Huge swaths of capital are flowing from Japan into European tech startups, as risk-averse investors increasingly favor the continent's mature entrepreneurial ecosystem to scale its burgeoning deep tech cluster. This strategic shift underscores a growing confidence in Europe's ability to foster and nurture innovative ventures, moving away from the traditional dominance of Silicon Valley.
While the European startup and venture capital landscape has historically operated in the shadow of its U.S. counterpart, it's now emerged as a prime destination for Japanese corporations, especially those seeking opportunities beyond their domestic market, which faces demographic challenges and slower growth.
Data from venture capital fund NordicNinja and data platform Dealroom reveals that Japanese investors, including venture capital funds with Japanese limited partners, have participated in European financing rounds totaling over 33 billion euros ($38 billion) since 2019, coinciding with the implementation of the EU-Japan Economic Partnership Agreement. This represents a significant surge compared to the 5.3 billion euros invested in the five years prior to the agreement.
Tomosaku Sohara, co-founder and managing Partner of Japan-Europe VC NordicNinja, notes the shift, stating that before the agreement, Softbank was the primary Japanese investor presence in Europe with the acquisition of Finnish gaming giant Supercell injecting dynamism into Finland's startup scene. NordicNinja, a joint venture between Japan's JBIC IG Partners and private equity firm BaltCap, currently manages 250 million euros in assets.
Now, corporations such as Mitsubishi, Sanden, Yamato Holdings, and Marunouchi Innovation Partners are directly backing European tech ventures, according to the report. Additionally, Japan-linked venture capital firms like NordicNinja, Byfounders, and Toyota's Woven Capital actively invest in startups across the continent. The data indicates there are over two times more VC-backed startups per capita in Europe compared to Japan, and a staggering 4.3 times more unicorns, highlighting the depth and breadth of Europe's startup ecosystem.
Japan's interest in investing abroad has existed for decades, Sohara points out. Initially, many Japanese multinationals established corporate venture capital arms in the U.S. in the early 2000s aiming to tap into the innovation boom that birthed many of today's tech giants.
However, Sohara suggests that after some time, Japanese investors reassessed their approach to the US market and considered investment opportunities elsewhere, noting that the cultural differences between the U.S. and Japan prompted some to explore Europe. He also highlighted that the profile of European entrepreneurs, many with experience in large multinational corporations, resonated more closely with Japanese corporate culture than the often younger founders emerging from U.S. universities.
He further notes that many European founders have extensive experience from working at companies like Nokia and Skype.
Japanese-linked investors exhibit a particular interest in deep tech, encompassing companies built around advanced scientific or engineering innovations. In 2024, deep tech and artificial intelligence investments constituted 70% of deals made by such investors in Europe, mirroring broader trends within the startup ecosystem driven by the rapid growth of the AI, energy, and defense sectors.
Prominent companies receiving substantial funding with Japanese participation include the U.K.'s autonomous vehicle startup Wayve, which raised $1.05 billion in May 2024; British quantum computing firm Quantinuum, which secured 273 million euros in January 2024; and Spanish quantum firm Multiverse Computing, which closed a 189 million euro round in June 2025 and were backed by Softbank, Mitsui and Toshiba, respectively. These companies often require significant growth capital and extensive industrial expertise to achieve successful scaling—resources that Europe historically lacked.
Sarah Fleischer, co-founder and CEO of Tozero, a Germany-based battery materials recycling startup, emphasized the strength of Japanese investment appetite, noting their access to capital accumulated over decades that they are reinvesting to expand globally.
Fleischer added that Japanese corporations and industrials possess robust manufacturing and automotive know-how, which is critical to addressing scaling challenges for nascent European manufacturing projects. Tozero counts NordicNinja, Honda and JJC among its investors and has raised 14.5 million euros to date.
Fleischer also pointed out that Japanese firms have established critical minerals supply chains and mature trading firms, providing them with the experience to secure the essential components needed for the energy transition. This capability is a key advantage for Tozero as it focuses on recovering such materials from used batteries.
Amid prevailing geopolitical tensions between the U.S. and China, Japan also provides a stable bridge to the Asian markets, which is very beneficial, according to Fleischer.
Sohara highlighted the contrast in entrepreneurial activity, stating that older generations in Japan traditionally sought employment at established companies like Toyota, Honda, or Sony. However, he noted that the mindset of younger generations is evolving. Europe has emerged as many founders' preferred tech ecosystem for establishing their companies.
As collaboration between Europe and Japan expands, language barriers present a persistent challenge, given the limited widespread fluency in English in Japan, according to Sohara.
Fleischer echoed this sentiment, citing the potential for miscommunication and cultural nuances to stymie partnerships, reinforcing the value in face-to-face relationship-building. She recently spent weeks in Japan meeting with her investors.
Despite these challenges, the decision-making processes in Japanese firms are comprehensive and research-driven, which often results in a slower pace but thorough execution. Fleischer mentioned the hands-on support from Japanese partners in helping Tozero develop plans for its next commercial plant, potentially starting in Japan and then expanding worldwide.
Aaike van Vugt, co-founder and CEO of Dutch nanotechnology engineering firm VSParticle, acknowledged that building relationships would have been much harder without the support from NordicNinja.
Sohara draws a distinction between Softbank and more traditional Japanese investors, emphasizing that Softbank's investment decisions are driven by its founder, Masayoshi Son, as opposed to the consensus-based approach typifying most Japanese businesses.
Softbank, known for its high-profile investments in companies like WeWork and Arm, invested significantly in tech startups during the venture capital boom in 2021. In 2021, firms linked to Japanese investment participated in deals worth 11.2 billion euros, with Softbank representing 22% of these transactions.
Sohara and Fleischer anticipate increased collaboration between Europe and Japan in the future. However, the Dealroom and NordicNinja report projects that Japanese investors will participate in rounds worth 3 billion euros in 2025, a decrease compared to the previous year.
As interest shifts among global investors, potentially towards the Middle East; Fleischer observes that inquiries about connecting with Japanese corporate limited partners have increased.
Fleischer suggests that this shift may reflect a more politically driven strategy within Japan, aimed at strengthening the country's geopolitical position and fostering industry growth and success through strategic investment.
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/12594.html
