Guide to Startup Subsidies in Japan

Startups in Japan are taking a huge turn in 2023. The support for start-ups has grown since Prime Minister Fumio Kishida’s governmental policies of support. Just in 2022, the prime minister vowed to promote bold investments and reforms in industries such as start-ups. He specifically cited the big corporations in Japan today, as they themselves had come from small and hugely creative innovations back after the World War period.

Since those vows, the Tokyo Metropolitan government is now planning to invest in start-ups while many cities are offering subsidies like free rent, covering staff salary, incorporation, grants, and subsidies to develop companies.  As of 2021, Tokyo is the world’s Number 1 Innovation City in the Innovation City Index. Today, there’s so much more to look forward to in establishing your start-up in Japan.  

What industries are hot for startups?

There are a few industries in which the government is incredibly growth-minded. Free spaces, loans, and other kinds of support are being offered in industries such as deep technology, green technology, health technology, and financial technology. The Tokyo government focuses highly on financial technology as it aims for Tokyo to be the financial hub of Asia. For those unaware, green technology or green tech is a technology that is environmentally friendly or reduces human impact on the environment. The Japanese government’s international conference promises of carbon neutrality and a focus on climate change have amped up this industry.

These industries are also being invested in through start-up-specific subsidies. This article will explore the various startup subsidies in Japan and how you can utilize them in your start-up today or in the future. 

What are subsidies and what do they cover?

Startup subsidies in Japan are either tax cuts or cash payments from the government to keep the costs of running a business low as well as to accelerate growth. This is especially helpful for startups which may need some funding. It should be noted that there exist certain limitations on what you can use the subsidies for. For example, if the subsidy is for marketing purposes, it can only be used for marketing expenditures. This applies to other types of startup subsidies in Japan as well so choose the type of subsidy you apply for well. 

What is the difference between subsidies and loans?

With a start-up in Japan, you must have cash on hand. Payment cycles tend to be long in the country as companies tend to pay for your service after maybe 3-6 months and only after finishing a project. Loans are common because of this. Interest rates in Japan have been historically low, as well, which makes this a less painful process. But what exactly is the difference between startup subsidies in Japan and loans?

Startup subsidies in Japan are financial aids or incentives provided by the government, as explained previously. Loans, on the other hand, involve borrowed funds that must be repaid over time, with interest, fostering financial responsibility and capital generation. Startup subsidies in Japan offer immediate support, while loans create obligations for repayment.

For a detailed breakdown of the difference between subsidies and grants + what kind of subsidies can you apply, check out our Q&A with a subsidy and grants expert in Japan.

How We Can Help with Your Startup Subsidy Application

Applying for startup subsidies in Japan has always been a complex process, but recently, there has been a noticeable decline in the acceptance rate for subsidies and grants. This makes it more important than ever to have a professional with experience by your side. Our team specializes in subsidy research and application preparation, guiding you through every step to ensure your application stands out. We handle all the details—from research to documentation—allowing you to focus on your business while we maximize your chances of securing vital financial support. Trust our expertise to navigate this challenging environment with confidence. Reach out to us using the form here.

Which government agencies are responsible for providing startup subsidies in Japan?

Several government agencies are responsible for issuing startup subsidies in Japan. The country’s Ministry of Economy, Trade, and Industry (METI) is one such government agency that is leading the start-up world through the Green Innovation Fund and other projects. This fund is a 2 trillion yen fund and was made with the vision of carbon neutrality for Japan by 2050, so it targets businesses and research that go toward sustainability and environmental consciousness. METI is one of the main government agencies responsible for promoting industrial and economic growth in Japan. It often plays a significant role in supporting startups through various programs, grants, and initiatives.

Japan External Trade Organization (JETRO) also provides startup subsidies in Japan. They provide support to foreign companies and entrepreneurs looking to establish or expand their businesses in Japan. They offer various services, including business matching, market research, and information on other startup subsidies in Japan.

Aside from national-level agencies, regional and local governments are often trying to promote the rise of start-ups in their city. The Tokyo metropolitan government, the Hokkaido government, the Aichi government, and so many more are on the lookout for potential. The Tokyo Metropolitan government offers a wide range of assistance which we will outline in the next section.

