Japanese investors turn to Europe as deep tech boom lures capital abroad

Huge swathes of currency are flowing from Japan to European tech startups arsenic risk-averse investors favour a much mature entrepreneurial ecosystem, helping to standard the continent's booming heavy tech cluster.

While the European startup and task superior ecosystem has agelong operated successful the shadiness of Silicon Valley, it has go fertile crushed for Japanese corporates, whose home marketplace is younger.  

Japanese investors oregon task superior funds who themselves person Japanese investors, known arsenic constricted partners, participated successful European financing rounds worthy much than 33 cardinal euros ($38 billion) since 2019 erstwhile a commercialized woody betwixt the European Union and Japan came into force, according to probe from task superior fund NordicNinja and information platform Dealroom.   

For the 5 years starring up to the EU-Japan Economic Partnership Agreement, concern totaled 5.3 cardinal euros.

In Europe astatine that time, "there was nary Japanese superior different than Softbank," Tomosaku Sohara, co-founder and managing Partner of Japan-Europe VC NordicNinja, told CNBC. NordicNinja, which has 250 cardinal euros of assets nether management, is simply a associated task betwixt Japan's JBIC IG Partners and backstage equity steadfast BaltCap.

"Softbank was beauteous progressive already astatine that moment, due to the fact that they had acquired Finnish gaming institution Supercell," Sohara said, noting that the acquisition injected beingness into Finland's startup ecosystem. 

Now, Mitsubishi, Sanden, Yamato Holdings, and Marunouchi Innovation Partners are among those straight backing European tech, per the report, portion Japan-linked task superior firms specified arsenic NordicNinja, Byfounders, and Toyota's Woven Capital chopped checks to startups connected the continent. 

There are implicit 2 times much VC-backed startups successful Europe than successful Japan, per capita, and 4.3 times much unicorns, per the report. 

Japan's appetite for investing was ever there, Sohara said. Its multinationals — similar galore — headed stateside to acceptable up firm task superior arms successful aboriginal 2000, successful hunt of a portion of the enactment astatine the clip erstwhile immoderate of today's largest companies were conscionable being thought up successful dorm rooms.  

"Nobody wanted to look astatine Europe astatine that moment, but I deliberation that aft a mates of years they realized, 'Hey, possibly the U.S. civilization is wholly antithetic from the Japanese culture,' and they began thinking, 'Hey, possibly we request to look astatine different portion similar Europe,'" Sohara said, adding that the illustration of entrepreneurs successful Europe, galore of whom came from ample corporates astatine the time, was much aligned with Japan. That's successful opposition to the young founders coming from Stanford oregon assemblage probe and improvement departments, helium said.

"They person acquisition astatine the corporates and besides they person a mindset of entrepreneurship. Japan, unfortunately, is lacking the entrepreneurship mindset," Sohara added, referring to Europe's founders, galore of whom came from Nokia and Skype.

Japanese-linked investors person a penchant for 1 assemblage successful particular: heavy tech, which refers to companies gathering connected apical of technological oregon engineering innovation. Deep tech and artificial quality accounted for 70% of deals made by specified investors successful Europe successful 2024, echoing trends successful the broader startup ecosystem arsenic the AI, energy, and defence industries boom.  

The top-funded companies with Japanese information see the U.K.'s autonomous conveyance startup Wayve, which raised $1.05 cardinal successful an concern round successful May 2024, British quantum computing steadfast Quantinuum, which secured 273 cardinal euros successful January 2024, and Spanish quantum steadfast Multiverse Computing, which saw investors chopped it a cheque of 189 cardinal euros successful June 2025. The rounds were backed by Softbank, Mitsui and Toshiba, respectively.  

Such companies, however, typically request a batch of maturation superior and concern acquisition to standard successfully — 2 elements that Europe famously lacks.  

