Southeast Asia’s science- and research-driven startups are increasingly turning to Japan for more capital and market access, as weak regional funding and smaller domestic markets push them to expand overseas.
The trend was on display at the SusHi Tech startup conference, organized by the Tokyo Metropolitan Government, which began on April 27. Nearly 70 startups and organizations from Singapore, Malaysia, Thailand, Vietnam, Indonesia, and elsewhere are among 770 exhibitors at the three-day event, one of Japan’s largest startup gatherings.
Startups and investors highlighted growing engagement with Japan. This was particularly evident among deep tech startups, often spun out of academic research in fields such as semiconductors, robotics, and pharmaceuticals, and requiring longer development timelines and heavier funding than more retail-oriented ventures.
Singapore-based Accelerated Materials, a startup originating from research at the University of Cambridge, is among those targeting Japan. Funded by investors including government-backed SGInnovate and Cambridge Enterprise, the startup uses artificial intelligence and automated lab systems to speed up the discovery of new nanoparticle formulations for sectors such as semiconductors and pharmaceuticals.
Participating as part of the city-state’s pavilion, Kelvin Yeo, its director of business development, said demand is rising from industries tied to rare earths and advanced manufacturing in Japan.
“These industries are becoming especially crucial amid geopolitics and supply chain security,” Yeo told Nikkei Asia, adding that Japan represents a key market given its concentration of manufacturers. “Japan has undergone a significant change and is becoming more receptive to new technologies.”
The Japanese government is positioning deep tech and critical science as key drivers of growth. In a keynote address on April 27, Prime Minister Sanae Takaichi said Tokyo will create a framework for ministries to pilot startup technologies in their operations, strengthening public procurement to support advanced fields. The initiative will target 17 areas, including AI, semiconductors, and quantum technology.
Japan’s appeal for Southeast Asian companies also reflects a broader shift in capital flows. Deep tech startups typically require patient capital, which has become scarce in the region, where investors had often traditionally favored faster-scaling sectors such as e-commerce and consumer services.
Raheel Zubairi, CEO of Malaysia’s Pixelence, a medical imaging startup that uses AI to enhance brain scans and generate contrast-like images without using injected dyes, said regional investors tend to prioritize quicker returns. “The problem with those markets is the ticket size is very small,” he said.
“They prefer something you can launch in six months and see traction,” he added. “For us, you have to wait more than two years. They don’t have the patience for this kind of investment.”
Despite some signs of recovery, Southeast Asia’s startup funding remains subdued. