to adopt digital payments. This shift towards digital finance is a significant change in a country where cash has long been king.

International Collaboration and Influence

Japan’s startup ecosystem is increasingly gaining international attention and collaboration, which is enhancing its global influence. The country’s startups are forming partnerships with international corporations, securing funding from foreign investors, and expanding their operations overseas. For instance, PayPay, the fintech startup mentioned earlier, was formed as a joint venture between SoftBank and Yahoo Japan in collaboration with India’s Paytm. This partnership highlights how startups in Japan are leveraging international expertise to disrupt traditional industries.

Progress in Deep Tech Startups

There’s also significant growth in deep tech startups. For instance, Kyoto Fusioneering, a leader in fusion power plant engineering, and Astroscale, focusing on orbital debris removal, have raised substantial funding rounds in recent years. These companies highlight Japan’s competitive edge in advanced technology sectors and their contributions to global technological advancements​

Startups and Society: Impact Beyond Business:

The impact of startups in Japan extends beyond the business realm, influencing various aspects of society. From driving shifts in work culture to solving social issues, startups are playing a crucial role in shaping Japan’s future. The Japanese government has played a crucial role in fostering this ecosystem. The ‘Five-Year Plan‘ announced by the government aims to accelerate startup activities, with goals such as increasing startup investments 10x and creating 100 unicorns by 2028. This plan includes provisions for risk capital, renewing the SBIR (Small Business Innovation Research) program, connecting with global startup ecosystems, providing tax incentives for M&A, and upgrading stock option regulations​.

1. Changing Work Culture

The startup culture challenges the traditional Japanese work ethic, which often involves long working hours and lifetime employment. Startups often promote a more flexible and diverse work culture, emphasizing work-life balance, creativity, and individual initiative. This shift is not only attracting more young people to join or start their ventures but also influencing established corporations to rethink their work practices.

2. Addressing Social Issues

Many Japanese startups are also committed to addressing social issues. For example, startups in the healthcare sector are developing innovative solutions to improve medical services and elderly care, which are pressing concerns given Japan’s aging population. Also, environmental startups are creating technologies to combat climate change and promote sustainable living.

3. Encouraging Female Entrepreneurship

Japan has also seen a rise in female entrepreneurship. While women are still underrepresented in the startup scene, more and more women are launching their businesses and breaking into leadership roles. Organizations such as Women’s Startup Network Japan are providing support and resources to empower female entrepreneurs, contributing to diversity and inclusion in Japan’s startup ecosystem. For Empowering Women (FEW) in Japan is a nonprofit organization that champions the professional and personal growth of women. Through networking opportunities, seminars, meetings, and special events, FEW inspires, educates, and connects globally-minded women. Their significant contributions are aiding the growth of female entrepreneurship and enhancing diversity within Japan’s startup ecosystem.

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What does the future hold for startups in Japan?

Japan’s startup ecosystem is entering a new stage of maturity, supported by expanding government initiatives and growing global interest in its innovation potential. Programs such as J-Startup, NEDO, and METI continue to drive research funding, startup incubation, and international collaboration, while regional hubs like Fukuoka Growth Next and Nagoya’s STATION Ai are creating strong innovation clusters outside Tokyo.

The next wave of growth is expected to be led by AI, robotics, biotechnology, fintech, and sustainability-focused startups, sectors that align with Japan’s industrial strengths and long-term policy priorities. Emerging companies such as Sakana AI and ANDPAD illustrate how Japanese startups are becoming more globally competitive, blending deep technical expertise with cross-border funding and partnerships.

Although structural challenges remain, including limited risk capital and talent shortages, the overall momentum is shifting toward a more open, internationalized ecosystem. As Japan continues to nurture a new generation of founders and attract global investors, its startup scene is poised to evolve from a steady growth market into a key innovation hub shaping the future of technology and sustainable business in Asia.

New Exit Strategies in Startup Systems

The resilience of Japan’s IPO market further underscores the robustness of the ecosystem. In 2024, 42 startups went public on Japan’s stock exchanges, maintaining strong momentum following the rebound in 2023. While the pace has stabilized, several high-profile listings such as SHElikes and Pocket Marche, reflect continued investor confidence in Japan’s innovation economy. Benchmark IPOs like Cover Corp and ispace, each surpassing ¥100 billion in initial market capitalization, continue to symbolize the scale and potential of Japan’s startup market.

The growing trend of significant IPOs and M&A deals, such as MUFG’s acquisition of Kanmu, highlights the evolving exit strategies available to Japanese startups.

