Ultimate Guide to Start Up in Japan
By Hei Kin Wong | June 8th 2021
As the third-largest economy in the world and a center of innovation, there’s no shortage of start ups in Japan. If you are one of many in Japan who tries to start their own innovative business or attempts to join a start up in Japan that shows potential, then you have come to the right place! This guide is for both future employers and employees of start ups in Japan. We will tell you everything about the skills required to launch or join a start up in Japan, the benefits and risks involved, where to find start up jobs in Japan, and many more. We also have a list of start up companies in Japan that we think are worth checking out.
This article is part of our series of extensive articles on living and working in Tokyo.
Will a start up in Japan employ foreigners?
The short answer would be yes, many start ups in Japan do employ foreigners. The long answer, however, is a bit more complicated. Start ups in Japan have incentives to hire foreigners who understand Japanese since that could provide valuable input to their company. Furthermore, Japan has a shortage of software engineers. The supply-demand gap in Japan is expected to grow to over 400000 by the end of 2030.
Needless to say, this has a huge impact on many start up businesses, where most rely on engineers to deliver their products and services. Therefore, more than one start up in Japan has started to employ more and more foreigners to fill the gap. The main benefits of being an engineer in Japan would be the opportunities that are open to you would be greater than others even if you don’t understand Japanese.
What do I need to successfully work in a start up in Japan or launch my own start up?
With the start up environment in Japan becoming more and more competitive, it has become more difficult to both find a job in a start up and launch your own start up in Japan. It is best to prepare yourself as best as you can before diving into start ups in Japan. Let’s review some criteria that can lead you to be successful in this business.
Advanced knowledge in the IT field
While this one is not an absolute requirement. It is one of the main skills you would need if you wish to join a tech-related start up in Japan. As we have mentioned, Japan is in need of engineers. Knowing and having the necessary knowledge and certification brings you a range of opportunities to work at different industries’ start ups. This even applies to more traditional industries like law. Take Bengo4.com,Inc. as an example, they are a company that provides online consultation and taxation portal to its customers. One of the reasons for their success is their adaptation to new technologies like cloud service to provide new value to its customers. This is but one of many examples that shows the demand for engineers in Japanese start ups.
If you are interested in learning or improving your IT skills, then check out our Ultimate Guide to Coding Bootcamps & Landing an IT Job in Tokyo.
Problem-solving and interpersonal skills
Yes we know that these skills are important no matter where you go but hear us out, they are extra important when it comes to start ups in Japan. Aside from the hugely successful start ups, most are companies with a small team. In that sense, every team member’s skills become more important. A start up is bound to have various problems and issues that require the attention of every team member. This is where great problem-solving skills can and will come into play. Problem-solving is even more important if you wish to launch a start up in Japan. Such a competitive environment requires you to make sound decisions and solve issues that would propel your company to the next stage.
Since start ups in Japan usually work in small teams, communication becomes a crucial factor to a start ups’ success. Everyone’s task is vital to the company’s success. Therefore as a manager/founder of a start up, you should be able to communicate responsibilities to your team in clear and effective terms. You should also be able to motivate your workers and communicate a sense of unity in the company; As an employee, it is important to talk to managers and fellow workers in an effective manner.
If you wish to work in the service sector then interpersonal skills would be even more important. This brings me to the issue of language. While you might be able to communicate with fellow workers in English, the truth is that for native speakers, it is still more comfortable to talk in their language. Learning Japanese would be a great first step for you to improve your interpersonal skills.
Speaking of learning Japanese, did you know that Japan Switch offers great and affordable offline and online Japanese lessons for beginner to intermediate level learners? Classes can be either online or in-person in the Shinjuku office and it would be a great opportunity to improve your social skills in Japan.
Knowing the work culture in Japanese start up
While a start up in Japan can be a bit different and more open in terms of work culture, it is still a major part of many start ups in Japan. If you are a foreigner and wish to join or launch your start up in Japan, then learning the work culture is crucial if you wish to be successful in the Japanese start up environment. Let’s talk about two cultures that most start ups in Japan will have.