What types of support can start-ups expect to receive?

Start-ups can mainly expect to receive two types of subsidized support for their start-up: Financial and non-financial assistance startup subsidies in Japan. The Tokyo Metropolitan Government, for example, offers free consulting services for industries 4.0 or Fintech & Asset Management. These are examples of non-financial assistance startup subsidies in Japan. There are different types of assistants within these two vastly contrasting categories which we will explore in this section. 

Financial Assistance Startup Subsidies in Japan

Financial assistance startup subsidies in Japan play a pivotal role in fostering economic growth, innovation, and entrepreneurship within a region. This section delves into the various components of financial support aimed at empowering businesses and individuals during different stages of their journey. To know more about financial assistance startup subsidies from the Japanese government, take a listen to our podcast episode on How to Get Japanese Government Money for Your Business with Miho Tanaka.

Seed Funding and Early-Stage Support

Seed funding and early-stage support are critical pillars of financial assistance. Startups and entrepreneurs often require initial capital to transform their innovative ideas into viable businesses. Startup subsidies in Japan within this category provide the essential monetary injection needed to cover preliminary costs such as product development, market research, and operational expenses. The following are seed funding from various parts of Japan that are subsidized by local governments. 

• Hokkaido’s government offers up to 50% (maximum amount of 2.5 Million JPY) subsidies to cover initial costs with a maximum amount of 300,000 JPY.  By offering seed funding, the region aims to catalyze the emergence of promising ventures and contribute to job creation. 
• Nagoya City’s government offers startup support for companies within 5 years of starting with a headquarters in Nagoya. The subsidy limit is a maximum of 1 Million JPY at ⅓ rate.

Research and Development (R&D) Funding and Innovation Grants

Research and development are key drivers of technological advancement and economic progress. R&D funding and innovation grants are tailored to support companies engaged in cutting-edge research, product development, and technology-driven initiatives. These startup subsidies in Japan foster collaboration between academia and industry, resulting in the creation of novel products, services, and solutions that elevate the region’s competitiveness on a global scale.

For hardware start-up companies, making an MVP often needs grants to allow time to gain funding from venture capitalists or angel investors. Grants for research and development are crucial for these types of companies. 

Prizes

Recognizing and rewarding innovation is a cornerstone of the financial assistance framework. Initiatives are available like the Financial Innovation Prizes which celebrates groundbreaking ideas and solutions that have the potential to reshape industries and address pressing challenges. By offering such prizes, the region not only acknowledges exceptional achievements but also encourages a culture of continuous innovation.

Free Rent

To alleviate one of the initial financial burdens faced by startups and businesses, the provision of free or subsidized workspace is a valuable component of financial assistance. By offering free rent or shared office spaces, the region facilitates a conducive environment for collaboration, idea exchange, and growth. This initiative aims to reduce overhead costs, enabling entrepreneurs to allocate resources more effectively during their crucial early stages. The following cities are a few examples of those that provide rent support.

• Fukuoka City Global Startup Center offers this as a subsidy, which you can learn more about in this podcast episode on Japanese Startup Cities with Akiko Nakagawa from Fukuoka GSC. Essentially, 5 spots are given out every April-June for both residential and office space subsidies. 
• Kobe City’s government offers free rent for start-ups such as free office space before the establishment of the start-up’s own office (maximum of 3 months). After the start-up establishes its own office, Kobe City also offers subsidies up to ½ of the space’s rent with a maximum of 1500/m²/month for downtown Kobe office spaces. Subsidy rates for spaces outside downtown Kobe go for 750/m²/month. 
• Nagoya City’s government offers subsidized rent for start-ups looking to establish a base office within Nagoya City. The subsidy is called the Subsidy for Promotion of Start-up Accumulation, which has a subsidy rate of ½ for 12 months with a maximum amount of 700,000 JPY. 
• Hokkaido’s government offers 3 months of free housing rent for entrepreneurs planning to open up a business in Sapporo with further plans of incorporation

Employee Salary Support 

Recognizing the significance of a skilled workforce, employee salary support initiatives are designed to attract and retain talent within the region. These startup subsidies in Japan may offer incentives such as wage reimbursements or matching contributions to encourage businesses to invest in human capital. The region’s commitment to enhancing its workforce promotes industry expertise and innovation, contributing to sustainable economic development. Here we list a few examples of subsidized employee salary support.

