TLDR:
- Venture capital available for investment in startups in Japan reached a record high of $9.7 billion at the end of 2023, up 10% from the previous year.
- This increase in funding capacity could accelerate technological innovations in fields such as artificial intelligence and decarbonization.
Venture capitalists’ funding for Japanese startups has been historically smaller than that of US startups, but the recent establishment of large funds, as well as low interest rates and favorable policy measures, have contributed to the growth of Japan funds. For example, a fund formed by Globis Capital Partners in 2022 raised $489.8 million and will focus on investing in emerging companies pursuing decarbonization and technological innovations. JAFCO Group also completed the formation of a $658.9 million fund last September, which will primarily focus on the development of AI and other technologies.
The significant increase in “dry powder” cash reserves, which are raised but not yet invested, over the past decade has contributed to the growth of venture capital funding for Japan startups. In 2013, dry powder totaled $1.33 billion, but it has now risen more than sevenfold. This growth in funding capacity is expected to contribute to the creation of unicorns, or privately held billion-dollar companies.
The availability of increased funding for Japanese startups is likely to spur technological advancements and innovation in various industries. The country’s focus on areas such as AI and decarbonization aligns with global trends and presents opportunities for both startups and investors.