Nomikai 飲み会
If you have any full-time work experience in Japan then this one is no stranger to you. Companies would set up Nomikai to welcome and send off staff, celebrating the start and end of the work year among other important events within the company. The purpose boils down to relationship building. Spending some time talking with your co-workers while drinking also becomes a core part of the Japanese work experience. It is no different in the case of start ups in Japan. If anything this tradition is more important because of the small team that start ups usually have. If everyone can know each other well in the company it would be a drastic improvement in efficiency and work environment.
Since it happens outside work hours foreigners might feel like this is not a necessary event to participate in. However, if you wish to be successful in the start up environment, then it is absolutely critical for you as an employer/employee to set up and/or take part in this event. Not only because of communication between coworkers, but it is also a valuable opportunity for you to learn more about Japanese culture.
Team-based Culture in Japanese start ups
Since we have mentioned Nomikai as an example of Japanese work culture, it is equally important for you to know about the importance of “team” in Japanese businesses. This is especially the case for more than one start up in Japan, where the company often consists of only a small team of workers. There is no “I” in many Japanese companies. Crucial decisions in start ups are often made as a team. Therefore, achievements are also shared as a team rather than awarded to a single individual. It is also important to see your coworkers not as rivals but as friends.
The Importance of Team for start ups in Japan
I am sure I have mentioned this many times before this section but we still think it is vital enough for its own section. Teamwork is everything for any start up in Japan. We cannot stress this enough. Most if not all of the time you will be working in a small group. Everyone’s contribution is extremely important. In our opinion, one of the most crucial elements for a successful start up in Japan is having a diverse team. Cities like Tokyo and Osaka are filled with foreigners from all over the world full of drive and initiative to work.
There are two advantages to hiring people from across different cultures. First is the diversity of workstyle, workers from different cultures allow managers to make the best out of each and fusing them into one. This not only provides a more comfortable work style that everyone can accept, but it also improves the work efficiency for most employees. The second benefit is the perspective that everyone brings to the table.
A start up in Japan requires innovation and excellent decision-making to be successful, getting perspective from workers across different cultures allows the company to do just that. As an employee, having a diverse team allows you to learn the best from each other, including the practices that help you improve your working efficiency. It also allows you to get a better understanding of various practices which could prove vital to your career.
Motivation and Time Management
While it is true that time management is a critical skill in most if not all jobs, there is an extra emphasis on being on time when it comes to a start up in Japan. The competitive nature of start ups means that there could be many companies that are trying to come up with the same innovation or product. Since most start ups consist of a small team it makes everyone’s work ever more important.
If someone from the team is not managing his/her deadline very well then it could jeopardize the launch of a new product or service. This could lead to the competitors launching a similar product before you, which likely means the end of your company. A large company can take on the loss of launching a product late - a start up in Japan launching its product late could be a matter of life and death. Therefore, time is of the essence if you wish to do well in the start up environment in Japan.
Let’s spend some time talking about motivation. This advice caters to those who wish to start their own business in Japan. A successful start up in Japan is full of employees full of motivation and drive. It is essential for you as an employer to make the workers feel they are marching towards the same goal. Give them the necessary incentives (monetary or certain control over the business) and care to make them feel they are part of the team. If you are launching a tech-related business then this is even more important for you. As mentioned, good engineers are difficult to hire in Japan and they could very well go to another company if you do not show the same or even more committed to the business than them.
What are the benefits/risks of working under a start up in Japan?
While working under a start up in Japan might seem attractive with its own benefits, there are also risks that you have to incur if you wish to work at a start up company in Japan. Let’s take a look at some of the benefits and risk involved:
Irreplaceable experience
The start up experience is pretty special. You work in a small group to develop something that is both innovative and sometimes unique to the market. You can also provide your input into things you are developing work on a product that you are passionate about. Since innovation and creativity is crucial in a start up, most companies would create an environment to allow both elements to grow within the business.