• Kobe City Government offers employee salary support subsidies for businesses with offices in downtown Kobe for 300,000 JPY per newly employed full-time worker (maximum 3 million JPY for the whole business) who has a registered address listed under Hyogo Prefecture. The businesses must, however, have 11 or more full-time workers. 
• Nagoya City’s government offers startup support for companies within 5 years of starting with a headquarters in Nagoya. This seed funding includes labor expenses of up to 350,000 JPY per month per worker over the subsidized period.

Tax Reduction

Tax reduction measures are a strategic approach to stimulate economic activity and incentivize investment. By offering tax breaks to eligible businesses and individuals, the region aims to promote entrepreneurship, job creation, and overall economic growth. These reductions can encompass various taxes, such as corporate income tax, property tax, and sales tax, providing a financial boost to entities that contribute to the region’s economic vitality. These different categories are important to distinguish amongst when applying for tax reductions. 

• Kobe City Government offers reductions on corporate enterprise taxes. These reductions will allow the start-up to pay only ⅓ of the full corporate enterprise tax given that. 
• Fukuoka City’s government has a considerable reduction in national taxes, up to at least 8% reductions for industries such as the Internet of Things, International, Medicine, Agriculture, and Advanced IT.

Loans

Loans from the government are a significant financial assistance subsidy that helps promote and foster economic growth at reasonable interest rates for the borrowers. Repayment periods also tend to stretch out and are considerably flexible. Here we list a few examples of flexible government loans.

• Japan Finance Corporation (JFC) offers loans for start-ups that haven’t started or are within 1 year of operations can avail of special loan programs through Japan Finance Corporation (JFC) which offers a base interest of 2% which can be lowered with a guarantor. 
• As part of their Startup Package for Foreign Entrepreneurs, Fukuoka City’s government offers a reduced interest rate of 1.3% for a maximum loan amount of 25 million JPY for start-ups in Fukuoka that have been established within the last 2 years. 

Non-Financial Assistance Startup Subsidies in Japan

In addition to financial assistance, the region is committed to promoting non-financial support that nurtures and guides businesses toward success. This section delves into the diverse range of non-financial startup subsidies in Japan aimed at fostering growth, knowledge enhancement, and long-term sustainability.

Start-up Incubation and Acceleration Programs

Business incubation and acceleration programs stand as pillars of support for startups and emerging enterprises. These programs offer a structured environment where entrepreneurs can access mentorship, resources, and networking opportunities. Through collaboration with established industry experts and successful entrepreneurs, participants gain invaluable insights, guidance, and feedback. Accelerators also offer possible investment after the program.

You can apply to notable accelerator programs in our article on the Top 10 Start-up accelerators in Japan and spread to incubators in our article on Top 10 Start-up Incubators in Japan. Other programs like the Japans Venture Academy (JVA) fellowship also encourage startup-minded individuals to create their own products. They’re currently being funded by Shibuya Startup Support, an initiative by the Shibuya Government. Fukuoka City’s government also invites businesses to their facilities by giving priority access to incubator facilities for entrepreneurs who open their businesses in Fukuoka. 

Mentoring and Consulting Services

Mentoring and consulting services form a crucial part of the region’s non-financial assistance strategy. Established professionals and seasoned mentors offer their expertise to guide startups and businesses through challenges, strategic decision-making, and growth opportunities. These one-on-one interactions provide a unique avenue for knowledge transfer and the cultivation of critical skills, ultimately contributing to the overall success of the entrepreneurial ecosystem. 

• Tokyo Metropolitan Startup Support’s One-stop Business Establishment Center established by the Tokyo Metropolitan Government offers a variety of services such as incorporation support, company registration (for both national tax and metropolitan tax), immigration support, and more
• Fukuoka City’s government offers free English business consultation in their Startup Café with experts such as lawyers, accountants, and government representatives. Startup visas and city certifications are other services offered by the government

For businesses seeking to grow their revenue, effective mentorship plays a vital role in achieving growth and financial stability. At Scaling Your Company, we provide expert guidance to help you develop and implement marketing strategies that drive customer acquisition and revenue growth we have helped over 50 businesses with their revenue expansion in Japan. Whether you’re navigating B2C or B2B markets, our hands-on approach ensures that your marketing efforts are aligned with your overall financial goals. Book a free 45-minute consultation with us to explore how we can mentor and support your business’s marketing and financial success.

