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Tokyo – best cities in the world for start-ups

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Tokyo – best cities in the world for start-ups


Historically, Tokyo — and Japan in general — has been more known for its large corporations than for start-ups. But things are starting to change, thanks in part to a growing innovation culture and strong support from the Japanese government.

A recent study highlighted Tokyo as a center for advanced manufacturing and robotics. Japan is today the world’s leading manufacturer of industrial robots, producing more than half of the world’s robotics supply. The country also hosts the world’s first robot trade association, the Japan Robot Association, whose members include Sony, Toshiba and other leading Japanese companies.

Thanks to all of this, robotics startups in Japan have done relatively well; for example, space technology company Synstpectic raised $99.9 million in Series A funding in 2019. Fintech is also big in Tokyo, with the city ranked seventh among the most competitive financial centers in the world according to the Global Financial Centers Index.

INITIAL, a Tokyo-based startup information platform, reports that Japanese startups raised about $4.8 billion in 2019, up from about $1 billion in 2011. According to Forbes, this development reflects a long-term trend in venture capital flows, which have nearly reached pre-2008 levels thanks to Japanese companies funneling money into startups. Thanks to these and other successes, Tokyo is ranked 15th in the “best cities for start-ups” ranking. For the first time, the Japanese capital has been ranked in the top 30 in the annual study of the global startup ecosystem.

Significant government assistance

The Tokyo Metropolitan Government actively promotes startups in several ways. For example, the Startup Ecosystem Tokyo consortium, which includes businesses, universities and local governments, aims to promote the creation and growth of start-ups in the private sector, academia and government. The ultimate goal is to strengthen Japan’s international competitiveness and accelerate overall economic development.

In addition, the federal government is trying to promote the development of startups in Tokyo and other cities in Japan through the “Beyond Limits, Unleashing Our Potential” strategy. Among other things, this plan includes:

  • Creation of a startup city specifically designed to encourage and support startups;
  • Encouraging entrepreneurship education in Japanese universities;
  • Creation of cutting-edge programs that partner with the best accelerators from around the world and expand the capabilities of local corporate and university accelerators;
  • Providing bridge financing for technology start-ups;
  • Improving the public procurement process for startups; and
  • Increasing labor mobility.

The government has also certified three new start-up visas that allow foreign entrepreneurs who receive startup support from local governments to stay in Japan for up to one year. Like other countries with similar programs, Japan hopes its start-up visas will help attract foreign talent and spur innovation.

The University of Tokyo is also participating in this activity. Since 2004, he has assisted startups seeking to commercialize university research by providing financial support, incubation space, rent-subsidized jobs, legal and accounting assistance, and entrepreneurship classes. Startups can also apply to use the university’s laboratory facilities.

The Changing Culture of Japan

Although Japanese culture is sometimes seen as conservative and risk-averse, this view is changing. According to Tokyo Weekender, Japanese corporations are no longer as willing to guarantee lifetime employment and steady promotions to workers as they were in the late 1990s. This makes it easier for entrepreneurs to raise money through early-stage investors and venture capitalists, and to attract top talent.

These trends have not gone unnoticed by foreign organizations such as the Cambridge Innovation Center (CIC), a US start-up workspace company now headquartered in Tokyo. CIC offers Japanese entrepreneurs networking and collaboration opportunities. It has housed notable startups including Android Inc.

“Japan far outnumbers its population in the number of incredibly successful startups. Now we just call them companies, like Honda Motor Company,” Tim Rowe, co-founder and CEO of CIC, told Forbes. “Today, Japan is at a turning point where many young Japanese are willing to take risks and build something new. We believe that Japan has basic trust, science and research, and that there are now opportunities for the Japanese to create their own companies and accelerate the development of an entrepreneurial culture.”

Large, complex market of the “Land of the Rising Sun”

Japan, the world’s third-largest economy valued at about $5 trillion, is fertile ground for testing all sorts of products and services. Japanese consumers tend to be well educated and wealthy. In addition, the quality of life in Japan is high: low crime rate and high standard of living.

This makes it both a great place to do business and a great place for employees to live. The transportation and communications infrastructure is also excellent, which means employees can easily commute to work and businesses can take advantage of modern Internet access and other technologies.

Finally, Japan, perhaps like no other country, is committed to developing advanced technologies such as artificial intelligence, automation and robotics to help solve the demographic challenges it faces – in particular, the population is aging faster than in other countries.

Source | StrategiNext

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