Enormous swathes of money are flowing from Japan to European tech startups as risk-averse buyers favor a extra mature entrepreneurial ecosystem, serving to to scale the continent’s booming deep tech cluster.
Whereas the European startup and enterprise capital ecosystem has lengthy operated within the shadow of Silicon Valley, it has change into fertile floor for Japanese corporates, whose home market is youthful.
Japanese buyers or enterprise capital funds who themselves have Japanese buyers, often called restricted companions, participated in European financing rounds value greater than 33 billion euros ($38 billion) since 2019 when a commerce deal between the European Union and Japan got here into power, in response to analysis from enterprise capital fund NordicNinja and knowledge platform Dealroom.
For the 5 years main as much as the EU-Japan Financial Partnership Settlement, funding totaled 5.3 billion euros.
In Europe at the moment, “there was no Japanese capital apart from Softbank,” Tomosaku Sohara, co-founder and managing Companion of Japan-Europe VC NordicNinja, informed CNBC. NordicNinja, which has 250 million euros of belongings below administration, is a three way partnership between Japan’s JBIC IG Companions and personal fairness agency BaltCap.
“Softbank was fairly lively already at that second, as a result of they’d acquired Finnish gaming firm Supercell,” Sohara mentioned, noting that the acquisition injected life into Finland’s startup ecosystem.
Now, Mitsubishi, Sanden, Yamato Holdings, and Marunouchi Innovation Companions are amongst these instantly backing European tech, per the report, whereas Japan-linked enterprise capital corporations reminiscent of NordicNinja, Byfounders, and Toyota‘s Woven Capital minimize checks to startups on the continent.
There are over two instances extra VC-backed startups in Europe than in Japan, per capita, and 4.3 instances extra unicorns, per the report.
The shadow of Silicon Valley
Japan’s urge for food for investing was at all times there, Sohara mentioned. Its multinationals — like many — headed stateside to arrange company enterprise capital arms in early 2000, seeking a slice of the motion on the time when a few of immediately’s largest firms have been simply being thought up in dorm rooms.
“No one needed to take a look at Europe at that second, however I feel that after a few years they realized, ‘Hey, possibly the U.S. tradition is completely totally different from the Japanese tradition,’ and so they started considering, ‘Hey, possibly we have to take a look at one other area like Europe,'” Sohara mentioned, including that the profile of entrepreneurs in Europe, a lot of whom got here from giant corporates on the time, was extra aligned with Japan. That is in distinction to the younger founders coming from Stanford or college analysis and improvement departments, he mentioned.
“They’ve expertise on the corporates and likewise they’ve a mindset of entrepreneurship. Japan, sadly, is missing the entrepreneurship mindset,” Sohara added, referring to Europe’s founders, a lot of whom got here from Nokia and Skype.
The pull for founders
Japanese-linked buyers have a penchant for one sector specifically: deep tech, which refers to firms constructing on prime of scientific or engineering innovation. Deep tech and synthetic intelligence accounted for 70% of offers made by such buyers in Europe in 2024, echoing traits within the broader startup ecosystem because the AI, power, and protection industries increase.
The highest-funded firms with Japanese participation embody the U.Okay.’s autonomous automobile startup Wayve, which raised $1.05 billion in an funding spherical in Could 2024, British quantum computing agency Quantinuum, which secured 273 million euros in January 2024, and Spanish quantum agency Multiverse Computing, which noticed buyers minimize it a examine of 189 million euros in June 2025. The rounds have been backed by Softbank, Mitsui and Toshiba, respectively.
Such firms, nonetheless, usually want numerous progress capital and industrial expertise to scale efficiently — two parts that Europe famously lacks.
“Funding urge for food is method stronger than [in] any strategics I’ve seen right here in Germany or in Europe,”
Sarah Fleischer
co-founder and CEO, Tozero
“Japanese corporations — and so they’re outdated, most of them that we’re speaking about, proper — they’re simply sitting on a pile of cash. They have been saving cash all through the final century, and now they’re beginning to spend it, to attempt to develop as a big company and improve their footprint exterior of Japan,” mentioned Sarah Fleischer, co-founder and CEO of Germany-based battery supplies recycling startup Tozero.
“You see that funding urge for food is method stronger than [in] any strategics I’ve seen right here in Germany or in Europe,” she added. Tozero has raised 14.5 million euros thus far and counts NordicNinja, Honda and JJC amongst its buyers.
It is not simply in regards to the examine. Japanese corporates and industrials have strong manufacturing and automotive know-how, Fleischer and Sohara famous respectively, which means they’re effectively positioned to plug Europe’s data gaps with regards to scaling giant manufacturing initiatives.
Fleischer added that Japanese corporations have lengthy shored up their vital minerals provide chain and long-established buying and selling corporations, which means they know find out how to safe important elements wanted for the power transition. For Tozero, that is an added plus, Fleischer mentioned, given it is within the enterprise of recovering such supplies from spent batteries.
Within the age of political uncertainty amid uneven U.S.-China relations, Japan additionally acts as a very good bridge to the Asian markets, Fleischer mentioned.
A slower tempo and decrease danger urge for food
Again in Japan, the variety of entrepreneurs is “nonetheless very restricted,” Sohara mentioned, because the older era and “nice abilities” needed to work for “a Toyota and Honda or Sony,” he added, however the youthful era’s mindset is starting to vary.
Europe has additionally change into the house to bold would-be founders trying to find a tech ecosystem to construct their firms in, Sohara mentioned.
Nonetheless, as collaboration between Europe and Japan scales, language stays a barrier as fluency in English just isn’t widespread in Japan, he added.
For Fleischer, this additionally poses challenges. “There’s a lot miscommunication and native translation that would destroy a partnership immediately. And there is additionally some type of cultural facet as effectively, one must in all probability concentrate on,” she mentioned, including that she lately spent weeks in Japan attending to know her buyers face-to-face, “as a result of that is nonetheless the sentiment” there.
Choice-making can subsequently be slower, the founder mentioned, attributable to thorough analysis and preparation. “They only do their homework,” Fleischer mentioned, noting that Japanese companions have been hands-on in serving to the corporate perceive “find out how to construct our subsequent future business plant, probably ranging from Japan after which going worldwide.”
Certainly, “with out the help from NN [NordicNinja] it might have been way more tough to construct the precise relationships,” mentioned Aaike van Vugt, co-founder and CEO of Dutch nanotechnology engineering agency VSParticle.
That is in distinction to maybe probably the most well-known Japanese participant: Softbank. Softbank is “completely totally different” from conventional Japanese investor cultures, given it’s pushed by founder Masayoshi Son’s choices somewhat than working on a consensus foundation, like most Japanese enterprise, Sohara added.
The enterprise agency, identified for its lofty bets on WeWork and, extra lately, chip firm Arm, poured big sums of money into tech startups amid the 2021 enterprise capital tech increase, which noticed not less than one Japanese-linked investor concerned in offers value 11.2 billion euros, per the report. Softbank stood out throughout this era; it was concerned in 22% of offers with Japanese-linked participation in 2021.
Curiosity ticking up
Trying ahead, Sohara and Fleischer anticipate higher collaboration between Europe and Japan. Nonetheless, Japanese buyers are anticipated to take part in rounds value 3 billion euros in 2025, per the Dealroom and NordicNinja report, representing a dip from final 12 months.
“I feel it is also politically pushed as effectively in Japan, by the federal government, to place themselves extra geopolitically well and guarantee that the corporates or the industries develop in sure ecosystems, strengthening their positioning as a rustic,” she mentioned.