"Japanese firms — and they're old, astir of them that we're talking about, close — they're conscionable sitting connected a heap of money. They've been redeeming wealth passim the past century, and present they're starting to walk it, to effort to turn arsenic a ample firm and summation their footprint extracurricular of Japan," said Sarah Fleischer, co-founder and CEO of Germany-based artillery materials recycling startup Tozero. 

"You spot that concern appetite is mode stronger than [in] immoderate strategics I've seen present successful Germany oregon successful Europe," she added. Tozero has raised 14.5 cardinal euros to day and counts NordicNinja, Honda and JJC among its investors.

It's not conscionable astir the check. Japanese corporates and industrials person robust manufacturing and automotive know-how, Fleischer and Sohara noted respectively, meaning they are good positioned to plug Europe's cognition gaps erstwhile it comes to scaling ample manufacturing projects.

Fleischer added that Japanese firms person long shored up their captious minerals proviso concatenation and long-established trading firms, meaning they cognize however to unafraid indispensable components needed for the vigor transition. For Tozero, this is an added plus, Fleischer said, given it's successful the concern of recovering specified materials from spent batteries. 

In the property of governmental uncertainty amid choppy U.S.-China relations, Japan besides acts arsenic a bully span to the Asian markets, Fleischer said.

Back successful Japan, the fig of entrepreneurs is "still precise limited," Sohara said, arsenic the older procreation and "great talents" wanted to enactment for "a Toyota and Honda oregon Sony," helium added, but the younger generation's mindset is opening to change.  

Europe has besides go the location to ambitious would-be founders searching for a tech ecosystem to physique their companies in, Sohara said.

However, arsenic collaboration betwixt Europe and Japan scales, connection remains a obstruction arsenic fluency successful English is not wide successful Japan, helium added.  

For Fleischer, this besides poses challenges. "There's truthful overmuch miscommunication and section translation that could ruin a concern instantly. And there's besides immoderate benignant of taste facet arsenic well, 1 needs to astir apt beryllium alert of," she said, adding that she precocious spent weeks successful Japan getting to cognize her investors face-to-face, "because that's inactive the sentiment" there.  

Decision-making tin truthful beryllium slower, the laminitis said, owed to thorough probe and preparation. "They conscionable bash their homework," Fleischer said, noting that Japanese partners were hands-on successful helping the institution recognize "how to physique our adjacent aboriginal commercialized plant, perchance starting from Japan and past going worldwide."

Indeed, "without the enactment from NN [NordicNinja] it would person been overmuch much hard to physique the close relationships," said Aaike van Vugt, co-founder and CEO of Dutch nanotechnology engineering steadfast VSParticle.

That's successful opposition to possibly the astir well-known Japanese player: Softbank. Softbank is "totally different" from accepted Japanese capitalist cultures, fixed it is driven by laminitis Masayoshi Son's decisions alternatively than operating connected a statement basis, similar astir Japanese business, Sohara added.  

The task firm, known for its lofty bets connected WeWork and, much recently, spot institution Arm, poured immense sums of currency into tech startups amid the 2021 task superior tech boom, which saw astatine slightest 1 Japanese-linked capitalist progressive successful deals worthy 11.2 cardinal euros, per the report. Softbank stood out during this period; it was progressive successful 22% of deals with Japanese-linked information successful 2021.

Looking forward, Sohara and Fleischer expect greater collaboration betwixt Europe and Japan. However, Japanese investors are expected to enactment successful rounds worthy 3 cardinal euros successful 2025, per the Dealroom and NordicNinja report, representing a dip from past year.  

As galore eyes crook to the Middle East for investment, Fleischer said that involvement successful Japan appears to beryllium ticking up. Anecdotally, "people scope retired to maine for intros, which is fun, to conscionable Japanese firm LPs," she said, noting that this is simply a caller improvement for her but that it whitethorn simply beryllium due to the fact that she has specified investors now. 

"I deliberation it's besides politically driven arsenic good successful Japan, by the government, to presumption themselves much geopolitically smartly and marque definite that the corporates oregon the industries turn successful definite ecosystems, strengthening their positioning arsenic a country," she said.