Japan’s push to build a globally competitive startup ecosystem is showing measurable progress, though significant challenges remain, according to a recent update from the Japan Business Federation (Keidanren) and government officials. The two sides share an ambitious goal—outlined in the 2022 “Startup Advancement Vision,” known as “10X10X”—to increase both the number of startups and their success rate tenfold within five years. Three years into the accompanying Five-Year Startup Nurturing Plan, stakeholders gathered on January 22 for a joint committee meeting to assess progress and refine strategy.

Officials reported that Japan’s startup ecosystem has expanded despite a difficult global funding environment. The number of startups has grown by roughly 1.5 times compared to 2021, contributing an estimated 12 trillion yen to GDP and signaling a growing macroeconomic impact. However, the country still lags far behind its headline goal of producing 100 unicorn companies, with only eight currently in existence.

To accelerate growth, the government is focusing on three core priorities: scaling startups, supporting deep-tech ventures, and fostering regionally impactful businesses. Measures to increase access to capital include reforms to Tokyo Stock Exchange Growth Market listing rules and tax changes aimed at attracting foreign investors. Research and development incentives have also been strengthened, with tax credit caps in key technology sectors raised to 40%. At the same time, policymakers are working to diversify exit strategies beyond IPOs by expanding tax incentives for mergers and acquisitions and encouraging minority investment deals.

Efforts to globalize Japan’s startup ecosystem are also intensifying. Programs such as J-StarX, which sends entrepreneurs overseas, are being expanded, while international engagement has increased through events like the Global Startup Expo 2025 in Osaka. The government is also studying overseas policies to attract more foreign venture capital firms into Japan. Meanwhile, support for deep-tech startups is being reinforced through initiatives like NEDO’s funding programs, particularly targeting the gap in later-stage financing.

Despite steady progress, challenges remain in areas such as government procurement and commercialization support. While procurement targets have yet to be fully met, pilot programs and corporate partnerships are advancing. New initiatives are also under consideration to better translate university research into startups. Going forward, officials emphasized the importance of building visible success stories and promoting Japan’s startup policies globally to ensure broader adoption and long-term impact.