Training and Skill Development Support

Continuous learning and skill development are fundamental for businesses to remain competitive in a rapidly evolving landscape. Training programs and skill development initiatives are tailored to equip entrepreneurs and their teams with the latest tools, techniques, and knowledge relevant to their industries. By investing in human capital, the government ensures that businesses have the capabilities to innovate, adapt, and thrive in an ever-changing marketplace.

Nagoya City’s government offers skill development through programs such as NAGOYA BOOST 10000. NAGOYA BOOST 10000 implements programs aimed at aiding budding entrepreneurs in gaining the necessary expertise and competencies for venturing into new business endeavors. It teaches know-how on product and service development through practical courses. Finally, the organization holds pitch events to lead entrepreneurs into presenting their business ideas to Nagoya. For details on support Nagoya / Aichi government provide to startups, check out our podcast episode with StationAI.

The Ministry of Health, Labor, and Welfare (MHLW) supports various startup subsidies in Japan for career development such as those listed here.

• Specified Job Seeker Employment Development Grant is a grant made for the employment of people who want to work but struggle to find it in human resource jobs because of a lack of skill or work experience. This grant provides a certain training period and a number of working hours.
• Development of Human Resources Development Support Subsidy is a grant that subsidizes part of the expense for training workers of a company in new fields and areas of expertise. This grant subsidizes 75% of the expenses (60% for large companies, see link for definition of a large company) with an additional wage subsidy of  960 yen (480 yen for large companies) per hour. 
• Development of Industrial Employment Stability Grant (Skill Up Support Course) is a grant that enrolls workers in secondary courses that aim to teach new skills and subsidizes a portion of the wages given that the company provides a 5% increase in wages after the enrollment. The maximum amount is 8,355 yen per person per day (10 million yen per business owner) and the payment period will be 1 month to 1 year.

To learn more about these opportunities, read more about them on the MHLW’s website.

List of startup subsidies in Tokyo

To aid you in your start-up journey, we’ve compiled a list of start-up subsidies for you to apply to according to your start-up’s needs. Some of these are no longer active so we’ve separated those out, but remember that they may be active again in the future, so keep an eye out!

List compiled by Francisco Dalla Rosa Soares

Inactive startup subsidies in Japan

Any industry

City: Tokyo

Inactive startup subsidies in Japan

Manufacturing Industry

City: Tokyo

Inactive startup subsidies in Japan

Disaster Prevention Industry

City: Tokyo

Active startup subsidies in Japan

Any industry

City: Tokyo

Active startup subsidies in Japan

Medical industry

City: Tokyo

Active startup subsidies in Japan

General Merchandise industry

City: Tokyo

Active startup subsidies in Japan

Startup incubation industry

City: Tokyo

Active startup subsidies in Japan

Digital Technology industry

City: Tokyo

Active startup subsidies in Japan

Industrial Technology industry

City: Tokyo

Active startup subsidies in Japan

Manufacturing industry

City: Tokyo

Specific Criteria for Obtaining Subsidies in Japan

In order to obtain startup subsidies in Japan, certain specific criteria must be met by potential recipients. These criteria vary based on different factors such as the nature of the business, the origin of the company, and the alignment with government policies. This section delves into the key requirements that applicants must fulfill to be eligible for subsidies offered by the Japanese government.

What is a start-up according to the Japanese government?

The Japanese government defines a startup as a company that embodies innovation, and technology-driven solutions, and exhibits potential for growth and expansion. Startups, as per Japanese standards, are often characterized by their focus on pioneering ideas, disruptive technologies, and a strong commitment to research and development. The government recognizes the importance of fostering a dynamic ecosystem for start-ups, both domestic and foreign, to stimulate economic growth and innovation.

