Startups rising: Government support helps Japan’s new innovators take off 

MORIOKA, Iwate — In the quiet northern city of Morioka, far from Tokyo’s gleaming tech towers, twin brothers Takaya and Fumito Matsuda are rewriting the rules of business and creativity. Their seven-year-old startup, HERALBONY collaborates with artists with intellectual disabilities, licensing their expressive, colorful artwork to global brands and public institutions. HERALBONY’s mission — “Radiate your colors”— challenges conventional ideas of value and talent, using design to champion social inclusion.

”Our goal is to change perceptions of disability through art,” says Takaya Matsuda, who was inspired to create HERALBONY by an older brother, Shota, with autism.

HERALBONY has gained recognition in Japan and abroad. In 2024, HERALBONY won the "Employee Experience, Diversity & Inclusion" category at the LVMH Innovation Awards 2024, becoming the first Japanese company to receive this recognition. It was also accepted into LVMH’s startup accelerator program. The same year, it opened a European subsidiary in Paris, joining the world’s largest startup incubator, Station F. In 2025, HERALBONY also won Gold Lions in "Glass: The Lion for Change" at Cannes Lions, the world's premier festival of creativity.

Behind the company’s rise is not only a powerful social vision, but support from Japan’s vibrant startup ecosystem — an environment that has evolved rapidly in recent years with help from government programs aimed at nurturing innovation.

Japan’s government laid out an ambitious roadmap for entrepreneurship in 2022 with its “Startup Development Five-Year Plan,” which aims to increase annual startup investment tenfold to ¥10 trillion by 2027. The plan sets bold targets for the creation and growth of new ventures: 100,000 startups nationwide, and 100 unicorns — startups valued at a billion dollars or more.

The strategy draws on the strengths of Japan’s regions as well as its mega-cities. The government has designated 13 “Startup Base Cities” where universities, local governments, venture capitalists, and private companies are incentivized to collaborate to foster entrepreneurship.

“Startups play an important role in the economy by creating new markets through innovative technologies and business models,” says Hiroshi Ishikawa, Director of the Innovation and Startup Promotion Division at the Ministry of Economy, Trade and Industry. “These companies contribute to GDP and employment, while also driving industrial transformation and strengthening international competitiveness.”

The economic value generated by startups rose by about 15% between 2023 and 2024, to 22.33 trillion yen. Startups are also an increasingly attractive place to work, including for people in the middle of their careers — a traditionally risk-averse group in Japan. The share of workers aged 40 and above who moved to startups rose sevenfold between 2015 and 2023.

Global collaboration is a core driver of the strategy. Programs such as J-StarX, led by METI, send Japanese entrepreneurs to innovation hubs around the world — including the U.S., France, Canada, Australia, UAE and Malaysia — to build cross-border networks and gain international exposure.

In 2023, the government established the Japan Innovation Campus (JICampus) in Palo Alto, California. The facility has already supported approximately 100 startups, offering co-working space and access to local accelerators for mentoring and business development. The Japan External Trade Organization (JETRO) Global Acceleration Hubs initiative further supports overseas expansion by partnering with local accelerators in key markets to provide free mentoring and workspace for Japanese startups seeking global growth.

These efforts align with the Global Startup Campus (GSC) initiative, which aims to make Tokyo’s Shibuya–Meguro district a world-class center for deep-tech R&D, acceleration, and talent development.

One cross-border success story to emerge from Japan’s startup scene is EF Polymer, an agricultural technology startup founded by Narayan Lal Gurjar, a young entrepreneur from India who relocated to Okinawa to access Japan’s technical infrastructure and support.

EF Polymer produces 100% naturally derived, biodegradable, super-absorbent polymers made from citrus and banana peels. The material, which can absorb water up to 50 times its weight, helps soil retain moisture and nutrients, significantly improving crop yields while reducing the need for irrigation and fertilizer.

“Nature has a solution for every problem,” says Gurjar of the inspiration behind his company’s technology.

The results have been striking. In field tests, farmers reported yield increases of up to 20%. Since launching, EF Polymer has shipped more than 500 tons of its organic soil additive to customers in the U.S., France, India, and Japan, and the company recently raised ¥10 billion in Series B funding to scale production and business expansion internationally.

EF Polymer benefited from Okinawa’s startup ecosystem, including support from the Okinawa Institute of Science and Technology (OIST) incubator, which helps science-based ventures commercialize their innovations.

"I have admired Japan’s technology and culture since my childhood. The support we have received from Okinawa has been instrumental in developing our 100% natural polymer. I believe that the combination of India’s youthful energy and Japan’s technological strength has been, and will continue to be, the key to our success.", Gurjar said.

The momentum behind Japan’s startup sector will be on full display in September at the Global Startup EXPO (GSE) 2025, to be held at the Osaka–Kansai Expo site in collaboration with METI, JETRO, and the New Energy and Industrial Technology Development Organization (NEDO). The event will bring together investors, entrepreneurs, and policymakers to address crucial topics such as health and longevity, sustainable living, and rule-making for new technologies.

Under the theme “Shaping the Future with Startups — Co-creation to Break Through Global Challenges,” GSE 2025 will feature startup exhibitions, keynote panels, pitch contests, and global networking opportunities, providing a platform for companies to showcase their innovations to a global audience.

Events like GSE 2025, and companies like HERALBONY and EF Polymer, demonstrate the depth and breadth of today’s Japanese startup sector. Backed by ambitious national policies, expanding regional ecosystems, and a new generation of purpose-driven founders, startups across Japan are tackling global challenges with local ingenuity. The momentum they’re creating is not only driving new economic growth — it’s reshaping what success looks like in Japan’s future economy.