The opportunity to establish a venture in Japan, a country known for its innovation, technology, and cultural diversity, is now more accessible to foreign entrepreneurs. Although starting a business in Japan as a foreigner can be complex, the introduction of the Startup Visa system helps simplify the process. This system serves as a dedicated pathway for foreign entrepreneurs with innovative ideas and a plan to implement them within Japan’s thriving economy.

This article explores the advantages of the Startup Visa, explains the application process, and provides insights on the journey to success after obtaining it. While initiating a business in Japan may be a consideration for many, taking the first step can be daunting. One of the challenges is acquiring the necessary residence status to start a business in Japan. Typically, a foreigner aiming to launch a business in Japan must secure a “business manager” residence status, which has stringent conditions such as obtaining a physical office and investing a minimum of 5 million yen or employing at least two full-time staff members. These requirements can pose significant obstacles for aspiring entrepreneurs.

However, Japan has introduced the Startup Visa system in recent years to ease the entry of foreign entrepreneurs into the market. So, what exactly is the Startup Visa, and what benefits does it offer? How can you get your hands on one? Let’s explore these questions and more in the following sections.

Introducing the Startup Visa: A breakthrough for foreign entrepreneurs in Japan

Normally, to kickstart a business in Japan, you’d need a “business manager” visa, which requires fulfilling criteria such as securing a local office and investing over 5 million yen or employing at least two full-time staff members. Recognizing the challenges these requirements pose to foreign entrepreneurs, the Japanese government introduced the Startup Visa system in 2018.

The Startup Visa system in Japan comprises two categories: the “Program to Promote Startups by Foreign Nationals” and the “Projects for Encouraging Entrepreneurs to Start Business.” These categories share many similarities, with the primary distinctions being the length of time granted for startup preparation and the residency status category. The “Program to Promote Startups by Foreign Nationals” offers a temporary residence permit for up to six months to foreign entrepreneurs whose business plans have been approved by one of the ten designated municipalities. During this period, they can prepare to launch their business and work towards meeting the requirements for obtaining a Business Manager visa, which include securing an office and investing at least 5 million yen. This program falls under the Cabinet Office’s national strategic special zones initiative.

On the other hand, the “Projects for Encouraging Entrepreneurs to Start Business” offers foreign entrepreneurs a Designated Activities visa, allowing them to stay in Japan for up to one year. The program requires their business plan to be approved by one of the 17 designated municipalities. Similar to the first category, entrepreneurs can use this time to prepare for starting their business and meet the requirements for obtaining a Business Manager visa. This program was established based on a public notice issued by the Ministry of Economy, Trade and Industry (METI) in December 2018.

Eligible business fields for the Startup Visa typically encompass innovative, high-growth industries like IT, life sciences, energy, and tourism. To apply, you must submit documents such as a business plan and financial plan to the relevant municipality for evaluation. If approved, you can then apply for the visa at the Immigration Services Agency.

While the Startup Visa simplifies obtaining residence status to start a business in Japan, keep in mind that it’s temporary and requires meeting the “business manager” visa requirements within its duration. Moreover, it’s only recognized in specific municipalities, which may limit your business scope. To maximize your chances of success, ensure you understand which municipalities and industries your venture aligns with, and create a robust business plan and financial plan. Additionally, work diligently to fulfill the “business manager” visa requirements while preparing to launch your business in Japan.

Analyzing the Pros and Cons of the Startup Visa in Japan

The Startup Visa offers a more accessible pathway for obtaining residence status to initiate a business in Japan. Nevertheless, it comes with its own set of advantages and disadvantages. Let’s dive deeper into each aspect, along with additional information to help you make an informed decision.

Benefits:

1. Simplified residence status: The Startup Visa streamlines the process of acquiring residence status for starting a business in Japan. It allows you to develop a business plan, conduct market research, and establish connections on the ground before fulfilling the “business manager” visa requirements.
2. Business support and resources: Startup Visa holders can benefit from business support, consulting, and networking services provided by the municipality. For instance, under Shibuya City Office’s “Startup Welcome Service,” foreign entrepreneurs receive assistance in obtaining the essential residency status and guidance through the various administrative procedures required to establish a legal entity in Japan.
3. Access to regional incentives: Some municipalities provide additional incentives and support to Startup Visa holders, such as tax breaks, subsidies, or mentorship programs, further fostering a conducive environment for business growth.
4. Exposure to a thriving ecosystem: The Startup Visa grants access to Japan’s thriving business landscape, offering opportunities to collaborate with renowned Japanese companies and institutions, accelerating innovation and growth.

