Digital transformation (DX) and green transformation (GX) are global megatrends over the next 10 to 20 years undeniably. In light of this, innovation is key to ensuring sustainable economic growth in Japan.

As a securities company with a mission to enrich society through our expertise in the capital markets, I believe the strengthening of the startup ecosystem is crucial to revitalize the Japanese economy. Addressing this issue jointly between the public and private sectors should be a priority.

The Kishida administration has announced to compile a five-year plan to foster entrepreneurs, calling 2022 as "the first year for founding startup." The administration has said it aims to achieve a period of startup creation akin to the post-war period in Japan when many companies were established. Moreover, Keidanren announced its "Vision for Startup Breakthrough" in March 2022, indicating that strengthening the startup ecosystem is critical to boost the Japanese economy and regain international competitiveness. Expectations are high for these public-private initiatives to further progress in the future.

Last year, the IPO valuation process garnered public attention, but not because there was a problem in the pricing method. Despite their small size, startups have had to rely on IPOs to raise capital as Japan has not been successful in attracting domestic and foreign investors who manage a large amount of funds and are willing to invest in startups. This issue aptly highlighted the fact that startups have limited options to raise capital in Japan. To promote investment in startups, it is important to attract overseas investors who have the knowledge and ability to fairly evaluate private companies while broadening their investor base in the Japanese financial market. It is necessary to generate a cycle of economic growth through innovation by revitalizing the financial markets that act as a lubricant for the economy and encouraging active investment in startups.

As we usher in this new era of startup creation, public and private sector collaboration is essential to strengthen the startup ecosystem.