This makes for an excellent work environment if you wish to work without too much supervision from your boss. Finally, if the company does well, you would also receive the benefits from that success. You can feel that you belong in the company and be proud of the product you create. Even if the start up you worked at fails, the experience of working in a start up in Japan would open new career opportunities for you.
Strong sense of teamwork
If you like to work in a small team and get to form lasting relationships with your coworkers, then start up is the perfect place for you. Most start ups have a casual atmosphere where you can have a friendly conversation with the top management in the pantry. Compared to the awkward situation where a top executive walks into a pantry in a traditional Japanese company, this is most definitely one thing you would enjoy working under a start up in Japan.
The learning process
There are a lot of responsibilities for you to take on in a start up in Japan. While many of them will be within your skills and experience, some of them will most likely be a new experience to you. Helping the company with tasks that you are not familiar with allows you to grow and diversify your skills in the process. The small team structure of a start up in Japan also means that you will often talk with the top management, which provides abundant opportunities for you to learn from the best entrepreneurs in Japan.
Work hours and work-life balance
Start ups focus on early growth and capture new trends, meaning that there is going to be a lot of work sent your way. Expect to work long hours if you wish to join a start up. This is especially the case in Japan as working overtime to meet deadlines is a common practice. The good thing is that a start up in Japan usually compensates for overtime very well, so there is something to look forward to (There are companies that don’t pay overtime, so make sure to do proper research on a company before joining!!). Many start ups also have flexible working hours, which is another benefit that a start up can provide.
What about job security?
While the job itself might be interesting and valuable, the hard truth is that 90% of the start ups would fail in the first few years of their operation. This basically means that if you are signing up for a job in a recent start up in Japan, you are throwing job security out the window. Many entrepreneurs have crazy ideas and good presentation skills to get the funding they need to launch a start up in Japan. However, very few actually made it through the five-year mark. If you decide to work at a start up, then this is a risk that you must keep in mind.
Let’s talk money: How much will I make?
Start ups usually start with very little capital, and there are many more important areas like operation and product development that entrepreneurs would spend their money on. Therefore, don’t set your expectations too high for start ups. In fact, you should expect lower salaries compared to traditional companies. Of course, the benefit of taking this cost would be a drastic increase in your salaries if the company is successful.
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What are the benefits/risks of launching a start up in Japan?
So far we’ve discussed the pros and cons for why a worker would like to join a start up. But what if you are an entrepreneur? What are the pros and cons of launching your baby in Japan?
Not bound to social contract as much as traditional Japanese companies
This is a benefit that is unique to Japanese start ups. There are many traditional practices and social contracts that a company has to follow. A start up in Japan often doesn't need to abide by those rules. More often or not, you will be interacting with fellow start ups that have innovated in another area and want cooperation. Or you might not have to interact with those giant conglomerates at all if you are working in a new field. You also get to set your own rules within the company that could create a more comfortable and friendly working environment that employees can enjoy.
Flexible company structure
Another benefit that start ups have is a flexible company structure. You can design the company’s structure to your heart's content. Having a flexible company structure means the connection between managers and employees can be much closer. Compared to traditional companies’ top-down structure, you can implement a more flat structure that gives more attention to each of your employees. Having a closer relationship with your employees can bring along numerous benefits. First, you get to form a closer bond with your employees, understand the problem that might be facing, and guide them to a solution.
The second is a general improvement in efficiency. Since there is no middle management, progress updates can get to you much faster and you could implement changes when needed. The third is giving more responsibilities to your employees. For a start up in Japan, increasing responsibilities for the employees can provide workers with a sense of belonging in the company, as they can visualize their impact on the company.
Larger talent pool
Japan is one of the largest centers for entrepreneurs to launch their own start ups. With that, it comes with a large workforce that could support start ups with talented labor. While it is true that Japan is lacking in engineers, a lot of young workers are not satisfied with working in a traditional company and wish to create something belonging to them. Launching your start up in Japan can potentially get you some of the most talented workers Asia has to offer, not to mention the continued increase of foreign engineers who are more than happy to join a start up in Japan. However, because of the engineer shortage workers will have the liberty to pick the best start up that they can find. So, if you want to get your start up running in Japan, you better have a pretty good game plan.
