AGUIDETHE INNOVATIONTOECOSYSTEMOFJAPAN1

The guide presents the main business opportunities, the mostimportant leads, and most interesting stakeholders, as seenfrom a Danish perspective. We give you a realistic and levelheaded understanding of the local startup scene based on
first-hand experience and on-the-spot dialogues.
This publication has been developed by Asia House andPREFACE

TechBBQ as part of a series of guides to innovation ecosystems in the China Bay Area and Taiwan, India, Japan, Korea,and Singapore.
The series is published as part of the non-profit initiativeInnovation Lab Asia to improve and enhance cooperation be-This guide gives you a brief introduction to the Japanese innovation ecosystem, with special focus on Tokyo,
where most of the startups and stakeholders are based,and Fukuoka, which is an upcoming ecosystem with astrong international profile.

tween Danish and Asian innovation ecosystems. The project is
supported by the Danish Industry Foundation.
For further information and guidance, contact:
ASIA HOUSEPeter Johansen, Project Manager

TECHBBQ
Lisa Mallner, Lead Consultant

MAIL
hello@innovationlabasia.dk23

WHY JAPAN?

Japan is Denmark’s second largest export market in
Asia, and the world’s third largest economy. By all
accounts, Japan will remain a key market for Denmark in
the years to come.

First, Japan is one of Asia’s wealthiest countries. After yearsof economic stagnation, the Japanese economy is now
showing signs of recovery. Complement this with a consumer
base of 127 million people, a highly advanced society and awell-educated population, Japan will most likely remain an
economic powerhouse of Asia.

45

JAPAN

Partnership Agreement (EPA) reducing trade barriers between•

At USD 100 billion, Softbank’s Vision
Fund is the world’s largest technology
investor•

Yet, Japan has only produced three unicorns. The government has launched aplan to raise this number to 20 by 2023•

The Economic Partnership Agreement
is expected to boost trade between
Denmark and Japan by 30-50%•

The Japanese population is aging rapidly: 27% of the population is now above
65 years, while 14% are below 14 years•

It is estimated that the Japanese population will shrink by a third from 127
million in 2010 to 87 million in 2060

•The Japanese government is betting
heavily on robotics, both industrial andservice, on account of this shrinking
population and workforce

the two economic zones. The majority of import duties
and tariffs will be removed, as well as non-tariff barriers.
Perhaps most notably, the agreement will seek to harmonize
international product standards. Experts expect the EU-Japan
Economic Partnership Agreement to boost trade between
Denmark and Japan by 30-50%.

GLANCE

52 of the world’s 500 largest companies
are Japanese, with Toyota and Softbank
topping the list

Japanese share the Danish liking for minimalism.
Third, Japan and the EU have recently agreed on an Economic

A•

Second, Danish products carry a strong brand value in Japan.
There is a high demand for premium products, and many

AT

Finally, Japanese megatrends may give Danish startups acertain advantage. With a rapidly aging population, Japanesedemand for welfare technology is increasing dramatically,providing opportunities for strong Danish startups within
Healthtech, Life Science, and AI.
Market opportunities for Danish companies looking to Japanare enormous.
67

MAIN ECOSYSTEM OVERVIEWOSAKA•TOKYOOsaka is Japan’s second largest city, andhome to some of Japan’s largest corporations: Panasonic, Sharp, Suntory, and Capcom. Osaka is also a Strategic Special Zone,
providing incentives and support systems
for aspiring entrepreneurs, including tax
breaks and lenient visa regulations.

•Tokyo is home to Japan’s greatest innovation ecosystem, with the largest number ofstartups, investors, financial institutions,universities, and corporations, both foreignand domestic. It’s also the world’s mostpopulous metropolitan area, with 38 million
inhabitants.

KOBEFUKUOKA••8Fukuoka is Japan’s upcoming international
startup hub. With only 2½ million people,
Fukuoka is relatively small, but emerging
fast as a dynamic startup hub based on
sound policies and government support
programs. Fukuoka has the highest growthof internationals living in the area.

Kobe is home to Japan’s newest innovationhub, centered around Port Island. Driven
forth by a visionary and entrepreneurialcity authority, Kobe has established itself
as Japan’s biomedical cluster, with a large
concentration of hospitals and research
institutions.

