The Global Startup Ecosystem Report 2023 and what it means for Japan

Having recently taken up the role of Senior Advisor to GEN Japan, together with Hiro Nishiguchi, we are happy to see the Startup Genome and Global Entrepreneurship Network collaboration on the Global Startup Ecosystem Report 2023!

From a Japan perspective, some of my key takeaways are:

- Whilst Tokyo fell from 12 to 15 in the world ranking, the value of the ecosystem increased by 6% on 2022 indicating that it is growing but being outperformed by other ecosystems- Concerning is that no other Japanese cities were featured in the rankings, nor were other Japanese cities featured in the Emerging ecosystems or Strong Starter ecosystem categories (Fukuoka was featured as a case study). My take is that more geographies across Japan, for example the Kansai region cities, will start to show their heads in the coming 2-3 years based on the activities driven by government investment as part of the Global Startup Cities initiative

- One trend that presents a good opportunity for Japan to advance is Deeptech exit amounts growing faster than non-deeptech exits. Given the research capability of Japans universities to accelerate deeptech spin-out companies, recent establishment of on-campus entrepreneurship programs and an increase in the number of university managed VC funds, this may be realised

- Fastest growing Series A amounts from have been attracted by manufacturing and robotics technology startups, 2 key areas where Japan has strong capabilities

- Like Australia, Japan should be looking at Singapore more carefully as a model case for APAC ecosystems breaking into the global top 10 rankings for the first time. The rhetoric about being the "next Silicon Valley" needs to stop, and the new game must be learning from, differentiating from and collaborating with Singapore- Startup visas and Soft-landing entrepreneur and startup market entry programs are on the rise globally. Now its time to be more strategic about the method of supporting inbound startups and what best fits each city

My final note is that, especially when it comes to cross-border startup activity, market entry and scaling globally, startup ecosystem strengths and rankings should not be confused with "potential customer markets".

When considering new global markets to enter as a startup, whilst many of Japans cities can still be considered "developing" in terms of global ecosystem ranking, more important than these rankings is validating the potential size of the target customer market. In many industries, Japans strength for startups is the potential B2B market size, meaning a critical mass of large potential corporate customers.

There is little advantage to existing in a world-class ecosystem with a small target customer market size.

Click here for the Startup Genome Japanese press release