Introduction:Japan’s Startup Ecosystem
Japan’s startup ecosystem has grown dynamically, with overall funding reflecting significant investor interest. In 2024, startups raised a total of approximately 7.08 billion US dollars [10.39 billion JPY]. This expanding capital flow reflects stronger confidence in Japan’s entrepreneurial landscape, while also revealing nuanced shifts in investment strategies across different funding stages.
This report examines the underlying trends, stage-by-stage developments, and strategic shifts shaping Japan’s startups today, offering insight into how investor behavior is evolving alongside market conditions.
Investment Trends by Startup Stage
Venture Capital (VC) funding dominates the investment landscape, especially from independent VC firms, accounting for the highest percentage of total investments.
Corporate Venture Capital (CVC) and financial institution-linked VCs also contribute significantly, reflecting strategic investment intentions tied to long-term corporate growth and market expansion objectives.
Seed
Both the number of funded companies and the average funding per company were rising from 2020 to 2022, although the number of funded companies has slightly dropped from 2023 to 2024. While average funding per company continues to climb, reaching the highest level in 2024. It indicates more selective investing — fewer companies get funding, but those that do receive larger investments. Meaning investors are funding more startups each year and increasing the check size moderately.
Series A
These graphs show a rise in both average funding per company and number of funded companies. Average funding rose from approximately 1.51 million US dollars [221 million JPY] in 2020 to approximately 2.25 million US dollars [330 million JPY] in 2022, as well as funded companies increased from 545 to 631 in the same period. This indicates a broad expansion phase, meaning more startups getting funded, and check sizes are growing.
Series B
A strong growth in both deal volume and check size from 2020 to 2021, “expansion phase”. During 2022, more companies funded but average ticket size shrank, suggesting broader distribution of capital rather than concentrating in fewer deals.
The chart shows Series B is under more pressure than Seed/Series A — instead of a “fewer but larger” trend, a pullback is seen in both volume and ticket size after 2021’s high point.
This could indicate that investors are slowing growth-stage commitments due to higher risk and uncertain late-stage exit markets.
Series C
During 2022 to 2024, company count stayed high, but average check size steadily decreased, suggesting that while investors kept engaging in Series C rounds, they spread capital more thinly across more deals rather than concentrating on large bets. Economic uncertainty prompting smaller round sizes, valuation corrections leading to reduced funding requirements or lower willingness to invest big at this stage might be the possible drivers.
Series D or later
Sharp 2021 spike followed by a sustained drop is seen, with from 2023 to 2024 funding levels roughly half of the 2021 peak, which could reflect mega-rounds for unicorns during peak market exuberance. Despite rising company counts in 2022–2023, the average funding per company fell sharply, indicating capital being spread across more companies instead of concentrated bets. Both deal count and funding size declined, suggesting a cooling in late-stage appetite in 2024, possibly due to IPO market slowdown or investor caution around high valuations. Late-stage investing is contracting, likely due to exit market uncertainty, higher cost of capital, and risk aversion toward large, pre-exit rounds.
Conclusion
Japan’s 2024 startup investment trends reveal a market balancing robust capital inflows with increasing selectivity. Early-stage funding—especially Seed and Series A—continues to expand, with rising average check sizes signaling strong investor appetite for emerging ventures. In contrast, later stages such as Series C and D face a pullback, marked by smaller round sizes and tighter deal counts amid valuation pressure and exit uncertainty. This stage-by-stage shift underscores a clear recalibration: investors are channeling bigger bets into earlier, high-potential companies while exercising caution in late-stage commitments.
About EXPACT
EXPACT provides a variety of operational support to domestic and international startups.
EXPACT offers market entry strategy advisory for international businesses looking to establish a presence in Japan. Our services are as follows:
– Advice for visas and programs: Providing guidance on suitable visas and government programs for foreign entrepreneurs (e.g., Startup visa).
– Market research assistance: Evaluating the potential market size and demand for the product or service.
– Geographical evaluation based on the company’s target: Carrying out a location analysis to determine the most suitable region, prefecture, and city according to the startup’s specific needs.
– Support for applying for financial aid programs: Sourcing and supporting the application process for applicable government grants and subsidies.
– Assistance for forming partnerships: Serving as a liaison to help the startup establish connections with local partners, investors, and government institutions.
– Advice for a business plan: Offering a business plan review with insights from a Japanese perspective.
– Translation services: Providing translation services for in-person meetings, virtual discussions, and document preparation.
Additionally, the company also offers One-Stop support from Startup advisory to Finance, PR, Recruitment and EXIT.
- Finance and Fundraising: Advisory on the financial health of startups and proposing an optimal fundraising plan by applying for government grants and facilitating investor introductions. Activities include drafting a pitch deck, and forming a business plan and/or cap table.
- Promotion: Publishing press releases, building media relations, branding.
- Startup Advisory: Business ideation, researching, conducting interviews, MVP analysis, investment access.
- Human Resources: Personnel strategy, hiring support, institution building.
- EXIT: IPO support, M&A support, exit system design.
For assistance or additional information, please contact us at info@expact.jp for inquiries.
Inquiries on market entry strategies can be directed to pramod@expact.jp
Written by Pramod Sharma & Akane Mashiko
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Reference
https://drive.google.com/file/d/1Ee6sEkxG_jEva4uEwJHl_ekuy_RNYi8P/view?usp=drive_link