THE
ECOSYSTEM
AT A GLANCETOKYOTokyo is the undisputed center of the Japanese innovation
ecosystem; it has the highest number of startups andattracts the greatest amount of funding. In 2018, 77%of all Japanese VC investments went to Tokyo-based
enterprises.

Japan is often considered a risk-averse society; employment
in large corporations, with a high level of security and stability,
remains a popular choice with many young Japanese. Thus,
Japan has relatively few startups, and most innovation comesfrom established corporations.

1011

AFEW

FACTSONTOKYO•

The Greater Tokyo Area is the most populous
metropolitan area in the world, with a population of 38 million people.

•Tokyo is the main financial center of Asia,
along with Hong Kong and Singapore.

•Tokyo ranks amongst the top 12 upcoming
ecosystems (Startup Genome 2019).

•As a consequence of the sarin gas attack in
the Tokyo subway in 1995 by Aum Shinrikyo,
there are no more trash cans on the streetsin Tokyo. People throw their trash away inSeven Elevens and Lawsons instead.

•Shinjuku train station in Tokyo is the busiest
train station in the world.

But times are changing. Several decades of economic recession
have forced millions of employees to work on short-termand project-based contracts, reshaping the Japanese labormarket and changing the mindset of the young generation inparticular. Considering a career as a startup entrepreneur is nolonger quite so controversial.
The Japanese government has invested heavily in creatinga startup ecosystem and now claims that Japan has morethan 10,000 startups (unofficial estimates are less generous).
However, considering Japan’s long tradition for sophisticatedtechnologies, strong universities and research institutions, andhighly skilled talent, the Japanese startup scene will continue
to evolve in a positive direction.
1213

MAIN LEADSThe Japanese innovation ecosystem is presently experiencing
a boost in investments, especially from Corporate VCs. However, the Japanese innovation ecosystem is still relatively
weak (though improving), and there is a growing interest
amongst Japanese investors for opportunities in the Nordics.
Some are already LPs in Nordic VC funds - mainly Finland andEstonia - others are accessible in Tokyo. Danish startups
should consider Japan for funding opportunities.

•NordicNinja VC is a joint venture between the Japan Bank•SLUSH Tokyo is the largest and most internationalized•

Digital Garage is a heavyweight in the startup ecosystem•Mistletoe is a VC focusing on “world changing startups infor International Cooperation (JBIC) and BaltCap. Nordic

startup event in Japan. Of the 700 startups and 200

and was responsible for bringing both Twitter and LinkedIndeeptech” and is run by Taizo Son, the youngest brother

Ninja VC is the first Nordic/Baltic focused fund from Japan.

investors attending in 2018, more than half wereto the Japanese market. The firm is also an original LP in theof Softbank’s Chief Executive Masayoshi Son. Mistletoe

The USD 110 million fund is backed by three large Japaneseinternational, and the conference content is in English.

Nordic VC byFounders.

has invested in several Northern European companies,

tech corporates: Honda, Panasonic and Omron, and was

Many prominent investors from the ASEAN region also

launched at Slush 2018 in Finland. The team’s stated focus

attend. The event included two pitch contests, one forWith a focus on Fintech and Data, this company isHelsinki-based early stage fund Maki.VC and the Estonian

is on matching novel Nordic ideas with Japanese industrial

investors and one for startups, and an advisory program,

especially interested in the rapid development of Nordic

VC Tera Ventures.

powerhouses. Their target sectors are enterprise software,

where successful entrepreneurs provide mentorship forsocieties toward cashless economies and the Nordic

robotics, AI, cybersecurity, digital health, and mobility.

early-stage startups.

approach to public data. While not a traditional accelerator,

including Funderbeam and Lift99, and is an investor in theDigital Garage looks to nurture businesses moving into theJapanese market through a collaborative partnership.

1415

OTHER LEADS
Innovation Lab Asia has established contacts withseveral interesting organizations in Tokyo that mightprove relevant for Danish startups. We can facilitate
further contact if needed.

