Japan’s push to transform its startup ecosystem has taken on renewed urgency under the “Startup Advancement Vision” proposed by Keidanren in March 2022. The initiative, known as “10X10X,” sets an ambitious target: increasing both the number and success rate of startups tenfold by 2027. Central to this vision is the creation of more high-value “unicorn” companies, which will require not only larger-scale fundraising opportunities but also a stronger global presence for Japanese startups.

To explore how this can be achieved, a planning subcommittee under Keidanren’s Startup Committee convened in Tokyo in February, led by Noboru Saito. At the meeting, Kunio Katsube of the Japan Investment Corporation presented findings on the overseas expansion of Japanese startups. While Japan’s startup ecosystem has matured over the past decade, relatively few companies have grown into globally dominant players capable of shaping next-generation industries.

One of the most significant barriers identified is funding. Expanding internationally demands substantial investment in research, development, and localization, yet Japanese startups raise less than half the capital of their U.S. counterparts at comparable stages. Although overseas investors—particularly venture capital firms with deeper financial resources—offer a pathway to larger funding rounds and strategic advantages, many Japanese startups engage them too late. In fact, only about 35% secure foreign investment before or during their international expansion, while most do so at later stages such as Series C or beyond.

This timing mismatch reflects a broader structural challenge. Overseas venture capital firms often prefer early-stage investments with high growth potential, whereas Japanese startups tend to approach them only after achieving domestic traction. Additional hurdles include gaps in technological maturity and the relative comfort of Japan’s sizable domestic market, which can reduce the urgency to expand abroad. Language barriers and differences in business practices further complicate internationalization.

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