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{"id":34251,"date":"2023-06-05T22:26:21","date_gmt":"2023-06-05T22:26:21","guid":{"rendered":"https:\/\/scienceandnerds.com\/2023\/06\/05\/6-investors-explain-why-they-are-bullish-about-japans-startup-scene-despite-an-uncertain-economy\/"},"modified":"2023-06-05T22:26:22","modified_gmt":"2023-06-05T22:26:22","slug":"6-investors-explain-why-they-are-bullish-about-japans-startup-scene-despite-an-uncertain-economy","status":"publish","type":"post","link":"https:\/\/scienceandnerds.com\/2023\/06\/05\/6-investors-explain-why-they-are-bullish-about-japans-startup-scene-despite-an-uncertain-economy\/","title":{"rendered":"6 investors explain why they are bullish about Japan\u2019s startup scene despite an uncertain economy"},"content":{"rendered":"

Source:https:\/\/techcrunch.com\/2023\/06\/05\/japan-investor-survey\/<\/a><\/br>
\n6 investors explain why they are bullish about Japan\u2019s startup scene despite an uncertain economy<\/br>
\n2023-06-05 22:26:21<\/br><\/p>\n

\n

Thinking of Japan<\/span> often evokes notions of bleeding-edge tech mixed with deep tradition and culture. The country\u2019s startups, however, haven\u2019t seen the sort of growth<\/a> that upstart tech companies in other parts of the world have. There are signs that those tides are turning, though, with startup funding increasing along with the number of active domestic venture capital firms. The Japanese government has also promised enthusiastic support<\/a> to boost the startup ecosystem in an effort to ramp up annual startup investments tenfold to 10 trillion yen ($71.5 billion) by 2027<\/a>.<\/p>\n

2022 was a record year for the Japanese VC market, in stark contrast to global VC investments trending downward. Even in the first quarter of 2023, Japanese VC investment slightly increased owing to active seed and Series A funding deals; but later-stage funding was tough for startups, per a report by KPMG<\/a>.<\/p>\n

Gen Isayama, co-founder and CEO of World Innovation Lab, said this might be because \u201cmost of Japan\u2019s startups are early-stage startups that tend to be isolated from periods of economic uncertainty and downturns \u2014 a function of being seven to 10 years from the time of the IPO.\u201d<\/p>\n

Startups in Japan received 877.4 billion yen ($6.2 billion) in 2022, up from 850.8 billion yen ($6 billion) in 2021, per a recent report by Initial<\/a>. The amount of funding raised by Japan-based startups was estimated at $625 million in 2013, the report said. To put this in context, startups in New York alone raised $2.9 billion<\/a> in 2013.<\/p>\n

We spoke to investors who actively invest in Japanese startups to get a better understanding of how the startup scene in Japan has changed from before and after the pandemic and their following plans.<\/p>\n

The money managers are optimistic despite uncertain macroeconomics, which could have a limited impact on Japan\u2019s startup ecosystem, and geopolitical risks between the U.S. and China, which could benefit Japan. However, they pointed out that later-stage funding would still be challenging for startups in the country in 2023.<\/p>\n

\u201cThe decline is happening in all markets [in the world] and at all stages \u2026 the impact on Japan is somewhat limited, but it is also true that Japan is a smaller market compared to its GDP and should be growing much more,\u201d said the CEO of Sony Ventures Corporation Gen Tsuchikawa.<\/p>\n

\u201cThere have been two things that have benefited Japan recently. One is that the rising concerns around China have caused investors to look at neighboring Japan as a more predictable alternative,\u201d said James Riney, founding partner and CEO of Coral Capital. \u201cAnother is Warren Buffet\u2019s investment in and endorsement of Japan. Many investors seemed to be listening to the Oracle of Ohama and locking in on Japan\u2019s opportunities.\u201d<\/p>\n

Although global macroeconomics doesn\u2019t help at this time, Japan is gearing up to accelerate its startup scene.<\/p>\n

\u201cWe expect the amount of funding to increase with the government\u2019s support,\u201d said Tsuyoshi Ito, CEO of Beyond Next Ventures. \u201cThe Japanese government has designated 2022 as the \u2018First Year of Startup Creation\u2019 and announced a five-year plan to foster startups<\/a>, which includes a record amount of approximately 1 trillion yen in startup support measures.\u201d<\/p>\n

\u201cLarge Japanese corporations have slowed down quite a bit in recent years. Startups and their innovation can help boost the Japanese economy one more time,\u201d said Anis Uzzaman, founder and chief executive of Pegasus Tech Ventures. \u201c\u2026 the current government\u2019s initiative can help the country prepare and get ready for the next challenge and give birth to lots of startups.\u201d<\/p>\n

We spoke with:<\/p>\n