Link: Japan should go big or go home on startups

Japan is on the brink of revitalizing its economy through tech innovation and entrepreneurship after thirty stagnant years. A tight labor market encourages the younger generation of workers to venture beyond lifelong corporate employment, thus creating an opportunity for startups.

Governmental officials are making strides to utilize this critical period by encouraging entrepreneurship. However, for Japan to have a significant global impact, officials need to create a unique path to success that involves bold and ambitious policies.

Currently, Japan’s five-year startup development plan led by Prime Minister Fumio Kishida is failing to reach its goals. As of last month, Japan had only 10 unicorns as compared to hundreds in other countries, indicating that the country's aspiration is struggling against a global pullback in unicorn-producing vigor from investors.

Japan’s strategy of hoping for a miracle company amongst thousands of startups is unrealistic for its market size. Domestic conditions force tech startups to go public earlier, which influences companies to prioritize immediate profits over ambitious projects and riskier expansion endeavors.

The government could boost R&D funding by directing more towards small- and medium-sized enterprises and shifting its focus towards ambitious plans. Richard Katz’s book proposes the idea of allowing startups to utilize tax credits once profitable, this could lead to more innovative ventures birthed.

Furthermore, Japan should consider the approach of France that allows taxpayers to invest in angel funds, resulting in more profitable and less risky investments, while also offering more funding opportunities for startups. This path may seem risky, yet adopting new approaches can potentially shape the success of future businesses similar to Sony Group. #

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