There has been one consistent buzzword in Japan in recent years: startups.
In 2022, Prime Minister Fumio Kishida announced a five-year plan to increase the number of startups tenfold. This initiative aims for 100,000 startups and 100 unicorns — startups valued at $1 billion USD or more.
Since then, half of the five years have elapsed, and while the goal of 100 unicorns remains distant, progress is evident. According to the Nihon Keizai Shimbun, 14 companies in Japan show strong potential to achieve unicorn status. To put this into perspective, the United States has hundreds of unicorns already.
Despite facing challenges in 2024, Japan's startup ecosystem has shown resilience and promise. A standout example was the inaugural edition of SusHi Tech, an event held in Tokyo to promote technology and sustainability. This included the Global Startup Program, where the grand prize went to Fermenstation, a Japanese company leveraging fermentation technology to recycle biowaste.
The event itself was a beacon of hope and possibility. As Tokyo Governor Yuriko Koike said in her opening address, "We can be empowered by the future — I hope everyone will make the most of this opportunity."
Events like SusHi Tech suggest a promising year ahead. Below are key trends expected to shape Japan's startup landscape in 2025.
The Sakana AI Effect
Sakana AI has become one of the most talked-about startups in Japan. Based in Tokyo and aiming to pioneer a new model of artificial intelligence (AI), it recently joined Japan's exclusive list of unicorns.
At the US-Japan Council conference in Tokyo on October 31, Sakana AI Co-founder David Ha was introduced as a leader of "one of the hottest startups" in the country. This recognition followed a major investment from US chipmaker Nvidia, which became a significant shareholder in September 2024. The chain of events propelled Sakana AI to unicorn status in less than a year since its founding.
Beyond the hype, Sakana AI's identity is deeply tied to Japan, focusing on advancing research and development locally. As Ha stated at the conference, "We identified a gap in the market for an R&D company in Japan." The company plans to release its first product in 2025, according to Nikkei Asia.
Sakana AI's influence extends beyond its innovations. Students at Japanese universities are looking to it as a model of what's possible. Venture capitalists also see it as a sign of Japan's potential. Major corporations like Mizuho and SMBC have also backed Sakana AI, highlighting the support available for promising ventures in Japan.
With its rapid rise and strong local ties, Sakana AI may inspire a wave of similar ventures in 2025. Could this be the start of a "Sakana AI effect"?
Semiconductors: Driving Japan's Technological Edge
Semiconductors have become a critical focus for global leaders due to supply chain challenges stemming from China. Japan is responding with a nationwide push to strengthen this vital industry.
One of the most prominent players is Rapidus, a Japanese venture building next-generation microchip technology. With facilities in Chitose, Hokkaido, Rapidus plans to begin test operations in April 2025.
Meanwhile, Taiwan Semiconductor Manufacturing Company (TSMC) has ramped up its efforts in Japan. In December 2024, TSMC began mass-producing cutting-edge microchips at its Kumamoto plant, with construction on a second plant scheduled to start in 2025.
Japan's renewed focus on semiconductors, combined with its expertise in related technologies, suggests significant growth in this sector in the coming year.
Kyoto Fusioneering and Emerging Technologies
In 2022, Kyoto Fusioneering caught the attention of global investors, raising nearly $14.7 million in seed funding for its nuclear fusion technology. Unlike conventional nuclear power, nuclear fusion holds the promise of a safer, more sustainable energy source.
Although commercialization is still years away, Kyoto Fusioneering exemplifies Japan's ability to develop groundbreaking technologies.
As 2025 progresses, we can expect more ambitious projects and innovations to emerge from Japan's vibrant tech ecosystem.
Osaka Expo and SusHi Tech: Showcasing Innovation
2025 will feature several high-profile events that provide a platform for showcasing technological advancements.
The Osaka Expo, set to begin in April, also promises to be a hub of innovation. One highlight is SkyDrive, a Japanese venture working on air taxis, which will unveil its latest technology. Startups from various sectors, including mobility and energy, are expected to use the Expo as a launching pad for their innovations.
Moving to Tokyo, the second edition of SusHi Tech is scheduled for May 2025. Building on its debut, the event will bring together startups from around the globe to share ideas and technology, particularly in sustainability and tech-driven solutions.
Japan's startup ecosystem is poised for an exciting year. With innovations and global collaborations, 2025 could mark a turning point for Japan's role in the world of technology and entrepreneurship. The world will be watching as these ventures take center stage in the Year of the Snake.
Follow our special New Year's series, Predictions 2025.
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Author: Arielle Busetto