Something truly unique
Previously we discussed why working in a start up in Japan is a one and only opportunity for an employee. This goes for the employer as well! You get to put your ideas into reality and work day and night for something that is one of a kind. And when the work that you and your team do finally pay off, it would be the proudest moment of your life, not to mention the amount of financial reward you would get from a successful start up.
Furthermore, launching a start up is quite a challenge, made even more difficult if you are a foreigner. Language barriers and cultural issues will always be a hassle. You will also have to step outside your comfort zone and take on other responsibilities that in a traditional company, someone else would be responsible for. From HR to accounting to marketing, one way or the other there will be something that you are unfamiliar with and will have to learn. That comes with the benefit of gaining a bit of experience in all elements of a typical company, but it also means you will have to be the most hard-working person on the team.
Flexible working hours
While you might have to work harder than everyone on your team to achieve greatness, it also means that you are the one who sets the deadlines and chooses when to work! This is a great benefit if you have kids or elderlies to take care of. It is also beneficial if you plan on living in Japan and want to pursue a higher level of Japanese proficiency.
Since the pandemic, more than one start up in Japan has switched to remote work.
Combine this with the flexible working hours, it means you could work and take online Japanese lessons all at the comfort of home!
Most start ups usually fails
Like we have said in the employee’s risk section, 90% of the start up fails in the first few years of business. You might have big dreams of how your product will change the world, but the truth is that everyone who goes into the start up business thinks the same. Ideas that sound good on paper does not mean it will be successful. Even if you pour your heart and soul into your project it could still be a failure. The start up environment in Japan is extremely competitive, expect at least 2 start ups in Japan to have a similar product as yours. Make sure to consider every factor in your life before throwing yourself into a start up.
High initial investment
While the initial cost of all start ups is high, the cost is even greater if you are a foreigner and wish to launch your start up in Japan. The immigration department in Japan requires a minimum of 5 million Yen (around 45,000 USD) of upfront investment in the company if you wish to enter Japan with a business manager visa. You would also need to hire shiho-shoshi and gyosei-shoshi to help you with the necessary paperwork for the start up and immigration.
Combined with the office space and other miscellaneous costs, you are looking at a minimum of 7 million Yen (around 64,000 USD) if you wish to open a start up as a foreigner. Of course, if you are already in Japan with a visa then the fee would be considerably less (around 1.5 million Yen or 14,000 USD). That being said, it is still a huge amount of money and you should have a plan on how you would support the company through the initial stages of product development.
If you have trouble finding a good working space for your business, then check out our guide on Top 10 Co-Working Spaces in Tokyo for more information.
Where to find start up jobs in Japan?
So far we have talked about what traits you should take with you if you wish to join the start up battlefield in Japan and the benefit as well as the risk that comes with it. Let’s look at where you could find start up jobs in Japan next.
Tech companies
By far the most popular field in the start up business are technology-related businesses. From Mercari to PKSHA Technology, these are all tech-centric start ups that do very well and are always looking for more workers. If you are an experienced engineer, you will find ample opportunities in many start ups within Japan. For those who wish to start a tech business in Japan, we think this would be a good reminder that you would be competing with some of the best start ups in Japan for talent. If you wish to know more about IT jobs in Japan, then check out our Guide to IT Jobs in Japan.
Service companies
While most start ups are looking for software engineers to help them innovate, service-centric start ups would still need talents from other professions to help them run their business. From accountants to marketers, positions like these are always demanded among Japanese start ups. However, since start up requires high efficiency and high growth they would expect a decent background experience in the respective hiring position. Therefore, even if you are not an engineer you could still find jobs in Japanese start ups.
Medical companies
This might be a weird one to mention but there are a surprising amount of medical-related start ups in Japan. In fact, some of them have even reached unicorn status (a private company with a valuation of over $1 billion USD). So if you have a medical-related degree and wish to join a start up in Japan, the job-hunting process might be easier than you might think.