Additional Case Studies: Astroscale, BitStar, and WealthPark

Further examples of startups disrupting their respective industries in Japan include Astroscale, BitStar, and WealthPark.

Astroscale, an aerospace startup, is addressing the growing issue of space debris. By pioneering solutions for orbital debris removal and on-orbit servicing, Astroscale is not only innovating within its industry but also contributing to the sustainability of space operations, a concern that impacts global security and communication systems.

BitStar, a platform for content creators, is capitalizing on the rise of the gig economy and the increasing value placed on digital content. By providing a platform where creators can monetize their work, BitStar contributes to the evolution of digital economies and labour models.

WealthPark is a real estate management platform that offers tools for property owners and managers to track their assets and operations. By digitizing and streamlining aspects of property management, WealthPark is leading the PropTech industry in Japan and transforming how real estate businesses operate.

In addition to these, the rise of deep tech in Japan is particularly noteworthy. University spin-out startups have increased from 131 in 2014 to 1,335 in 2022, nearly a tenfold increase. Government subsidies and deep tech-focused venture capital funds, such as those affiliated with leading universities, have been instrumental in supporting these startups. Examples include Ookuma Diamond Device, which manufactures diamond semiconductors, and Logomix, a synthetic biology platform leveraging advanced genome editing technology

What government benefits are startup companies in Japan receiving?

National-Level Incentives and Tax Benefits

At the national level, Japan offers a range of corporate tax incentives targeted at small and medium-sized enterprises (SMEs). These include reduced corporate tax rates, tax deductions for R&D spending, and credits for digital transformation initiatives. The Five-Year Startup Development Plan (2023–2027) also introduced additional measures to encourage innovation, such as preferential R&D tax credits, digital and green transformation subsidies, and investment support for hiring and training skilled workers.

These incentives are designed to ease the financial burden on startups, allowing them to reinvest more resources into innovation and market expansion.

Grants and Funding Programs

Several government agencies play a key role in supporting startups financially. The Ministry of Economy, Trade and Industry (METI) and the New Energy and Industrial Technology Development Organization (NEDO) provide research grants, pilot project funding, and commercialization assistance for innovative technologies. Meanwhile, the J-Startup program helps high-potential startups scale globally through mentoring, visibility, and investor introductions.

Startups in fields such as AI, robotics, sustainability, and life sciences are particularly encouraged to apply for these grants, which can significantly reduce early-stage risk and R&D costs.

Regional and Prefectural Support

Beyond national programs, many prefectures and municipalities offer their own startup incentives to attract businesses and talent. Cities like Fukuoka, Osaka, and Nagoya provide subsidies for office rent, local tax exemptions, and startup incubation spaces. These regional programs are part of Japan’s broader effort to diversify innovation beyond Tokyo and foster new technology hubs across the country.

Detailed information about regional incentives and business setup support can be found through JETRO (Japan External Trade Organization), which also manages the Startup Visa Program, a streamlined path for foreign entrepreneurs to establish a business and residency in Japan.

Financial Management and Tax Guidance for Startups

In addition to public programs, understanding how to maximize these benefits through proper accounting and financial planning is critical. Articles like “Ultimate Guide to an Accountant in Japan” explain how accountants can help manage startup finances efficiently, while resources such as “Tax Reduction: Bad Debts as Accounting Loss ” and “Short-term Prepaid Expenses in Japan ” provide insights on optimizing tax deductions.

A Supportive Environment for Growth

With access to financial incentives, expert accounting guidance, and a maturing innovation ecosystem, Japan has positioned itself as one of Asia’s most promising destinations for both domestic and international entrepreneurs.

Explore the Scaling Your Company website, coupled with the government’s supportive measures, provides a robust environment for startups to grow and thrive in Japan.

Foreigners Owning Businesses in Japan

Japan is an open market that encourages foreign investment, permitting foreigners to own businesses within the country. The national government is actively enhancing the global competitiveness of Japanese startups by internationalizing the startup ecosystem. The procedure of initiating a business as a foreigner in Japan is detailed in the resource written by Tyson Batino. Mercari, for example, was co-founded by Tommy Tomishima, a Japanese entrepreneur who was born and raised in the United States. Mercari has become one of Japan’s unicorn startups with Tomishima relocating back to the United States to expand the operations of Mercari, exemplifying the international reach of Japanese startups. To attract foreign talent, the Japanese government has relaxed visa restrictions and introduced programs tailored for foreign entrepreneurs. In 2018, the “Startup Visa,” a subset of the Business Manager Visa category, was introduced. This visa allows foreign entrepreneurs to stay in Japan for a year to establish their business. This influx of foreign talent not only infuses the Japanese startup scene with new skills and perspectives but also aids in building a global network. For more content like this, check out the podcast hosted by Tyson on Scaling Your Company’s very own podcast hosted by Tyson Batino.

