Innovation in Tokyo: where are all the unicorns?

In 2020 Japan spent 3.6% of its GDP ($148bn) on R&D. In the decade 2000-2010 it registered more patents on renewable energy technology than any other country. The QR code, used widely in the region for online payments and vaccination checks was invented by Denso, a Japanese auto parts manufacturer. Instant noodles, blue LED lights, mechanical pencils and car airbags are only a few examples of the inventiveness and quality of Japan’s human talent. Yet Japan stays far behind other developed countries – most noticeably its regional neighbours – in spawning or hosting unicorns (startup companies with a valuation of USD1bn or more), which to many are a benchmark of innovation in the digital era.

Seoul, Bangalore, Singapore and Beijing have not only seen their numbers of billion-dollar-plus startups soar but they’ve seen whole districts evolve into young innovation hubs, which in turn invite more ambitious technologists, and this in turn seeds more creativity and therefore further growth. For a country with such a long tradition and proven achievements in technological progress and human talent, what is Japan missing? More importantly, what can businesses do to turn Tokyo into a vibrant hub of innovation and reap the profits?