Sites that can help you find the right start up in Japan
There are many ways and sites that are useful to find start up jobs in Japan. Here are some of the once that we recommend:
- Linkedin start up Jobs - one of the most useful sites you can use to find start up jobs in Japan. Even more convenient for you if you already have a LinkedIn account. Though occasionally large companies would still list their job positions with the start up jobs tag. So make sure to check the company’s background before applying.
- Glassdoor start up Jobs - another useful site with start up tags. However, Glassdoor has much fewer start up job listings compared to Linkedin and it is possible you will have to do remote work. (speaking of remote work, check out our introduction on online jobs in Japan if you are interested)
- Startup.Jobs - A site that is specialized in the listing of start up jobs. There are quite a few start ups in Japan that have listed their job positions on the site already. It also has a much wider range of listings compared to Linkedin. Therefore even if you are not an engineer it is still worth checking out. Notable companies that have listings on the site include Airbnb and Spotify.
- J-StartUp - While not a job-hunting site, this organization is one that is determined to promote the best start ups in Japan. This means that they have a listing of some of the best start ups in Japan. Go to their “start ups'' section and you will find hundreds of start ups across different industries. Take a look and see if a company interests you.
- Startus.cc - A similar site to start up.jobs. However, it mostly caters to Japanese employees instead. The English job listings within Tokyo are limited. Still, a great site to check out if you have the Japanese skills to work in a Japanese-centric start up.
- Justa - An employment-centered site that specializes in promoting start ups' job listing in Japan. The downside is that it is a member-based site and the start ups that are listed there are limited compared to Linkedin. They also have a system for start ups to sign on to their site and find workers. So go check it out if you wish to launch a start up in Japan.
Project-based/Freelance
Working as a freelancer among start up companies has its pros and cons. For one the money you get would certainly be higher compared to full-time workers. Since start ups usually would hire freelancers when they are in a pinch and just want to get their project done as soon as possible, they would provide you with a higher wage than normal. On the other hand, you would have even less job stability compared to full-time workers in a start up in Japan. You would also be responsible for finding your own clients. This is best done by checking individual companies' websites that you are entered in and registering on websites that help to connect freelancers with start up companies. For further information on freelancing in Japan, check out our guide that will tell you all about freelancing in Japan!
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What are the most successful start ups in Japan thus far?
So maybe you are a worker that is interested in working in the most successful start ups in Japan? Or you are an entrepreneur and want to know more about the best that Japanese start ups have to offer and learn something from their business model. Don’t worry, we have compiled a shortlist of the most successful start ups in Japan for you!
Mercari, Inc.
If you have lived in Japan for long enough, this is a name you most definitely have heard of. This Unicorn company provides a C2C (Customer to Customer) marketplace for consumers to sell their used products. Even before its IPO in 2018 Mercari was already a unicorn start up. Right now the company is valued at over 7 billion USD and has become one of if not the fastest-growing company in Japan. It is one of the first companies that harnessed the potential of smartphones and implemented it on the online resale marketplace concept. Created by the Japanese entrepreneur Shintaro Yamada in 2013, it stands as a reminder of what is possible for a start up in Japan.
Freee
Freee is a Fintech company that specializes in providing accounting and management software to other businesses. By utilizing SaaS(software as a service) cloud technology it is able to deliver its accounting and reporting service to many companies and freelancers across Japan. Created by the entrepreneur Sasaki Daisuke in 2012, it has quickly risen to the top of Japan start ups and become the 2nd most valuable start up behind Mercari.
Money Forward
Another Fintech start up that is hugely successful. Money Forward is a budget managing app that helps its users track all their savings and expenses. Some functionalities include reminding its user when they have gone over budget, calculating budget based on your income and savings, and scanning receipts to add expenses to your daily budget. Needless to say, this is an extremely useful app that managed to grab over 6 million users since its founding in 2012. It is the 3rd most valuable company behind Free, valuing at around 2.5 billion USD. An article in 2017 also mentioned its founder, Yosuke Tsuji’s intention to bring Money Forward to the global stage like Mercari.
