Market Insights Financial Capital Raising Traditional Capital Raising

Venture Capital - Japan

Japan

Japan is projected to reach a Total Capital Raised in the Venture Capital market market of €1.98bn in 2024.
Within this market, Early Stage dominates with a projected market volume of €1.46bn in 2024.
In global comparison, the United States is expected to generate the most Capital Raised, amounting to €125,300.0m in 2024.
Japan's Venture Capital market is thriving, with a notable focus on tech startups driving innovation in AI and robotics.

Key regions: Europe, United States, United Kingdom, Australia, Brazil

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Analyst Opinion

The Venture Capital market in Japan has been experiencing significant growth in recent years.

Customer preferences: Japanese investors have shown a growing interest in venture capital as a means of diversifying their investment portfolios and seeking higher returns. With the low interest rate environment in Japan, traditional investment options such as bonds and savings accounts have not been providing attractive returns. As a result, investors are increasingly turning to venture capital as a way to generate higher yields. Additionally, Japanese investors are becoming more open to taking risks and investing in early-stage startups, as they recognize the potential for significant returns in this sector.

Trends in the market: One of the key trends in the Japanese Venture Capital market is the increasing number of investments in technology startups. Japan has a reputation for being a leader in technological innovation, and this has attracted both domestic and international investors to the market. Startups in sectors such as artificial intelligence, robotics, and biotechnology have been particularly popular among venture capitalists. The government's support for these industries through initiatives such as the "Society 5. 0" plan has further fueled the growth of venture capital investments in these sectors. Another trend in the market is the rise of corporate venture capital. Large Japanese corporations are increasingly setting up their own venture capital arms to invest in startups that align with their strategic goals. These corporations not only provide funding but also offer expertise, resources, and market access to startups. This trend has created a symbiotic relationship between startups and established companies, leading to a more vibrant and collaborative ecosystem.

Local special circumstances: Japan's aging population and declining birth rate have created a sense of urgency for economic growth and innovation. The government recognizes the importance of startups and venture capital in driving economic growth and has implemented various measures to promote entrepreneurship and innovation. These include tax incentives for venture capital investments, the establishment of startup incubators and accelerators, and the simplification of regulations for startups. This supportive environment has attracted both domestic and international entrepreneurs and investors to the Japanese market.

Underlying macroeconomic factors: Japan's economy has been recovering from a long period of stagnation, and venture capital has played a crucial role in driving this growth. The government's efforts to promote entrepreneurship and innovation have created a favorable environment for venture capital investments. Additionally, the low interest rate environment and the search for higher returns have led investors to explore alternative investment options such as venture capital. The combination of these factors has contributed to the growth and development of the Venture Capital market in Japan. In conclusion, the Venture Capital market in Japan is experiencing significant growth due to the changing preferences of investors, the increasing focus on technology startups, the rise of corporate venture capital, the supportive government initiatives, and the underlying macroeconomic factors. This growth is expected to continue as Japan continues to prioritize entrepreneurship and innovation as key drivers of economic growth.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.