•Marubeni is a major Japanese business conglomerate•Plug and Play is a global innovation platform working as athat has been increasing their interest in Nordic and Baltic

VC and a corporate accelerator. Headquartered in Siliconsolutions. Marubeni is not a VC but collaborates with start-Valley - but with 26 locations worldwide - Plug and Playups through investments in innovations that serve theirprovide a three-month program twice per year focused oncore business. The company’s 2019 focus areas are Nor-scaling. Plug and Play Japan is focused specifically on scal-

dic strongholds, including Blockchain, Gaming, and Well-ing startups into Japan and East Asia. The program covers

being, and they have recently opened an office in Tallinn.

business matchmaking, where domestic and international
startups can network and interact with corporates in Plug•The Nomura Research Institute (NRI) is one of Japan’sand Plays’ network and qualify for funding.

leading companies in business consulting and IT, as well as athink tank. They provide startups with three types of IPO-related support services: IPO research, business consulting,and venture capital. NRI is a global partner of both the Copenhagen Fintech and Copenhagen Welfare Tech clusters
and is keen to bring Scandinavian strengths in the healthcare industry and smart cities into the Japanese market.

1617

OTHER GATEWAYS &ACCESS POINTS•Softbank’s Vision Fund is the largest VC in the world, with•Samurai Incubate is an early stage venture capital andUSD 100 billion in capital. In 2019, Softbank announced

seed accelerator, which was launched in 2008 with the aim

plans to raise a second USD 100 billion fund, as well as aof supporting startups within the areas of management,

USD 55 million fund for early stage VC focused on earlymarketing, sales, HR, and finance. Samurai Incubate also

stage AI. So far, Softbank has only had a few investments inruns the Samurai Startup Island, a startup incubator andNordic companies, though they famously bought a stake inco-working space in Tokyo, where startups can find oppor-Supercell in 2013 (which was later sold to Tencent). Howev-tunities for networking and funding.

er, partners have been present at Nordic events like Slushand TechBBQ to connect with deep tech startups.

•East Ventures is a venture capital firm based in Singapore,
Jakarta, and Tokyo. East Ventures focuses on seed and•

Docomo Innovation Village is a startup accelerator

early stage startups in Southeast Asia and Japan and has 4

branch of Japan’s predominant mobile phone operator,

unicorns in its portfolio.

NTT Docomo. The primary focus in NTT Docomo is to promote and foster technological solutions in mobility and related businesses and services. While primarily focused onJapan-based companies, the Docomo Innovation Village
has a reputation for nurturing and supporting the startups in their program until they have reached a stable state.

1819

STRONGHOLDS& OPPORTUNITIESJapan is one of the few Asian countries where Danish

Artificial Intelligence is the second focus area of this report.

design really resonates with the culture. Additionally, Danish

Japan was the second country to develop a national AI strat-companies are reputed for their high quality products thategy, and is home to 12 of the top 20 AI developers in terms ofmatch Japanese reality. Thus, Danish solutions carry a strong

number of patent applications and comes in third in terms ofbrand value in Japan.

academic papers published. Japanese investors and research
institutions are interested in engaging with the Danish AI start-

The focus areas of this report are Healthtech and Lifeup ecosystem.

Sciences. The Japanese population is aging rapidly; by 2025,
30% of the population will be above the age of 65. The Japanese
government is actively seeking ways to ensure that all citizens(and especially seniors) have access to healthcare in the future
while avoiding massive increases in healthcare spending. Thisnaturally magnifies demand for innovative and cost-efficientsolutions, opening the field for Danish Healthtech startups.

2021

HEALTHCARETECHNOLOGY•Japan is one of the world’s main consumers of Healthcare•There is a high demand for products and services that catertechnology and the world’s second largest market for phar-to individual and consumer needs. Otherwise, the following

maceuticals. Much of this is imported.

areas within Healthtech seem to have particular relevance inJapan: IoT or robotics solutions to assist patients, solutions•The EU-Japan Economic Partnership Agreement addresses

that facilitate remote diagnosis, and AI and Big Data that cansome of the barriers that the EU may experience when trying

be used to recommend and optimize treatment of patients.

to access the Japanese market for healthcare. For example,
the agreement lets more European companies bid on public procurements, which might be especially relevant within
healthcare. The agreement also has a strong focus on SMEs,
and not least easing the barriers for imported goods and services in the healthcare industry.
•While Japan is characterized by strong competition
amongst multinational healthcare corporations, the market is still fragmented, with ample space for niche products
and services and high-quality solutions. Presently, smaller
players account for a relatively large share of the total sales.