JMDC Inc.
While JMDC is another tech-related company, the field it operates in is much different compared to the three listed above. JMDC is a medical company that engages in three areas of business: health big data, telemedicine, and dispensing pharmacy support. The overall objective of the company is to harness the latest technology to improve the lives of people across Japan. They have also invested in advancing presymptomatic and therapeutic medicines. Founded by Matsushima Yosuke in 2002, this tech-medical hybrid company took a while to get to today’s position, with it ranking 4th on the Mothers section of the Tokyo Stock Exchange.
Bengo4.com
Remember we talked about a law start up as an example of why advanced IT knowledge is often required to join a start up? This is Bengo4.com, a company that provides low-level legal consultation as well as tax-related assistance. It is one of the largest consultation websites with around one-third of the lawyers being registered on the site in Japan. Bengo4.com revolutionized the law industry by drastically increasing people's ability to access legal advice.
The case of Bengo4.com is so unique because the law industry has traditionally been one that simply cannot adopt new technology in their business model. The success of this company is proof that even traditional industries can innovate and find success in Japan.
What recent start ups in Japan are doing well?
The companies listed above are the most successful companies listed on the Tokyo Stock Exchange. They have operated for a while and have a good foundation. Let’s look at some more recent start ups (2015 and onwards) that managed to do well.
Folio
Folio is an online brokerage service that helps its users with thematic investment. Using AI-advisor and big data, the user will receive investment suggestions based on their interest and the level of commitment they want to engage in. Since its establishment in 2015, it has become one of the top 100 fintech innovators in Japan and has raised over 80 million USD.
Synspective
So far we have talked about a range of start ups across different industries. But it is quite a special company even among start ups. Synspective is a space tech company that provides Solutions services with the satellite data they have gathered. Their clients include the Japanese government and individual businesses where they want to get insights on the consumer as well as industry behavior. Founded in 2018, they have so far raised around 100 million USD and been funded by major corporations like Mitsubishi.
Ubie
Following the success of JMDC, Ubie is another medical start up that specializes in AI-based assistance, diagnosis, and decision-making for the elderly. Supervised by verified physicians, this application service will diagnose a patient's condition and provide feedback based on the input. Recently it has also added a COVID-19 basic diagnosis functionality to help combat the virus in Japan. Created in 2017, it has raised around 22 million USD and received funding from a major pharmaceutical company in Japan.
PLANTIO
Founded in 2015, this is another company that operates in a rather unusual industry for start ups. PLANTIO is a farming company that uses AI and IOT to provide fresh and sustainable vegetables to its customers. I have developed a new farming system that would allow individuals to be more proactive during farming procedures. Their system would provide farmers with a range of information about their crops and the surrounding environment. If the AI deems the condition too unsuitable for the crops it will notify the farmers, So far PLANTIO has raised 350 million USD since its establishment and has continued to grow since.
Kyash
Kyash is another Fintech start up in Japan that provides mobile banking services. Different from its competitors, the app also contains online payment and personal remittance functionalities that many other apps do not. It can also provide its customers with a prepaid card that can be used at Visa accepted retailers. To add an extra security feature it also has no card number on the front side of the credit card and the number can only be accessed through the app. Since its founding in 2015, it has raised around 70 million USD from major banks across Japan.
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Final Remarks
Joining the start up battlefield in Japan can be quite a challenge and comes with a substantial amount of risk. However, the potential benefits that come with a successful start up are also enormous. The bottom line is that whether you are launching or joining a start up in Japan, it is best to be as prepared as possible before you think about entering the field. This is especially the case when you are a foreigner. If you are determined to make your mark in the Japanese start up scene, then the first step you should take is to start by learning some Japanese.
Here at bff Tokyo, we have several articles on Japanese learning to help you get started, check them out when you have time. If you want to take a step further on your Japanese learning, then check out some lessons on Japan Switch!
Finally, if you happen to be job hunting when reading this article, then why not check out our guide on the highest paying jobs in Japan well as an introduction to job fairs in Tokyo.
