Japanese buyers flip to Europe in lieu of personal ecosystem

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 turn out to be fertile floor for Japanese corporates, whose home market is youthful.  

Japanese buyers or enterprise capital funds who themselves have Japanese buyers, often known as restricted companions, participated in European financing rounds price greater than 33 billion euros ($38 billion) since 2019 when a commerce deal between the European Union and Japan got here into pressure, in accordance with analysis from enterprise capital fund NordicNinja and information 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 aside from Softbank,” Tomosaku Sohara, co-founder and managing associate of Japan-Europe VC NordicNinja, instructed CNBC. NordicNinja, which has 250 million euros of property underneath administration, is a collaboration between the agency’s managing companions and Japan’s JBIC IG Companions.

“Softbank was fairly lively already at that second, as a result of that they had acquired Finnish gaming firm Supercell,” Sohara stated, noting that the acquisition injected life into Finland’s startup ecosystem. 

Now, Mitsubishi, Sanden, Yamato Holdings, and Marunouchi Innovation Companions are amongst these immediately backing European tech, per the report, whereas Japan-linked enterprise capital corporations corresponding to NordicNinja, Byfounders, and Toyota‘s Woven Capital lower 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. 

Japan’s urge for food for investing was all the time there, Sohara stated. Its multinationals — like many — headed stateside to arrange company enterprise capital arms in early 2000, in the hunt for a slice of the motion on the time when a few of at the moment’s largest corporations had been simply being thought up in dorm rooms.  

“No person needed to have a look at Europe at that second, however I feel that after a few years they realized, ‘Hey, perhaps the U.S. tradition is completely completely different from the Japanese tradition,’ and so they started pondering, ‘Hey, perhaps we have to take a look at one other area like Europe,'” Sohara stated, including that the profile of entrepreneurs in Europe, lots of whom got here from massive 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 stated.

“They’ve expertise on the corporates and in addition they’ve a mindset of entrepreneurship. Japan, sadly, is missing the entrepreneurship mindset,” Sohara added, referring to Europe’s founders, lots of whom got here from Nokia and Skype.

Japanese-linked buyers have a penchant for one sector specifically: deep tech, which refers to corporations constructing on high 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, vitality, and protection industries increase.  

The highest-funded corporations with Japanese participation embrace the U.Okay.’s autonomous car startup Wayve, which raised $1.05 billion in an funding spherical in Might 2024, British quantum computing agency Quantinuum, which secured 273 million euros in January 2024, and Spanish quantum agency Multiverse Computing, which noticed buyers lower it a examine of 189 million euros in June 2025. The rounds had been backed by Softbank, Mitsui and Toshiba, respectively.  

Such corporations, nonetheless, usually want a variety of progress capital and industrial expertise to scale efficiently — two parts that Europe famously lacks.  

“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 enhance their footprint exterior of Japan,” stated 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 so far and counts NordicNinja, Honda and JGC amongst its buyers.

It isn’t simply concerning the examine. Japanese corporates and industrials have sturdy manufacturing and automotive know-how, Fleischer and Sohara famous respectively, that means they’re nicely positioned to plug Europe’s data gaps in the case of scaling massive manufacturing initiatives.

Fleischer added that Japanese corporations have lengthy shored up their vital minerals provide chain and long-established buying and selling corporations, that means they know the right way to safe important parts wanted for the vitality transition. For Tozero, that is an added plus, Fleischer stated, 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 stated.

Again in Japan, the variety of entrepreneurs is “nonetheless very restricted,” Sohara stated, because the older technology and “nice skills” needed to work for “a Toyota and Honda or Sony,” he added, however the youthful technology’s mindset is starting to alter.  

Europe has additionally turn out to be the house to bold would-be founders trying to find a tech ecosystem to construct their corporations in, Sohara stated.

Nevertheless, as collaboration between Europe and Japan scales, language stays a barrier as fluency in English isn’t widespread in Japan, he added.  

For Fleischer, this additionally poses challenges. “There’s a lot miscommunication and native translation that might spoil a partnership immediately. And there is additionally some kind of cultural facet as nicely, one must most likely pay attention to,” she stated, including that she just lately spent weeks in Japan attending to know her buyers face-to-face, “as a result of that is nonetheless the sentiment” there.  

Determination-making can due to this fact be slower, the founder stated, as a result of thorough analysis and preparation. “They simply do their homework,” Fleischer stated, noting that Japanese companions had been hands-on in serving to the corporate perceive “the right way to construct our subsequent future business plant, doubtlessly 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 proper relationships,” stated Aaike van Vugt, co-founder and CEO of Dutch nanotechnology engineering agency VSParticle.

That is in distinction to maybe essentially the most well-known Japanese participant: Softbank. Softbank is “completely completely different” from conventional Japanese investor cultures, given it’s pushed by founder Masayoshi Son’s choices fairly than working on a consensus foundation, like most Japanese enterprise, Sohara added.  

The enterprise agency, recognized for its lofty bets on WeWork and, extra just lately, chip firm Arm, poured big sums of money into tech startups amid the 2021 enterprise capital tech increase, which noticed at the very least one Japanese-linked investor concerned in offers price 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.

Wanting ahead, Sohara and Fleischer count on better collaboration between Europe and Japan. Nevertheless, Japanese buyers are anticipated to take part in rounds price 3 billion euros in 2025, per the Dealroom and NordicNinja report, representing a dip from final 12 months.  

As many eyes flip to the Center East for funding, Fleischer stated that curiosity in Japan seems to be ticking up. Anecdotally, “individuals attain out to me for intros, which is enjoyable, to fulfill Japanese company LPs,” she stated, noting that this can be a new improvement for her however that it might merely be as a result of she has such buyers now. 

“I feel it is also politically pushed as nicely 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 stated.  

Correction: This story has been up to date to replicate that NordicNinja is a collaboration between its managing companions and Japan’s JBIC IG Companions, and to replace Tozero’s buyers.