Japan’s Startup Ecosystem Gains Momentum as Universities, Policy and Global Partnerships Align

Japan’s startup ecosystem is undergoing a structural shift, driven by a convergence of policy support, academic innovation and growing global engagement. While the country has long been recognised for its engineering strength and industrial depth, translating these capabilities into globally scalable startups is now emerging as a central priority.

In an exclusive conversation ahead of SusHi Tech Tokyo 2026, Toshiya Watanabe, Chair of the Strategic Council at National Innovation Network for Entrepreneur Japan, outlined how Japan is working to build a more connected and globally competitive innovation ecosystem.

Building a National Innovation Network

At the centre of this transformation is NINEJP, a government-backed initiative focused on connecting Japan’s fragmented innovation landscape. Watanabe describes NINEJP as a platform designed to “visualise and connect” innovation across the country, linking universities, researchers and regional ecosystems from Hokkaido to Kyushu.

The initiative aims to address one of Japan’s longstanding challenges, the lack of integration between academic research and commercial application.

“Universities and industry have traditionally been quite separate,” he noted, highlighting a gap that has limited the commercialisation of research. By creating a national network anchored in universities, NINEJP seeks to foster innovation based on Japan’s strong research base, particularly in areas such as robotics, drones and advanced engineering.

From Research Strength to Commercialisation

Japan’s global reputation in manufacturing and engineering remains a key advantage. Watanabe emphasised that while software-led innovation, particularly in areas such as large language models, has been dominated by the United States and China, Japan retains a competitive edge in what he describes as “physical AI”.

This includes technologies that combine artificial intelligence with hardware, such as robotics, automation systems and industrial applications. However, converting these strengths into scalable startups requires a shift in how research is commercialised.

“In Japan, the incentive for universities to move towards commercialisation has historically been weak,” he explained. That dynamic is now beginning to change, with government and institutional efforts aimed at encouraging greater collaboration between academia and industry.

Policy Signals and Changing Incentives

Government policy is playing an increasingly important role in shaping the ecosystem. According to Watanabe, recent policy shifts have significantly improved the environment for startups, with greater emphasis on supporting innovation and entrepreneurship.

“There has been a visible change in the situation,” he noted, pointing to increased interest from both universities and industry in startup development. This aligns with broader efforts to position Japan as a more dynamic player within the global innovation ecosystem, with startups seen as a key driver of economic growth.

Events such as SusHi Tech Tokyo 2026, organised by the Tokyo Metropolitan Government, serve as important platforms to reinforce this shift, showcasing emerging technologies and fostering collaboration across sectors.

Global Partnerships as a Growth Imperative

While domestic reforms are essential, Watanabe emphasised that international collaboration will be critical for the long-term success of Japanese startups. “Without global partnerships, it is not possible to scale,” he said, particularly in the context of building unicorns that require significant capital investment.

Japan’s historically cautious approach to large-scale funding has limited the emergence of high-growth startups, making access to global capital increasingly important.

There are already signs of progress. International investors, researchers and ecosystem partners are showing growing interest in Japan, particularly in sectors such as artificial intelligence, biotechnology and advanced manufacturing.

At the same time, Japan is actively working to create an environment that attracts global talent and investment, including through initiatives showcased at SusHi Tech Tokyo.

Corporate and Academic Collaboration

Another notable shift in the ecosystem is the increasing collaboration between large corporations and startups. A decade ago, such collaboration was limited, with startups often viewed as small-scale enterprises rather than strategic partners.

“That situation has changed,” Watanabe observed, noting that corporations are now more open to engaging with startups as part of their innovation strategies.

Universities are also playing a more active role, not only in research but in supporting entrepreneurship and startup formation. This convergence of academia, industry and policy is gradually creating a more integrated innovation ecosystem.

Diversity and Inclusion: An Emerging Priority

Despite these advances, challenges remain. Watanabe highlighted the issue of diversity within Japan’s startup ecosystem, noting that representation, particularly gender diversity, is still limited.

At a recent national conference, he observed that participants were overwhelmingly male, underscoring the need for greater inclusion.

Addressing this imbalance is becoming an important part of the broader effort to build a more dynamic and globally competitive ecosystem.

“There is a need to change the climate,” he said, referring to both cultural and structural factors that influence participation.

Encouragingly, initiatives aimed at supporting women entrepreneurs and fostering inclusive innovation are beginning to gain traction.

Looking ahead, Watanabe sees strong potential in sectors aligned with Japan’s existing strengths. Areas such as biotechnology, robotics and advanced engineering are expected to play a central role in the next phase of growth.

Recent startup competitions have already highlighted promising companies emerging from leading universities, demonstrating the potential for rapid innovation when research is effectively commercialised.

Over the next three to five years, he expects to see more startups achieving global scale, particularly as access to capital and international partnerships improves.

A System in Transition

Japan’s startup ecosystem is still evolving, but the direction of change is becoming clearer. The combination of policy support, academic engagement and global collaboration is creating new pathways for innovation.

For Watanabe, the challenge now lies in sustaining this momentum and ensuring that structural reforms translate into tangible outcomes.

As SusHi Tech Tokyo 2026 brings together startups, investors, corporations and policymakers, it offers a timely opportunity to assess how far the ecosystem has come, and what remains to be done.

Japan may not yet rival the scale of Silicon Valley or other global hubs, but it is building an innovation ecosystem that reflects its own strengths, grounded in research, engineering and long-term collaboration.