Tokyo (tech hub)

What it is

Tokyo is Japan's primary tech and venture-capital hub, concentrating roughly 73% of the country's startup funding across a metropolitan economy of 37 million people. More than 10,000 active startup ventures operated in the city as of early 2026. The ecosystem spans AI, robotics, fintech, and SaaS. The Japan External Trade Organization (JETRO) and the Ministry of Economy, Trade and Industry (METI) co-ordinate government programmes, including the J-Startup programme (launched 2018), which designates nationally supported companies for export promotion and international investor introductions. Key companies include Sakana AI (AI research, co-founded 2023), SmartHR (HR SaaS), and Mercari (peer-to-peer marketplace, 2013).

History

Japanese startups raised 64.5 billion yen (roughly US$500 million) in 2012. By 2022 that figure had grown to 877 billion yen (roughly US$6.7 billion), a 13-fold increase in a decade. Mercari listed on the Tokyo Stock Exchange in 2018 and became Japan's first major tech unicorn IPO. In November 2022, Prime Minister Fumio Kishida's cabinet approved the Startup Development Five-Year Plan, committing a target of 10 trillion yen in public and mobilised private investment from fiscal 2023 to fiscal 2027, with goals of 100 unicorn companies and 100,000 startups. SoftBank, headquartered in Tokyo and operating the Vision Fund globally since 2017, had already reshaped international VC but left Tokyo's seed-stage market comparatively thin by international comparison.

Current state

Startup Genome values Tokyo's ecosystem at US$59 billion, based on H2 2023 to 2025 activity, with US$24 billion in total VC funding deployed over the same period. Japan ranks #12 globally in Startup Genome's index and holds 8 active unicorns as of mid-2026, well short of the government's 100-by-FY2027 goal. Japan raised US$4.25 billion in H1 2026, a 130% year-on-year increase and the fastest growth rate of any major tech hub globally in the period, as documented in 日本初创企业融资2026年同比增长130%，增速居全球主要科技中心之首. Sakana AI raised US$127 million in a Series B that attracted significant international LP attention. The Tokyo Metropolitan Government raised its innovation budget to US$448 million for fiscal 2026, up from US$325 million in fiscal 2024. SusHi Tech Tokyo 2026, the city's annual startup summit, drew over 750 startups and 60,000 participants.

Relationships

Tokyo's ecosystem is structurally tied to SoftBank and Masayoshi Son, whose Vision Fund deployed capital globally while Tokyo's early-stage market remained thinner than peer hubs. Global VC firms have been entering since 2008, when DCM opened a Tokyo office; Plug and Play arrived in 2017, and Salesforce Ventures launched a US$100 million Japan Trailblazer Fund. METI's J-Startup designation, covering around 700 companies as of 2025, functions as a quality signal for international LPs. Japan and South Korea jointly established a KRW 29 billion bilateral venture fund in 2026, a rare public-private cross-border vehicle. Tokyo competes with Singapore for regional AI deal flow: Singapore captured 92% of Southeast Asia's AI startup funding in H1 2026, while Japan drew increasing inbound capital from the United States and Europe.

What to watch

• The FY2027 deadline for Japan's 100-unicorn target: with 8 active unicorns as of mid-2026 and 18 months remaining, the government is on course to miss by a wide margin, though the official counting methodology may be revised.
• Sakana AI's growth trajectory as the highest-profile test of Tokyo's credibility as a global AI research hub distinct from Silicon Valley and Beijing.
• Whether H1 2026's 130% funding surge sustains into H2, or reflects a structural catch-up from a decade of under-investment rather than a durable step-change.
• The Japan-Korea bilateral fund's first portfolio investments, which will reveal whether government co-operation translates into operating cross-border companies.