Prefecture Advantages for Startups in Japan

Japan’s startup ecosystem is no longer concentrated solely in Tokyo. By 2025, regional innovation hubs have gained significant traction, supported by government-backed initiatives and local startup policies aimed at revitalizing regional economies. Each prefecture offers its own combination of tax incentives, funding programs, and ecosystem strengths that cater to specific industries and stages of business growth.

Tokyo and Shibuya – Japan’s Innovation Capital

Tokyo remains the heart of Japan’s startup ecosystem, offering unparalleled access to investors, accelerators, and global networks. Within Tokyo, Shibuya has become a micro-ecosystem of its own. Designated as a Global Startup City, Shibuya is home to major incubators like Shibuya Startup Support, Plug and Play Japan, and CIC Tokyo, which connect startups with both domestic and foreign investors.

The Tokyo Metropolitan Government provides rent subsidies, overseas expansion grants, and employment support programs for early-stage startups. Shibuya’s ecosystem focuses heavily on AI, fintech, SaaS, and creative tech, attracting both Japanese and international founders.

Check out our podcast on Startups in Shibuya with Yoshiro Tasaka 

Fukuoka – Japan’s Most Startup-Friendly City

Fukuoka is often referred to as Japan’s “Startup City” due to its proactive local government and welcoming environment for entrepreneurs, including foreigners. It was the first city to introduce the Startup Visa Program, which allows foreign founders to establish a business within one year.

The city’s Fukuoka Growth Next accelerator provides mentorship, networking, and funding support, while corporate tax incentives and low living costs make it ideal for early-stage startups. In 2025, Fukuoka continues to strengthen its position as a regional hub for AI, gaming, and digital transformation startups.

Osaka – Gateway for Manufacturing and Healthtech Innovation

Osaka’s strong industrial base and access to manufacturing expertise make it a natural hub for biotech, medtech, and robotics startups. Supported by the Osaka Innovation Hub and Kansai Startup Ecosystem Consortium, the city connects startups with research institutions and corporations in the Kansai region.

Government initiatives like the Osaka Global Innovation Center and proximity to Expo 2025 Kansai are attracting both domestic and international attention, particularly in sustainability and life sciences. The local government also provides grant programs and rent subsidies for startups setting up near R&D clusters. The outlook of the startup industry in Kobe can be found in Startups in Kobe with Yoshi Nishikawa.

Nagoya – Deep Tech and Mobility Focus

Nagoya, home to major automotive and manufacturing firms, is becoming a leading hub for deep tech, robotics, and mobility innovation. The STATION Ai project, Japan’s largest startup support complex launched with backing from the Aichi Prefectural Government, opened its full facilities in 2025.

This center integrates coworking spaces, accelerators, funding access, and collaboration opportunities with local universities and major corporations. Startups in mobility, materials science, and green energy particularly benefit from Nagoya’s industrial ecosystem and partnership networks. 

In the podcast Startups in Aichi and Nagoya with Satoru & Akihiro, the duo discusses the startup scene in Nagoya, making it a useful resource for entrepreneurs eyeing this industrious city.

Kyoto – Academic and Cultural Innovation

Kyoto leverages its world-renowned universities and research institutions, including Kyoto University, to support biotech, AI, and environmental startups. The city’s ecosystem is characterized by close collaboration between academia, startups, and established corporations.

Initiatives such as Kyoto Research Park and ASTEM (Advanced Science, Technology & Management Research Institute of Kyoto) provide access to incubation programs and investor matching. Kyoto’s emphasis on sustainable innovation and deep technology continues to attract entrepreneurs seeking long-term R&D partnerships.

Kobe – Healthtech and Smart City Development

Kobe has established itself as a leader in healthcare innovation and smart city development. The city’s Kobe Biomedical Innovation Cluster houses over 370 medical and life science organizations, offering startups access to R&D facilities, funding, and industry collaboration.

The local government’s Startup Visa program and the Kobe Startup Office provide foreign entrepreneurs with business support and connections to venture partners. Kobe is also a participant in the Global Startup City initiative, focusing on medtech, logistics, and urban sustainability solutions.

Sapporo – Sustainability and Digital Transformation

Located in Hokkaido, Sapporo has become a rising startup destination known for its focus on sustainability, agritech, and digital innovation. The city’s Sapporo Startup Ecosystem Promotion Council and Open Network Lab Hokkaido support early-stage entrepreneurs with mentorship and government-backed funding.

