Japan's ¥370 Trillion Tech Strategy: Startup Ecosystem as the Core Lever
Claire Weston
Japan plans to mobilize over ¥370 trillion (~$2.3 trillion) in public-private investment by 2040, targeting AI, semiconductors, and 15 other fields — but whether the strategy delivers hinges on an old weakness: can its startup ecosystem actually produce global-scale companies?
What does ¥370 trillion buy — and where does the money come from?
The Takaichi government has designated 17 priority fields: AI robotics, semiconductors, drug discovery, batteries, and autonomous driving, among others. The target: over ¥370 trillion in combined public-private spending by fiscal 2040.
The fiscal logic is seed-and-leverage — use nominal tax-revenue growth to fund government seed capital, then pull in far larger private investment.
This means → the government puts up the starter money; the heavy lifting falls on corporates and funds. But how much the government actually needs to commit, and whether private capital will show up at scale, remain unanswered.
Why is Silicon Valley VC suddenly rushing into Japan?
Andreessen Horowitz (a16z) announced it will open its first overseas office in Japan this summer. Alumni Ventures opened a Tokyo office the same month; the University of Tokyo's investment arm promptly committed to invest in its funds.
The University of Tokyo ecosystem has already incubated factory-robotics firm Mujin and autonomous-driving developer Turing, both backed by UTokyo's UTEC.
This means → top-tier Silicon Valley VCs are not simply "bullish on Japan" — the move is driven by capital reallocation as the China investment window narrows. In plain terms = money left China and is looking for its next Asian home.
How big is Japan's startup gap?
Per CB Insights data as of January, Japan has just 8 unicorns. India has 64, China 157, and the U.S. 750.
a16z partner Guido Appenzeller noted that Japanese founders need the ambition to "build global leaders," not just serve the domestic market.
This reflects a core tension: Japan's technical talent is strong, but its startups broadly lack the instinct to scale globally and command large valuations. Small scale, in turn, makes them hard to pitch to U.S. investors.
How does Chinese competition change Japan's calculus?
Global Brain CEO Yasuhiko Yurimoto put it bluntly: "You can't even build robots without relying on Chinese technology — Japan needs to identify its strengths and double down."
China has established leads in generative AI (DeepSeek), EVs (BYD), consumer electronics (Xiaomi), and robotics (Unitree).
Per PitchBook, foreign VC investment in China plunged from $54 billion in 2021 to $2.1 billion in the first half of 2025. But that capital has not automatically redirected to Japan — its market is smaller, and startups often need to expand overseas before they reach the scale and valuation that attract U.S. investors.
Can government procurement close the gap?
At the SusHi Tech startup event in Tokyo in April, the Takaichi government pledged that central and local governments will purchase products and services from startups to help them grow revenue and scale up.
In plain terms = the government wants to be startups' "first big customer" — backing them with orders, not just subsidies.
This means → whether this commitment can actually narrow the valuation gap between Japan and the world's top startup markets will be the key test of whether the entire ¥370 trillion strategy delivers.
Content is for reference only, not financial advice.