Japan’s investment landscape is buzzing with exciting opportunities. From a burgeoning startup ecosystem to steady growth in mergers and acquisitions (M&A), the country is proving to be a hotbed for local and global investors.

Despite being the world’s third-largest economy, Japan’s startup ecosystem has traditionally been underrepresented. But things are changing. The government’s ambitious goal of creating 100,000 startups and 100 unicorns by 2027 has set the stage for growth. In 2023 alone, Japan saw 13 unlisted companies nearing unicorn status—its highest tally ever.

What’s fueling this? A combination of factors:

• Government Initiatives: Programs like the ¥10 trillion startup fund, special tax breaks, and startup visas make it easier for entrepreneurs to thrive.
• Regional Growth: Cities like Fukuoka and Osaka are stepping up with startup-friendly ecosystems.
• Focus on Sustainability: Green tech and AI-focused startups are receiving significant investment as Japan works toward its carbon neutrality goal by 2050.

Japan is also leading in global M&A activity, with 1,425 deals in 2023, even as other markets slowed down. New M&A guidelines introduced in 2023 have spurred this, which simplifies corporate transactions and makes it easier for investors to acquire businesses.

Private equity firms are also jumping in. International funds are now targeting Japan for its stable market, low interest rates, and favorable yen-to-dollar exchange rate. The focus extends beyond traditional industries to include infrastructure and real estate.

While Japan’s startups are growing, there’s still room for expansion. The country ranked ninth globally for startups in 2022, showing that it’s a relatively untapped market. Venture capital is also catching up, with funds raised for startups increasing more than sevenfold over the past decade. However, there’s still a gap in the availability of capital, making it an attractive “blue ocean” for investors.

Some of Japan’s startup standouts include:

• Mercari: The e-commerce platform has become a global success, highlighting Japan’s potential to scale businesses internationally.
• AI Inside: This AI and machine learning firm is leading innovation in its field.
• Paidy: Acquired by PayPal for USD 2.7 billion in 2021, it exemplifies the international interest in Japanese startups.

Japan’s investment scene is not just stable but also primed for innovation. With government backing, emerging technologies, and a shift in corporate culture towards private equity and divestitures, opportunities abound. Whether you’re looking at startups, private equity, or M&A, Japan’s market is diverse and ripe for exploration.

So, what are you waiting for? The Land of the Rising Sun might just be the land of your next big investment.

Navigating these complexities requires a partner with foresight and expertise. At Janus Intellect LLP, we help investors identify emerging opportunities in Japan. With tailored strategies and data-driven insights, we enable you to achieve impactful and sustainable growth.