Riding Unicorns: Startups and Venture Capital in Japan

IMF Working Papers, December 6, 2024

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Riding Unicorns: Startups and Venture Capital in Japan

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Bibliographic details

• Authors: Salih Fendoglu, TengTeng Xu
• Published: December 6, 2024
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9798400294518.001

Overview

• The startup ecosystem in Japan has seen gradual growth, supported by the government’s "Startup Development Five-Year Plan" and significant interest from overseas venture capital.
• The paper lays out the startup financing ecosystem in Japan, compares it to international peers, and studies potential drivers of startup financing and their relevance for startups’ performance.
• Research is presented at both the country-level (aggregate analysis) and the firm-level.

Key findings (country-level aggregate analysis)

• Firm dynamism and entrepreneurship play a critical role in supporting capital investment and firm valuations.
• Cross-country comparisons highlight Japan’s gradual ecosystem growth relative to international peers.

Key findings (firm-level analysis)

• Equity funding helps startups:
  • innovate,
  • grow,
  • successfully exit.
• The impact of funding on the likelihood of a successful exit appears to be higher in cultures that seem to reward risk taking.

Subject areas and keywords

• Subject: Development, Development strategy, Financial markets, Initial public offering, Labor, Self-employment
• Keywords: Development strategy, firm dynamics, funding affect startup performance, Global, helps startup, Initial public offering, Japan, Self-employment, startup ecosystem, startup financing, Startups, TengTeng xu, venture capital

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