April 25, 2023
The Startup Committee of the JACD (Chair: Kazuhiko Toyama, Chairman of JACD and Chairman of the IGPI Group, Vice Chair: Ken Kusunoki, Professor of the Graduate School of BA., Hitotsubashi University) has released a proposal to improve the environment of Japan's venture ecosystem, aiming to produce unicorn companies from Japan that will grow globally.
Unicorn companies, unlisted companies with a corporate valuation of US$1 billion or more within 10 years of establishment, equivalent to 133.8 billion Japanese yen, are currently only six companies in Japan. Japan has an enormous amount of so-called deep tech seeds, full-fledged technologies related to global social issues such as alternative energy and health tech, and the government is also actively supporting these businesses. In addition, with the rapid evolution of digital innovation and AI, new games are starting in new, more realistic and serious business areas, including areas that could be combined with deep tech, expanding opportunities for startups in Japan. However, the number of unicorn companies in Japan is extremely small compared to the 1207 companies worldwide, including 654 in the U.S. and 169 in China. Behind this, we assume that some disincentive lurks in the environment surrounding Japan's start-ups.
This proposal consists of the following agenda. First, we point out some of the issues in the Japanese venture investment environment, which has become Galapagosized.
Next, we propose measures such as governance structures, investment and shareholder agreements, incentive schemes such as stock options, that are necessary to draw global venture investors to Japan's startups in order for them to make a leap to the world. The report also highlights the current situation in Scandinavia, which can be a model for the future in creating an environment conducive to the global growth of Japanese startups. In addition, a "Model English Investment Agreement" that can be implemented in actual business situations will be published in the coming months.
This proposal provides new perspectives and action opportunities, while connecting to the startup support policy being promoted by the Japanese government and METI. After the publication of this proposal, it was handed over as the reference for comments by Chairman Toyama at the "Council for the Realization of New Capitalism" today. We plan to visit related ministries and agencies and other concerned parties to explain the contents of the proposal.
The proposal was developed with the involvement of leading venture investors and venture company CEOs in Japan, the U.S., and Scandinavia, alumni of the FSA, leading Japanese business academics, and legal scholars specialized in Intellectual Property Rights.