Japanese investors turn to Europe in lieu of own ecosystem
Large amounts of cash are flowing from Japan to European tech startups as risk-averse investors opt for a more mature entrepreneurial ecosystem, helping scale the continent’s burgeoning deep tech cluster.
While the start-up and venture capital ecosystem in Europe has long operated in the shadow of Silicon Valley, its domestic market has become fertile ground for younger Japanese companies.
Venture capital funds with Japanese investors, known as Japanese investors or limited partners, have participated in European financing rounds worth more than 33 billion euros ($38 billion) since 2019, when a trade agreement between the European Union and Japan came into force, according to research by venture capital fund NordicNinja and data platform Dealroom.
During the five years leading up to the EU-Japan Economic Partnership Agreement, investment totaled 5.3 billion euros.
Tomosaku Sohara, co-founder and managing partner of Japan-Europe VC NordicNinja, told CNBC that “there was no Japanese capital other than Softbank” in Europe at the time. NordicNinja, which has €250 million in assets under management, is a joint venture between Japan’s JBIC IG Partners and private equity firm BaltCap.
“Softbank was very active at that time, because they had purchased the Finnish gaming company Supercell,” said Sohara, adding that this acquisition gave life to Finland’s start-up ecosystem.
Now, Mitsubishi, sanden, Yamato HoldingsAccording to the report, Marunouchi Innovation Partners is among those directly supporting European technology, while NordicNinja, Byfounders and Japan-linked venture capital firms are also toyotaWoven Capital has cut checks to start-ups on the continent.
According to the report, Europe has twice as many venture capital-backed startups per capita as Japan, and 4.3 times more unicorns.
Shadow of Silicon Valley
Sohara said Japan’s investment appetite has always been there. Multinationals, like many others, turned to America in early 2000 to set up corporate venture capital arms to get a piece of the action, at a time when some of today’s biggest companies were just starting out in dorm rooms.
“At that moment, no one wanted to look at Europe, but I think after a few years they said, ‘Hey, maybe U.S. culture is completely different from Japanese culture,’ and they started to think, ‘Hey, maybe we need to look at another region like Europe,'” Sohara said. Sohara said, adding that the profile of entrepreneurs in Europe, most of whom come from large companies, is more compatible with Japan. That’s in contrast to young founders coming from Stanford or university research and development departments, he said.
“They have experience in companies and also have an entrepreneurial mindset. Japan unfortunately lacks an entrepreneurial mindset,” Sohara added, referring to European founders, many of whom come from Europe. Nokia’s and Skype.
Attraction for founders
Japanese-affiliated investors have a penchant for one sector in particular: deep technology, meaning companies built on scientific or engineering innovations. Deep tech and AI accounted for 70% of deals by such investors in Europe in 2024; It reflects trends in the broader startup ecosystem, along with the boom in artificial intelligence, energy and defense industries.
Among the most heavily funded companies with Japanese involvement is the UK’s autonomous vehicle startup Wayve. It raised $1.05 billion in a funding round in May 2024; British quantum computing firm Quantinuum secured 273 million euros in January 2024, and Spanish quantum firm Multiverse Computing, for which investors cut checks for 189 million euros in June 2025. The rounds were supported by Softbank, Mitsui and Toshiba respectively.
But such companies often need a lot of growth capital and industrial experience to scale successfully; these are two elements known to be lacking in Europe.
“Investment appetite is much stronger” [in] Any strategy I’ve seen in Germany or Europe.”
Sarah Fleischer
Co-founder and CEO of Tozero
“Japanese companies — and most of them we’re talking about are legacy, right — are just sitting on a pile of money. They’ve been saving money over the last century, and now they’re starting to spend money to grow as a major company and increase their footprint outside of Japan,” said Sarah Fleischer, co-founder and CEO of Germany-based battery materials recycling startup Tozero.
“You see that the investment appetite is much stronger than before” [in] “I haven’t seen any strategy in Germany or Europe,” he added. Tozero has raised €14.5 million to date and counts NordicNinja, Honda and JJC among its investors.
It’s not just about the check. Fleischer and Sohara, respectively, stated that Japanese companies and industrialists have strong manufacturing and automotive know-how; This means they are well positioned to close Europe’s knowledge gaps when it comes to scaling up large production projects.
Fleischer added that Japanese companies have long supported critical mineral supply chains and established trading firms, which means they know how to secure the key components needed for the energy transition. Fleischer said this is an added plus for Tozero, given that it is in the business of recovering such materials from used batteries.
Fleischer said Japan also serves as a good bridge to Asian markets in an era of political uncertainty when U.S.-China relations are unstable.
A slower pace and lower risk appetite
Sohara added that the number of entrepreneurs in Japan is “still very limited”, with the older generation and “great talents” wanting to work for “Toyota and Honda or Sony”, but the younger generation’s mindset is starting to change.
Sohara said Europe has also become the home of ambitious would-be founders looking for a technology ecosystem to launch their companies.
But he added that as cooperation between Europe and Japan scales, language remains a barrier because fluent English is not common in Japan.
For Fleischer, this also creates challenges. “There’s so much miscommunication and local translation that can instantly ruin a partnership. There’s also kind of a cultural aspect to probably be aware of,” he said, adding that he recently spent weeks in Japan meeting his investors in person, “because that’s still the idea there.”
The founder said decision-making may therefore be slower due to extensive research and preparation. “They’re just doing their homework,” Fleischer said, noting that the Japanese partners have been hands-on in helping the company figure out “how to build our next commercial facility, potentially starting in Japan and going all over the world.”
Indeed, “without the support of NN [NordicNinja] It would be much harder to establish the right relationships,” said Aaike van Vugt, co-founder and CEO of Dutch nanotechnology engineering firm VSParticle.
This is in stark contrast to Softbank, perhaps the best-known Japanese player. Sohara added that Softbank is “completely different” from traditional Japanese investor cultures because it operates based on founder Masayoshi Son’s decisions, rather than operating on a consensus basis like most Japanese businesses.
The venture firm, known for its big bets on WeWork and, more recently, chip company Arm, has poured large amounts of cash into tech startups amid the 2021 venture capital tech boom, which saw at least one Japanese-linked investor involved in deals worth 11.2 billion euros, according to the report. Softbank came to the fore during this period; In 2021, Japan was involved in 22% of agreements with related participation.
Interest is growing
Going forward, Sohara and Fleischer expect greater cooperation between Europe and Japan. However, according to the Dealroom and NordicNinja report, Japanese investors are expected to participate in rounds worth 3 billion euros in 2025, which means a decrease compared to last year.
“I think in Japan it’s also politically driven by the government to position themselves more geopolitically wisely and strengthen their position as a country by enabling companies or industries to grow in certain ecosystems,” he said.
