Japan’s startup moment may soon arrive given significant government support, the rise of corporate venture capital and a changing mindset about internationalization, according to Anis Uzzaman, founder and CEO of Pegasus Tech Ventures.
“Overall, I would say Japan is now at a turning point,” Uzzaman said.
San Jose, California’s Pegasus Tech Ventures has invested in a number of major U.S. tech companies, including SpaceX, Airbnb and Robinhood, and also in major artificial intelligence companies, such as OpenAI and Anthropic.
The firm has been an active investor in Japan, putting money to work in 58 Japanese startups with total investment exceeding $120 million.
Uzzaman studied at Osaka University of Foreign Studies and the Tokyo Institute of Technology from 1995 to 2000. After working at IBM in the United States, he became a venture capitalist.
“One of the things that is holding back a lot of Japanese companies from becoming unicorns or decacorns is the amount of capital you can raise inside the country,” Uzzaman said.
A unicorn is a privately held startup valued at $1 billion or more. A decacorn is valued at $10 billion or more. According to data from CB Insights, the United States had 724 unicorn companies as of October last year, while Japan had eight, such as Sakana AI, Preferred Networks and SmartNews.
“Unless you can go outside the country and raise a lot of capital from international investors, I think it is very difficult to make progress,” he added.
Uzzaman said the Japanese startup environment has started to pivot in recent years, helped along by government backing and a shift in corporate strategy. Large Japanese companies traditionally relied on their own R&D, but a growing appetite for open innovation has emerged, fueled by a wave of corporate venture capital companies.
Some investors have said Japan still has work to do to attract more global investment, as not enough Japanese startups are developing products with international scalability. Uzzaman said more founders are thinking globally from an earlier stage in recent years, but that improvement is needed.
“The speed of decision making, global talent integration and scaling internationally remain key challenges,” he said.
Uzzaman noted that talent and team diversity are critical success factors, citing Tokyo’s Mujin — a developer of manufacturing automation controllers — as a rare example of a Japanese startup that has been doing well from that perspective.
Mujin is headed by two entrepreneurs, one from the United States and one from Japan, while many of its engineers are from overseas.
Mujin topped startup fundraising rankings last year with a ¥36.4 billion ($229 million) round from a group of investors that included NTT and the Qatar Investment Authority.
Pegasus Tech Ventures is…