Selected Issues Papers

Startups and Venture Capital in Japan: How to Grow

Author/Editor:

Salih Fendoglu ; TengTeng Xu

Publication Date:

July 1, 2024

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Summary:

The startup ecosystem in Japan has seen gradual growth, supported by the government’s recent "Startup Development Five-Year Plan" and a significant interest from overseas venture capital. This paper lays out the startup financing ecosystem in Japan, with comparison to international peers, and studies potential drivers of startup financing and their relevance for startups’ performance. The results, based on country-level aggregate analysis, underscore the critical role of firm dynamism and entrepreneurship in supporting capital investment and firm valuations. Further analyses at the firm level suggest that equity funding helps startups innovate, grow, and successfully exit. Moreover, the impact of funding on the likelihood of a successful exit appears to be higher in cultures that seem to reward risk taking.

Series:

Selected Issues Paper No. 2024/027

Subject:

Development Development strategy Financial markets Initial public offering Labor Self-employment Stock markets

Frequency:

Regular