Japan has produced six unicorn companies—startups valued above $1 billion—out of roughly 1,400 worldwide, according to CB Insights. South Korea has five; Australia has six. Both countries lead Japan in unicorns per capita, and neither has an economy built on the industrial legacy that once made Japanese firms dominant across the globe.
No Japanese startup has ever reached a valuation of $10 billion, the threshold that defines a "decacorn." That absence captures something larger: the country that gave the world Sony, Honda and SoftBank has not produced a startup of genuine global scale in a generation.
Sony's founding story runs through a firebombed department store in postwar Tokyo. Morita Akio, a physics graduate, co-founded the Tokyo Telecommunications Engineering Corporation there in 1946 with 20 employees who handmade heated cushions and voltmeters in a single room. That company, eventually renamed Sony, is now valued at roughly $140 billion. Honda launched the same year in a ruined factory. SoftBank began in 1981 as a small software distributor run by Son Masayoshi, then 24 years old.
Those origins are not the problem. The problem is what came after them. Three interlinked structural failures have blocked a new generation of Japanese startups from reaching comparable scale.
The first is the shortage of risk capital at every stage. A decade ago traditional venture capital funds were rare. In 2015, only $1 billion was deployed across fewer than 500 deals in Japan, according to Pitchbook. By 2025 that figure had grown to roughly $6 billion in annual fundraising—but Australia, whose economy is half the size of Japan's, raised $5 billion in the same year. The gap per dollar of economic output remains wide.
What capital does exist is distributed unevenly. Japan ranks in the top 10 globally for early-stage funding—deals worth less than $15 million—but falls to 16th place for late-stage deals, according to Side Stage Ventures, a Tokyo-based investor. "A lack of late-stage risk capital is a big constraint," said Murakami Yumiko of MPower Partners, a venture capital firm in Tokyo. SoftBank's own venture arm, one of the most obvious potential backers of Japanese startups, directs the vast majority of its funds overseas.
The second problem is that Japanese startups go public too soon. Since the pandemic, 57 percent of Japanese startups that exited did so through an initial public offering, compared with 23 percent in the United States and 13 percent in Britain. The reason is a near-absence of mergers and acquisitions—the route through which most startups in the rest of the world generate returns for founders and early investors. Without acquisition offers, companies that need liquidity have one realistic option: list on a public market. The result is that Japan's public markets function as a mid-stage fundraising round. Investors describe going public in Japan as the equivalent of a "Series B" in the United States—a second modest injection of capital, typically used to scale operations rather than mark a company's arrival as a mature business.
Listing early carries consequences. A company that goes public before it has built durable revenue and organizational depth faces quarterly scrutiny from public shareholders at the moment it most needs to take long-term risks. Growth capital goes toward meeting disclosure requirements and managing investor relations rather than into product or expansion.
The third structural problem compounds the first two: a thin pipeline of promising companies at the late stage reduces interest from global investors, who are precisely the ones capable of writing the large checks that turn a $200 million startup into a billion-dollar one. Late-stage international capital and the domestic pipeline that would attract it are caught in a loop—neither develops without the other.
James Riney of Coral Capital, a Tokyo venture firm, has argued publicly that Japanese startups can thrive within the current system, pointing to firms that have scaled despite the constraints. His argument depends on individual execution rather than structural repair.
The state is attempting structural repair. A new cohort of venture investors and founders, backed by government initiatives introduced over the past decade, is working to address the capital gap and the IPO incentive problem simultaneously. "The government realised that while other countries were producing more unicorns, Japan had neglected the needs of startups," said Akio Tanaka, a venture investor. The specific measures include improved access to capital and regulatory changes designed to make acquisition activity more attractive relative to public listings.
Japan's economy is the world's fourth-largest. It has the engineering talent, the corporate supply chains, and the historical proof that its founders can build global companies from nothing. Six unicorns in a field of 1,400 is the distance between that history and the present.