2223

ARTIFICIALINTELLIGENCE•

In 2017, the Japanese government launched a strategy to•

There are several areas where Danish startups might

increase R&D for AI and strengthen collaboration between

find viable business opportunities. One is companies

academia, industry, and the government. This strategy willthat incorporate deep learning-based technologies.

centeraroundthe areas ofproductivity,welfare, and mobility.

AI-applied solutions in marketing based on data analysis,automated marketing, and image recognition are also•

Japan’s market for artificial intelligence is predicted tofields where Danish startups may find special prospects.

grow from USD 34 billion in 2015 to 810 billion by 2030.
While AI solutions for the wholesale and retail sectors
made up 35% of the AI market in 2015, the transport sector(including driverless vehicles) and the manufacturingsector are predicted to take up half of the market by 2030.
•While some have mentioned AI as a solution to the labor
shortages Japan will encounter as a result of the aging
population, others point to the fact that the lack ofworkforce, especially in terms of specialized personnel, isan obstacle for Japanese AI companies. Also, compared toChina and the US, Japan does not have an AI powerhouseequivalent to companies like Amazon, Alibaba, Google,or DJI.

2425

THE GATEWAYCITY
FUKUOKA

In 2014 the Japanese government launched the Startup
Fukuoka initiative; removing regulations, lowering taxes
and providing great incentives for foreign startups inthe southern city of Fukuoka. Today Fukuoka is therising star of the Japanese innovation ecosystem, witha growing number of international startups, including a
few intrepid Baltic companies.

Fukuoka’s special designation as a startup zone meansthat regulations for foreign entrepreneurs and new businesses are more lenient. All you need to submit to get astartup visa is a bank account, a business plan, and yourresume.

If the city of Fukuoka believes your business ispromising, you will be eligible for all manner of support.
It also has good facilities for testing as a part of the national startup-strategy. For example, companies can use
public areas to experiment with smart city IoT devices.

2627

VIBRANTFUKUOKA•

With a population of just 2.6 million, Greater
Fukuoka is the sixth largest city in Japan•

Fukuoka has the fastest growing population andthe lowest average age of Japan’s larger cities•The proportion of foreign-born residents inFukuoka is increasing faster than any othermajor city in Japan•

Fukuoka has the highest rate of new business
openings in Japan

Secondly, the startup community in Fukuoka is a lot moreaccessible and tightly knit than the rest of Japan. Startup government services are housed in the same building as
co-working spaces and startup offices, and to get access tothe city’s startup support services, you don’t even need abooking to get a free consultation. Finally, the government
has introduced tax incentives for entrepreneurs, lowering thecorporate tax from the usual 30% to 22% in Fukuoka.
With 12 universities, Fukuoka has one of the highest densities
of international students in Japan, many of whom are interested in continuing to live and work in the area. Fukuoka also
has one of the youngest populations among large Japanesecities. Being located on the southern tip of Japan, the city
is also well connected to East Asia – a hop away from Seoul,
Taipei, Singapore, and Hong Kong.
So, while Tokyo still is the metropolis of the startup ecosystem inJapan, it might be advisable for early stage startups especially toconsider Fukuoka as a less competitive and more cost-efficientlanding spot.

2829STARTUP FUKUOKA
Startup Fukuoka is the main go-to point for foreign startups

These examples show that even early stage companies fromcoming to Fukuoka. Startup Fukuoka is a government-

small local markets, who may not have large amounts ofrun organization that operates an incubation facility thatinvestor backing can consider local soft-landing services likecollaborates with private organizations with the aim ofStartup Fukuoka as a valid entry point for the Japanese market.

centralizing all startup support functions. In total, 180
institutions are involved.
More specifically, the facility works as a one-stop center
providing a range of services for domestic and international
startups free of charge. These include financial aid for officespace and house rent but they also provide marketing,
distribution, legal aid, and funding support besides support
with administrative work when setting up the company.
Since the Startup Fukuoka initiative was launched in 2014,
Startup Fukuoka has entered into collaborations with 14 citiesin 10 countries throughout Europe, North America, and Asia.
Among these is the city of Helsinki, and Baltic startups likeCoffee Pixels and Stigo from Estonia, as well as Junno fromLatvia, have been able to leverage Fukuoka’s services for
successful expansion into Japan.
30

31This report has beendeveloped by

In a collaboration
betweenWith support fromAsia House
32|

Indiakaj 16, Copenhagen|www.innovationlabasia.dk|

hello@innovationlabasia.dk