Japan is home to the fourth largest economy in the world according to both nominal GDP (coming in behind the USA, China and Germany) and purchasing-power-parity (after the USA, China and India).
But the economy is complex. While Japan is fourth in the world with regard to the size of its GDP, it actually dropped a ranking last year. At the same time though, Japanese stock markets have been doing exceptionally well. How can both of these things be true?
Now, there are plenty of factors that contribute to the health of the economy, including the appreciation and depreciation of currency (and the Yen has been losing value recently) among many more considerations.
But, interestingly enough, simply having a strong economy doesn’t necessarily make a country ideal for launching and running a startup. Indeed, Japan has produced a surprisingly small number of successful startups compared to countries with similarly sized economies.
Even more telling, however, is the fact that Japan is home to no more than seven unicorns, and while any number of unicorns is impressive, seven seems inordinately low in relation to the size of Japan’s economy.
Why Isn’t Japan’s Startup Ecosystem Thriving?
It’s always hard to pinpoint exactly why a country has a good or a bad startup ecosystem, but in the case of Japan, there are a few factors that make it difficult for new companies to do well.
- Not much availability of venture capital in Japan compared to other countries with large economies like the USA and China.
- Japan’s economy is dominated by large, established businesses like Toyota, making it tough for new, less-established companies to compete.
- There are plenty of regulations that can slow down innovation, act as an obstacle or scare entrepreneurs off from starting a company in Japan.
- Japan doesn’t have a very diverse pool of talent, especially in terms of tech.
- Many companies focus a bit too much on domestic markets rather than attempting to extend into global markets.
- Japan is notorious for its risk-averse culture, and this is true with regard to both entrepreneurs and investors alike.
These are just a few of the most pertinent reasons why Japan doesn’t have a very successful startup economy and is only home to seven unicorns.
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Top Unicorns in Japan
Here are the top unicorns from Japan.
1. Gokin Solar: $2.88 Billion
Gokin Solar was founded in 2019 and with nearly 7,000 employees, the company is now valued at $2.88 billion.
The company is the developer of complex technology that harnesses solar energy to generate electricity. It designs and manufactures products that can be used both privately and commercially too.
The company has a total of 26 investors, and although Gokin Solar was nearly listed for an initial public offering (IPO), it’s still privately owned and is one of the highest-valued unicorns in Japan.
2. Smart HR: $2.6 Billion
Smart HR is the developer of a cloud-based human resources software, and it’s designed to automate both employment insurance procedures and social insurance too.
The software allows people to fill out a virtual form and then from there, it generates digital versions of official forms for things like employment insurance, pension and other similar things. Then, these documents can be submitted quickly and easily, making human resources processes streamlined.
Smart HR was most recently valued at $2.6 billion.
3. Preferred Networks: $2 Billion
Preferred Networks is the developer of deep technologies that are designed to integrate data from the physical world to digital worlds.
By means of machine learning, deep learning used to integrate data for the purpose of autonomous driving, medical diagnoses, machine tools and robotics.
Founded in 2013, Preferred Networks is now valued at $2 billion.
4. Smart News: $2 Billion
Smart News, valued at $2 billion, was launched in 2012 and with 566 employees, it’s continuing to attract investment.
The company is the operator of a news platform that is intended to discover and deliver the latest trending news stories.
By means of machine learning algorithms, the platform is able to evaluate articles and social signals in order to properly categorise stories accordingly.
5. Spiber
Spiber, founded in 2007, is the developer of a hybrid type of synthetic material that is protein-based. The material can be used in the production of films, fibres, resins and other materials, allowing individuals to enjoy an improved quality of silk.
The company currently has 300 employees and is valued at $1.22 billion. It was founded by Kazuhide Sekiyama and Sugawara Junichi.