Drawbacks:

1. Limited duration: The Startup Visa is only valid for up to one year, within which you must meet the requirements for the “business manager” visa. This time constraint may put pressure on entrepreneurs to accomplish a lot within a short period.
2. Restricted to specific municipalities: The Startup Visa is only recognized in certain municipalities, which may limit the scope of your business. For instance, if you obtain a Startup Visa through Sendai City, you must establish an office and conduct business activities within Sendai City.
3. Local language barriers: While the Startup Visa offers an easier entry into the Japanese market, entrepreneurs may still face challenges in navigating the local business environment due to language barriers. This may necessitate investing time and resources into learning Japanese or hiring local staff proficient in English.
4. Competition for resources: As more foreign entrepreneurs capitalize on the Startup Visa program, competition for resources such as funding, mentorship, and networking opportunities may increase, potentially making it harder for newcomers to access essential support.

A Step-by-Step Guide to Applying for the Startup Visa in Japan

To secure the Startup Visa, follow these essential steps to navigate the application process smoothly:

1. Select a suitable municipality: As the Startup Visa is recognized only in specific government-approved municipalities, begin by choosing one that aligns with your business. Each municipality targets different business fields and industries for the Startup Visa, such as Sendai City, which focuses on sectors like knowledge-creating industries, health, medical, welfare, education, environment, energy, disaster prevention, trade, and tourism. Consult each municipality’s website for their target businesses and industries.
2. Submit required documents: After selecting a municipality, submit documents like your business plan and financial plan. Formats and submission destinations can be found on each municipality’s website. Application documents should include:
   • Business overview: name, content, purpose, location
   • Business plan: market analysis, competitive analysis, sales strategy, revenue forecast
   • Financial plan: funding method, fund usage, income and expenditure forecast
   • Background and ability: education, work history, specialized knowledge, skills
3. Undergo a municipality evaluation: Upon submitting the documents, expect an evaluation from the municipality. The content and duration of the examination may vary, but generally, it involves assessing your business’s innovativeness, growth potential, marketability, and financial situation. If you pass, you’ll receive a “Confirmation Certificate of Entrepreneurship Activity” or a “Confirmation Certificate of Startup Preparation Activity,” both essential for applying for the Startup Visa at the Immigration Services Agency.
4. Apply for and obtain the Startup Visa: After receiving the certificate, apply for the Startup Visa at the Immigration Services Agency. The required documents mirror those for the “business manager” visa and include:
   • Application form for Certificate of Eligibility (COE)
   • Identity documents (passport, photo)
   • Confirmation Certificate of Entrepreneurship Activity or Confirmation Certificate of Startup Preparation Activity
   • Copies of documents like your business plan and financial plan
   • Proof of living expenses (income certificate, bank statement)

The application to issuance period typically takes about one month. Once you obtain the Startup Visa, you can start preparing your business in Japan. However, with a six-month or one-year stay limit, you must meet the “business manager” visa requirements within this timeframe. If you fulfill the requirements, you can renew your visa to a “business manager” visa and continue your entrepreneurial journey in Japan.

Pursuing Success in Japan’s Startup Visa Journey

The Startup Visa presents both opportunities and challenges for foreign entrepreneurs eager to establish a business in Japan. This system offers an accessible path for those looking to prepare their business in Japan, along with support from the respective municipality. Japan’s national strategic special zones or the Ministry of Economy, Trade and Industry certify local governments implementing the Startup Visa, with each region targeting specific business fields and industries.

However, the Startup Visa is a temporary residence status, and entrepreneurs must meet the “business manager” visa requirements within its validity period. Additionally, the Startup Visa’s recognition is limited to certain municipalities, potentially restricting your business scope. Japan also faces challenges in building a startup ecosystem and providing information in foreign languages.

Therefore, for entrepreneurs considering the Startup Visa, it is essential to thoroughly research municipalities and industries that align with their business and to develop a comprehensive business and financial plan. Additionally, they should work towards meeting the “business manager” visa requirements while preparing to launch their businesses in Japan. Information on the required documents and procedures for applying for the Startup Visa can be found on each municipality’s website.

As a provider of translation services and a liaison for entrepreneurs interested in starting a business in Japan, I can offer invaluable assistance throughout the process. By bridging the language barrier and helping you navigate the complexities of Japanese bureaucracy, I can save you time and resources, ensuring a smoother transition into the Japanese market. My expertise will help you better understand the local business landscape, cultural nuances, and specific requirements of the Startup Visa, increasing the chances of success for your venture.

In conclusion, the Startup Visa symbolizes both opportunity and challenge for foreign entrepreneurs in Japan. By effectively leveraging this system and utilizing my services, you can bring your dreams and visions to life in the land of the rising sun.

Further Reading:

What is the Startup Visa in Japan? by JETRO

How to Obtain a Startup Visa for Japan – 2023 by EJable.com

How to Set Up Your Business in Japan by Kobe Trade Information Office

How to Get a Startup Visa To Build a Company in Japan: A Complete Guide by Sasha Kaverina