Even though Tōkyō is a big East Asian metropolis, the startup scene is still small. A risk averse culture and high living expenses are just some of the big challenges for the growth of the Japanese startup ecosystem. According to a 2015 report in the business magazine JapanContact, the financing of startups in Japan are on an average about 500 000 US dollar, compared to the US with an average of 8.75 million dollar funding. Most of the funding comes from Japanese companies instead of institutional investors. This provides positive sides for both parties: Japanese startups can gain more trust from Japanese customers with big company names backing them and those companies on the other hand use the funding also as an investment into research and development. Japan was ranked fourth in Bloomberg's Global Innovation 2014 Index with a 5th rank in R&D intensity. Some of those venture programs initiated by big communication companies are for example the KDDI Labo and the Docomo Innovation Village.
But the investment landscape is slowly changing with big funding announcements: 500 startups for example was planning to launch in 2015 a $30 million microfund and in 2016 Rakuten Ventures, the VC part of the Japanese Rakuten Group, is launching the 10 billion Yen Rakuten Ventures Japan Fund aiming at Japanese Startups in an early development stage, including ecommerce, marketing tech and adtech models. Startups with the focus on “Big Data” and mobile gaming, such as DeNA tend to take the bigger part in the Japanese startup sector.
2015 announced the Ministry of Economy, Trade and Industry (METI) a new program “Start Next Innovator 2015”, “[…] for fostering global entrepreneurs“, where 20 Japanese entrepreneurs and business people will receive a training program in Silicon Valley. This is the first part of the “Project for a Bridge of Innovation between Silicon Valley and Japan” and a step into the direction of supporting the growth and globalization of the Japanese startup ecosystem.
Japanese companies, Incubators and VCs not only focus on the domestic market but also expand their activities into other parts of Asia, Israel and Germany. The Japanese company Recruit for example bought in May 2015 the Berlin based startup “Quandoo”, an online reservation platform for about 200 million Euro, one of the biggest exits for a Berlin startup to that moment (JapanContact). The tech giant SoftBank is currently one of the biggest investors both from Asia and in Asia, reaching out into sectors of fintech, medtech or nascent ecommerce platforms. They invested about 2 billion US dollars into the South Korean Startup Coupang and another undisclosed amount into GrabTaxi (Singaporean office, founded in Malaysia) (Tech in Asia, 2015).
The Tōkyō Startup scene has an Impact Hub and several events to offer. Smaller ones are for example: HackerNews and Doorkeeper for networking with Japanese and foreign startup founders, Startup Weekend for first time entrepreneurs or Tokyo Startups United （ツ）, a casual meet up of the startup community. For news on startups in Tokyo, websites like Tech in Asia or The Bridge, which focuses mainly on the Japanese market, provide a good base of articles on current developments. Those sites also organize bigger annual startup events, like Tech in Asia Tokyo and The Bridge Festival or present other events, such as Tokyo Pioneers.