Plug and Play helps Japanese startups avoid small IPOs

Japanese startups are often pushed to go public earlier than their global peers. This pressure results in smaller IPOs and fewer merger and acquisition opportunities.

Plug and Play aims to tackle these challenges by helping startups connect with global markets and investors.

The California-based accelerator and investment firm recently launched its first large-scale fund in Japan.

Announced last month, the fund has raised over 3 billion yen (US$20.8 million) from MUFG Bank, Tokyu Fudosan, Sazaby League, and a semi-government body.

CEO Phillip Vincent highlighted that international expansion is key for Japanese startups, especially in sectors like manufacturing, robotics, and deep tech.

Plug and Play has been active in Japan since 2017 and has supported over 2,000 global startups, including PayPal and Dropbox.

🔗 Source: Japan Times

🧠 Food for thought

1️⃣ Japan’s early-exit culture creates a unicorn drought

Japan’s entrepreneurial ecosystem faces a fundamental constraint that Plug and Play’s fund aims to address: Japanese startups tend to IPO much earlier than their global counterparts, limiting their growth potential.

This structural issue results in many smaller IPOs rather than creating unicorns, with Japan ranking only 20th globally in startup ecosystem strength despite being the world’s third-largest economy1.

The Japanese investment culture typically pushes startups toward public markets within 10 years, as Ma Jingqian of Plug and Play Japan noted in the article, creating “a much shorter span for startups to grow compared with overseas competitors.”

This explains why Japan’s startup funding metrics remain modest, ¥814 billion in 2023 and ¥779 billion in 20242, far below the government’s ambitious ¥10 trillion target and representing just 0.08% of GDP compared to South Korea’s 0.22% and China’s 0.23%1.

The cultural preference for rapid exits creates a self-reinforcing cycle: smaller exits mean less reinvestment into the ecosystem from successful founders, fewer role models for ambitious scaling, and reduced international visibility for Japanese innovation.

2️⃣ Geographic advantages position Japan for deep tech leadership

While the Japanese market constrains consumer startups, it offers distinct advantages for deep tech and industrial startups looking to scale globally with the right support.