Japan’s startup ecosystem has long been viewed through the lens of comparison, often measured against global benchmarks such as Silicon Valley. But according to Tim Romero, such comparisons can obscure the real story.
Speaking as part of an exclusive conversation with AsiaBizToday in the lead-up to SusHi Tech Tokyo 2026, Romero, a long-time observer and participant in Japan’s startup landscape, argues that the country’s innovation ecosystem is best understood not in relation to others, but through its own evolution. Having spent more than three decades in Japan, Romero is a serial entrepreneur, investor, and currently the founder and host of Disrupting Japan podcast.
Progress Measured Over Time, Not Against Silicon Valley
Romero points out that while Tokyo may appear slower when compared to San Francisco, the trajectory becomes far more compelling when viewed over a longer horizon. “If you compare the Japan startup ecosystem today to where it was 10 or 20 years ago, it’s much easier to see the substantive progress,” he notes.
This progress is not merely about increased capital flows, but about structural and behavioural shifts across the ecosystem. One of the most significant changes has been the growing openness of large Japanese enterprises to engage with startups.
During the early 2000s, collaboration between startups and corporates was extremely difficult, often hindered by rigid procurement systems and hierarchical structures. Today, that dynamic has changed meaningfully. “Every major company in Japan now has teams focused on working with startups and incorporating innovation,” Romero explains.
Corporate Collaboration as a Defining Feature
Unlike more competitive ecosystems such as the United States, Japan’s startup landscape is increasingly characterised by long-term collaboration between startups and large enterprises.
Romero highlights that corporate venture capital plays a particularly significant role in Japan, even if it operates differently compared to Western markets. While corporate investors may not always lead funding rounds, they contribute meaningfully to the ecosystem by supporting partnerships and scaling opportunities.
There is also a distinct cultural dimension to these relationships. “In Japan, you see much more collaborative, long-term partnerships between startups and enterprises,” he says.
This approach allows startups to build credibility and scale within established industry networks, while enabling corporates to access innovation that may be difficult to develop internally.
Policy Signalling and the Role of SusHi Tech Tokyo
Romero believes that one of the most important drivers of change in Japan’s startup ecosystem is not just capital or talent, but signalling.
Government endorsement of startups as a key pillar of economic growth has had a cascading effect across industries. He recalls a pivotal moment when Japan’s leadership publicly emphasised the importance of startups, triggering widespread corporate interest.
Events such as SusHi Tech Tokyo 2026, organised by the Tokyo Metropolitan Government, continue to reinforce this message. “These kinds of events signal that startups are now mainstream and important in Japan,” Romero observes.
In a market where institutional validation carries significant weight, such signalling plays a crucial role in shaping behaviour across the ecosystem.
Culture, Risk and Rational Decision-Making
Japan’s startup ecosystem is often described as risk-averse, shaped by a culture that values stability and consensus. However, Romero offers a more nuanced view. Rather than attributing entrepreneurial behaviour solely to culture, he argues that founders are responding rationally to changing incentives.
Three decades ago, starting a company in Japan involved significant risks, limited access to capital, strict bankruptcy laws and minimal career safety nets. Today, these conditions have evolved.
“There is more risk capital, greater acceptance of failure and more pathways to start again,” he explains. As a result, entrepreneurship is increasingly seen as a viable career path, with thousands of startups now operating across the country.
“If you want to change culture, change the risks and rewards,” Romero adds.
The Influence of Foreign Founders
Foreign entrepreneurs are also playing a disproportionate role in shaping Japan’s startup ecosystem. Romero notes that this is a common pattern across global innovation hubs, where internationally mobile founders often bring diverse perspectives and a higher tolerance for risk.
“Foreign entrepreneurs have an outsized impact compared to their population,” he says. In Japan, this influence is becoming increasingly visible, contributing to a more dynamic and globally connected ecosystem.
However, success in the Japanese market still requires localisation, particularly in areas such as language and customer engagement.
One of the most common mistakes international founders make, according to Romero, is assuming that strategies that work in their home markets will translate seamlessly to Japan. “The biggest mistake is assuming the US playbook will work here,” he cautions.
While many aspects of business remain consistent, critical differences exist in areas such as customer expectations, regulatory frameworks and social acceptance of new ideas. Companies like Uber and Airbnb have faced challenges in adapting to these nuances, underscoring the importance of market-specific strategies.
Capital Structures and the Rise of University Funds
Japan’s funding landscape also has unique characteristics. Corporate venture capital plays a larger role compared to Western markets, while family offices remain less prominent. At the same time, university-backed funds are emerging as a powerful force in early-stage innovation.
Romero highlights that many universities in Japan now operate their own investment funds, supporting the commercialisation of research and intellectual property.
These initiatives are particularly important in a country known for its strength in deep tech and advanced research.
Deep Tech Potential and the Commercialisation Challenge
Japan’s global reputation in robotics, materials science and engineering remains a cornerstone of its innovation ecosystem. However, translating research excellence into scalable startups remains a challenge.
“Japan has world-class research, but it is not yet good at productising it,” Romero notes. Efforts to bridge this gap are underway, particularly through university-led initiatives and increased collaboration between academia and industry.
At the same time, emerging areas such as AI, robotics and climate technologies are creating new opportunities for startups to build globally competitive solutions.
On the question of inclusion, Romero sees encouraging signs. Startups are increasingly providing opportunities for women to build careers based on merit and performance, bypassing some of the structural barriers found in traditional corporate environments.
However, challenges remain, particularly in access to funding. In contrast, climate tech presents a more complex picture.
While the need for innovation is clear, Romero notes that building profitable and scalable climate-focused startups remains difficult, often dependent on regulatory shifts that create market opportunities.
A Defining Moment for Japan’s Innovation Ecosystem
As SusHi Tech Tokyo 2026 brings together startups, corporates, investors and policymakers, Romero believes the event offers valuable insights into the direction of Japan’s innovation ecosystem.
For him, the most telling indicator will be the nature of collaborations between startups and large enterprises.
“These partnerships are a strong signal of where Japanese industry sees its future,” he says.Japan’s startup ecosystem may not follow the same trajectory as Silicon Valley or other global hubs, but it is evolving in a way that reflects its own strengths, structures and priorities.
And as Romero suggests, understanding that difference may be the key to unlocking its full potential.