Eligibility Rules for Foreigners or Foreign Start-Ups

Foreign individuals or companies seeking startup subsidies in Japan are subject to specific eligibility rules. These rules are designed to facilitate international collaboration and innovation while ensuring that recipients contribute positively to the Japanese economy. Eligibility for subsidies often requires foreign start-ups to have a legal presence in Japan, demonstrate a clear business plan, and exhibit the potential to create jobs and drive economic progress. Foreigners hoping to set up start-ups are also expected to have a resident status that permits business activities within Japan.

Rules for Overseas Companies

Overseas companies interested in obtaining startup subsidies in Japan from the Japanese government must adhere to certain regulations and guidelines. These may include establishing a subsidiary or branch in Japan, partnering with local entities, or aligning their business activities with the strategic priorities outlined by the Japanese government. This approach ensures that subsidies are directed towards initiatives that align with national economic goals and promote long-term sustainability.

Application Process for Subsidies

Applying for startup subsidies in Japan involves a structured process that requires prospective recipients to provide comprehensive information about their business, innovation potential, and intended outcomes. The following examples illustrate the general steps involved in applying for these subsidies:

1. Submission of Application: Interested startups submit a detailed application that outlines their business model, innovation goals, and the specific subsidy program they are applying for. The application form is linked in the pages linked in our list and the address to mail this is also usually listed. Before submitting this, be sure to look through the application guidelines and your eligibility for the program. You may also be required to sign up to a website and register as a member. You may have to make a reservation ahead.  

Remember writing these documents is a lot like writing an essay. Even those N1 in Japanese would find this difficult so if you can possibly ask a native speaker to help fill out the document, that would be helpful, especially if they work in the startup.

2. Assessment and Review: Government agencies responsible for disbursing startup subsidies in Japan evaluate applications based on predefined criteria, including innovation, economic impact, and alignment with policy objectives.

3. Verification: Shortlisted applicants undergo a verification process to validate the accuracy of the information provided in the application. This may include interviews or site visits. Interviews usually operate with a group. It helps not to be technical with the interviewers and try to explain it as simply as you can.

4. Approval and Grant: Successful applicants receive official approval and are granted the subsidy, which may be awarded as a financial grant, tax incentives, or other forms of support.

5. Monitoring and Reporting: Recipients are typically required to adhere to reporting obligations, providing updates on project progress, milestones achieved, and the effective utilization of the subsidy.

Obligations or Conditions After Obtaining Subsidies

Startups that obtain subsidies from the Japanese government are often subject to certain obligations and conditions aimed at ensuring accountability, transparency, and a return on investment for the broader economy. These obligations may include:

• Reporting and Auditing: Providing periodic reports detailing the progress and outcomes achieved as a result of the subsidy, along with potential audits to verify the accuracy of the information provided.

• Repayment or Recapture: In some cases, start-ups may be obligated to repay the subsidy if specific milestones or objectives are not met within the agreed-upon timeframe.

These obligations and conditions ensure that startup subsidies in Japan granted to start-ups contribute effectively to the development of a thriving and innovative business landscape in Japan while maximizing the overall benefits for society and the economy.

Final Thoughts

Japan’s evolving start-up subsidy landscape is ushering in a new era of support for entrepreneurial endeavors. This commitment is seen in the Tokyo Metropolitan government’s ambitious investments and various city-level subsidies. The distinction between financial assistance startup subsidies in Japan and loans empowers start-ups with flexible funding options, enabling them to strategically manage their financial resources and fuel innovation.

Guided by agencies like the Ministry of Economy, Trade, and Industry (METI) and the Japan External Trade Organization (JETRO), Japan’s start-up ecosystem is poised to flourish. METI’s emphasis on equity-based funding structures and JETRO’s support for foreign companies showcase a holistic approach that fosters innovation and cross-border collaboration. The eligibility criteria for startup subsidies in Japan align with Japan’s drive for innovation, with an emphasis on supporting ventures that exhibit growth potential, innovation, and a commitment to contribute to the economy. As these startup subsidies in Japan continue to shape the country’s start-up landscape, the nation’s trajectory toward becoming a global innovation powerhouse appears promising, offering a fertile ground for aspiring entrepreneurs to thrive.