Sapporo also promotes collaborations between local universities and private companies, encouraging innovation in food technology, renewable energy, and regional revitalization. Its high quality of life and lower operating costs make it an appealing choice for startups seeking a balanced work environment.

Listen to our podcast episode “Startups in Sapporo with Miho Tanaka” with Miho Tanaka discussing the available benefits and support for new business owners. 

Regional Summary

Japan’s 2025 startup ecosystem is no longer Tokyo-centric. Shibuya’s creative innovation, Fukuoka’s global openness, Osaka’s biotech expertise, Nagoya’s industrial technology, Kyoto’s academic R&D, Kobe’s healthtech focus, and Sapporo’s sustainable innovation together create a diverse, interconnected network of opportunity.

Each region provides its own strengths and incentives, offering both domestic and foreign founders multiple pathways to build and scale successful ventures in Japan.

A deep understanding of these nuances is crucial for any entrepreneur planning to set up a business in Japan, and resources like our podcast series provide invaluable insights into these different startup scenes.

The Next Wave: Japan’s Startup Predictions for 2026 and Beyond

Japan’s startup ecosystem is entering a pivotal phase where deep tech, AI, and sustainability are expected to define the next generation of leading companies. As cultural attitudes toward entrepreneurship continue to shift and both domestic and global funding expand, the coming years will likely see Japan strengthen its position as a hub for advanced technology innovation.

Emerging Sectors to Watch

Artificial Intelligence and Deep Tech
AI-focused startups are rapidly advancing, especially those in natural language processing, robotics, and quantum computing. Companies such as Sakana AI, founded by former Google Brain researchers, are attracting international attention and investment, signaling Japan’s growing role in the global AI race.

Biotechnology and Life Sciences
Japan’s strong research infrastructure and aging population make biotech one of its most promising frontiers. Startups developing novel therapeutics, medical diagnostics, and digital health tools are gaining traction, supported by government-backed R&D funding and corporate partnerships.

Robotics and Automation
As labor shortages deepen, robotics startups are driving automation across manufacturing, logistics, and elder care. Japan’s technical expertise and real-world need for productivity solutions give this sector a clear competitive edge.

Fintech and Digital Transformation
The success of firms like Paidy, acquired by PayPal for $2.7 billion, continues to inspire new entrants. Growth in cashless payments, blockchain technology, and financial SaaS solutions will sustain fintech as one of Japan’s most dynamic startup fields.

Sustainability and Environmental Tech
With Japan’s ongoing commitment to carbon neutrality, startups focused on clean energy, circular economy innovations, and environmental monitoring are set to expand. These ventures align with both domestic policy priorities and international investment trends.

Ecosystem Outlook

In 2024, Japanese startups raised about ¥780 billion (approximately $5.2 billion), reflecting consistent growth and increasing confidence from global investors. Regional innovation centers such as Nagoya’s STATION Ai and Fukuoka Growth Next are helping diversify activity beyond Tokyo, creating a more balanced and inclusive innovation network.

Looking ahead, experts predict a flywheel effect, where successful exits and reinvestments by experienced founders generate continuous momentum for new ventures. Combined with expanded NEDO and METI funding programs, Japan’s startup environment is transitioning from gradual growth to a more dynamic, self-sustaining ecosystem.

The Road Ahead

Between 2026 and 2030, Japan’s startup scene is expected to evolve into a globally competitive innovation hub driven by AI, robotics, biotech, fintech, and sustainability. With stronger investor participation, international talent inflows, and a growing number of serial entrepreneurs, Japan is moving from cautious progress to confident acceleration, shaping the next chapter of technology and entrepreneurship in Asia.

Final Thoughts

Japan presents an increasingly vibrant landscape for startups, particularly in areas like technology, healthcare, renewable energy, and more. The government plays a crucial role in this ecosystem, actively nurturing it through funding for research and development, bridging academic research and commercial enterprise, and fostering entrepreneurship education. There are robust support structures in place, such as the New Energy and Industrial Technology Development Organization (NEDO), the Feed-in Tariff scheme (FiT), METI’s Startup Program, and the Japan Green Innovation Fund, providing a strong launchpad for startups, especially those in the renewable energy sector. Japan’s commitments to the United Nations Sustainable Development Goals and the Paris Agreement on climate change further promise growth in green and sustainable technologies.

Despite these challenges, Japanese startups are making strides across numerous industries, powered by cultural shifts, government initiatives, and a growing pool of venture capital. As Japan continues to cultivate a conducive environment for startups, the entrepreneurial scene is expected to become even more dynamic and vibrant in the coming years.

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