The Japanese startup ecosystem continues making significant strides as we enter 2026, with fresh funding announcements, government initiatives, and international recognition reshaping the landscape. Recent developments demonstrate how Japanese startups are gaining momentum across sectors ranging from artificial intelligence to biotechnology.
Government Backing Fuels Biotech Expansion
The Japanese government has committed approximately 350 billion yen ($2.3 billion) to strengthen its startup ecosystem, with particular emphasis on biotech and life sciences companies. The Japan Agency for Medical Research and Development now offers matching grants that can effectively double venture capital investments for eligible biopharma companies.
This support comes alongside the J-RISE initiative, designed to attract top scientific talent to Japanese research institutions. The combination of government funding and private capital is creating favorable conditions for early-stage companies in the healthcare sector.
Several major venture funds closed in 2025, signaling investor confidence. AN Venture Partners secured $200 million for its debut fund in July, marking one of the largest Japan-focused biotech funds to date. That same month, University of Tokyo Edge Capital Partners closed its sixth fund at 47 billion yen ($326 million), bringing total assets under management past $1 billion.
Corporate venture activity also expanded significantly. Olympus Corporation launched its Innovation Ventures Fund II in December 2025, committing $150 million toward MedTech startups developing solutions for gastrointestinal, urology, and respiratory care applications.
Historic Valuations and Investment Milestones
Sakana AI recently achieved a remarkable milestone by raising $128 million at a valuation of $2.6 billion, representing the highest declared valuation for any private Japanese startup. The company, co-founded by a former Google research scientist, focuses on building nature-inspired foundation models. This funding round nearly doubled its previous $1.5 billion valuation from September 2024.
General Atlantic made its first growth equity investment in Japan by acquiring a minority stake in Smart HR for $96 million. The HR software platform has become one of Japan’s few tech unicorns, and this transaction marked the largest startup secondary sale from a single seller in Japanese history.
Meanwhile, SoftBank completed a massive $40 billion commitment to OpenAI, securing roughly an 11% ownership stake in the company behind ChatGPT. The final tranche of approximately $22 billion was transferred in late December, representing one of the largest technology investments in modern history.
National AI Strategy Takes Shape
The Japanese Cabinet approved the country’s first basic national plan for artificial intelligence in December 2025. This comprehensive strategy acknowledges that Japan has fallen behind other major economies in AI investment and commercialization.
A five-year public support package worth approximately 1 trillion yen ($6.34 billion) will begin in fiscal year 2026. The funding aims to support a new AI company formed through public-private cooperation, tasked with developing large-scale domestic foundation models. Around 10 firms, including SoftBank Group, are expected to back the initiative, with approximately 100 engineers coming from SoftBank and AI startup Preferred Networks.
The plan emphasizes what officials call “reliable AI,” reflecting public concerns over safety, transparency, and potential misuse of the technology. Measures include expanding staff focused on governance and pushing AI education into elementary and junior high schools to build a domestic talent pipeline.
For startups, this creates both opportunities and challenges. A state-backed foundation model provider could lower infrastructure barriers for smaller firms, though questions remain about whether startups will become customers, collaborators, or competitors of this government-supported entity.
Japanese Innovation Showcased at CES 2026
The Japan External Trade Organization will host 31 Japanese startups at the Japan Pavilion during CES 2026, taking place January 6-9 in Las Vegas. The pavilion, located at the Venetian Expo, will feature companies spanning spatial computing, metamaterials, AI, HealthTech, and entertainment sectors.
Four exhibitors have already been recognized as CES 2026 Innovation Awards honorees: AMATELUS INC., SHOSABI inc, UNTRACKED inc, and a fourth company to be revealed at CES Unveiled on January 4th. JETRO will host pitch events three times daily throughout the conference, featuring formats including Ask Me Anything sessions, use-case demonstrations, and global pitch battles.
Japan-based cleantech startup Hello Space will unveil MAG DRIVE at CES 2026, a patented semi-superconducting regenerative drive system designed to charge batteries through pedaling without inducing magnetic resistance. The technology addresses a major logistical challenge for the growing global e-mobility sector and could significantly reduce external charging frequency for e-bikes.
The Ministry of Internal Affairs and Communications will support 13 Japanese ICT startups exhibiting at CES pre-events, with 10 companies participating in Launch IT and 9 in CES Unveiled on January 4th.
University Startups Reach New Heights
The number of university-based startups increased by approximately 800 in the past year, reaching a record 5,074 companies in 2024. This growth reflects government policies helping bring intellectual property out of universities and into commercial markets.
Waseda University’s research and development startup Equmenopolis was recently selected for Forbes JAPAN’s “100 Next Generation Leaders: Japan’s Top 100 Startups to Watch in 2026.” The company developed the conversational AI agent platform “EQU AI Platform” and rolled out “LANGX Speaking,” a language communication learning support service, nationwide. Equmenopolis completed its Pre-A funding round in March 2025, raising 250 million yen.
Silicon Catalyst announced the formation of Silicon Catalyst Japan, a new entity dedicated to accelerating semiconductor and microtechnology startups across Japan and Korea. The organization began accepting applications in late 2025, with its first cohort starting in January 2026.
Startup Ecosystem by the Numbers
According to recent data, Japan now hosts over 40,670 startups across the country. Of these, approximately 10,000 are funded companies that have collectively raised $87.6 billion in venture capital and private equity. The country is currently home to 7 unicorns, though this number is expected to grow given recent valuation trends.
In 2025 through December, startups raised $3.21 billion across 491 equity funding rounds, representing a 12.1% increase compared to the same period in 2024. This upward trajectory suggests growing investor confidence in the Japanese startup ecosystem.
When the government launched its Startup Development Five-year Plan in 2022, Japan had around 16,000 startups. That number has since climbed to approximately 25,000, a roughly 1.5-fold increase that underscores rapid expansion.
The plan set ambitious goals: growing the number of startups to 100,000, nurturing 100 unicorns, and attracting 10 trillion yen in investment by fiscal year 2027. Three key pillars support this strategy: building human resources and networks for startup creation, enhancing funding provision and diversifying exit strategies, and promoting open innovation among large established companies.
Sector Focus and Investment Trends
Funding trends favor B2B software, industrial AI, fintech infrastructure, and healthcare technology. Japanese startups typically focus on operational efficiency, regulatory compliance, and long-term contracts rather than consumer-scale marketplaces.
Tokyo dominates startup activity, accounting for the majority of venture-backed companies, investors, and exits. Secondary hubs including Osaka, Kyoto, and Fukuoka contribute specialized strengths in deep tech, robotics, and life sciences, often linked to university research and industrial supply chains.
A growing network of shared wet labs, coworking research spaces, and open innovation hubs is reshaping how life science startups are built throughout Japan. These collaborative environments are fostering connections between academic researchers and commercial entrepreneurs.
Looking Ahead
Global venture capital firms are increasingly viewing Japan as their next growth hub. By bringing in investors with international networks, Japanese startups gain direct access to global markets while absorbing accumulated expertise from investors who helped grow companies like Google and Meta.
The government is aligning business practices and governance standards with global norms, creating an environment where overseas investors and Japanese companies can collaborate more easily. This standardization is expected to accelerate foreign investment in coming years.
The combination of government support, increasing private investment, university commercialization, and international recognition positions Japanese startups for continued growth throughout 2026. As implementation of the national AI plan begins and more companies achieve unicorn status, the ecosystem appears poised for its most dynamic period yet.
