Japan’s Startup Ecosystem: Funding, Growth, and What It Takes to Join
The Evolution of Japan’s Startup Ecosystem
Twenty years ago, starting a venture-backed business in Japan was nearly impossible—especially for non-Japanese founders. Venture capital was scarce, tax and incorporation rules were restrictive, and the cultural mindset was more focused on traditional corporate careers.
That has changed significantly. Over the past decade:
Government Support: Policy reforms reduced incorporation capital requirements and streamlined company formation.
VC Model Adoption: A more Silicon Valley–inspired venture capital approach has emerged, adapted to Japan’s unique business culture.
Key Infrastructure: Initiatives like the J-KISS (Japan’s version of the KISS convertible note) have standardized early-stage fundraising, making it easier for founders to raise pre-seed capital without complex negotiations.
Today, Japan’s startup ecosystem is more open, but there’s still a funding “bottleneck” in later-stage rounds (Series C and beyond). Expanding access to these stages will help more startups scale sustainably and create a larger pool of experienced talent for the next generation of founders.
Understanding the Startup Funding Journey in Japan
Evan breaks down the typical stages for B2B software startups (hardware and deep tech follow different timelines):
Pre-Seed
Stage: Pre-revenue, MVP or prototype, small-scale pilot projects.
Goal: Validate that a real problem exists and test initial solutions.
Funding Sources: Founder savings, friends & family, early angel investors, accelerators.
Common Vehicle: Convertible notes (SAFE, KISS, or J-KISS) with a valuation cap, no fixed company valuation yet.
Seed
Stage: Proven product-market fit, paying customers, low churn.
Goal: Build a repeatable sales process and prepare for scaling.
Funding Sources: Institutional VC investment with a priced equity round.
Series A
Stage: Scaling proven solutions to new markets or use cases.
Goal: Expand into adjacent verticals or new geographies; invest in product development.
Series B and Beyond
Stage: Significant market presence, rapid expansion.
Goal: Broaden footprint, grow internationally, strengthen operational infrastructure.
Key Insight: In Japan, there’s a surplus of funding at Seed and Series A, but a shortage at later stages. This often pushes companies to IPO earlier than ideal. Expanding late-stage funding could help companies grow into more stable, globally competitive corporations before exiting.
The Balancing Act: Funding vs. Revenue
While VC funding can fuel growth, Evan emphasizes that startups must balance outside investment with customer-driven revenue.
“Capital should be deployed where it gets the best return. If your sales growth can outpace the ROI from additional investment, you may not need VC funding at that stage. But when technological changes or scaling needs arise, taking investment responsibly allows you to better serve customers and society.”
What It Takes to Get Hired at a Startup in Japan
As Kimaru AI scales, Evan expects to hire across multiple functions—from sales and marketing to engineering and operations. But in the immediate future, revenue generation roles are top priority.
Beyond technical skills, successful startup hires share certain traits:
Adaptability: The “career superpower” in a fast-changing environment.
Curiosity: Openness to new ideas, willingness to explore emerging technologies.
Self-Direction: Ability to learn independently and stay ahead of industry trends.
Mission Alignment: Motivation to tackle big problems—in Kimaru’s case, a $1.6 trillion global supply chain challenge.
The Bigger Picture: Building a Flywheel Effect
Japan’s ecosystem doesn’t just need more founders—it needs entire startup teams to experience the journey from early-stage chaos to sustainable growth. These alumni then feed their expertise back into the ecosystem as advisors, early employees, or even founders themselves.
Evan sees this as the key to transforming Japan’s “bottlenecked” startup scene into a self-sustaining flywheel that continually produces and supports high-growth companies.
