Policy Support for Japan to Become a Startup Powerhouse

In the Japanese government’s 2022 Basic Policy for Economic and Fiscal Management and Reform, “startups” were selected as one of five priority investment areas. Various measures to support startups have already been implemented since the 1990s. With the added efforts of the private sector, startups are finally taking root in the society and economy of our country. Japan is currently entering a new phase of development, a phase in which it should aim to become a startup powerhouse by further increasing the number of startups and encouraging startups to scale up.

Policies to promote startups are already in place to a certain extent in Japan, while we have seen major improvements in support from the private sector. However, the global business environment for startups has deteriorated sharply this year due to global monetary tightening and heightened geopolitical risks, and additional support from the policy side is deemed necessary. There are two tasks that are particularly important: 1) support startups that address local social issues as a way to increase the number of startups, and 2) strengthen support for deep-tech startups that have high potential to scale up.

In addition, Japan needs to foster a climate that encourages the creation and growth of startups. Among the priorities should be a policy push to promote the flow of people within Japan, as well as between Japan and the rest of the world. Countries/regions with active startup creation and growth often exhibit openness in terms of human resources, high labor mobility, diverse work styles, and active exchanges between their own people and those of other countries. Full-fledged efforts must be made to tolerate side jobs and dual employment, to allow leaves of absence to be taken in a manner that does not disadvantage the employee concerned, to rehire those that have once left the company, to create opportunities for frequent communication between universities and the private sector, and to actively attract foreign nationals and support their launching of startups here in Japan.

As the business environment for startups deteriorates, the social momentum to boost startups will wane, and policy support may recede as well. However, in order to stimulate the economy and resolve social issues through innovation, it will be extremely important to promote startups, which are the key players in innovation. Now is the time for the government to continue to demonstrate its unwavering support for startups, and to elicit greater involvement from the private sector by supporting their activities.

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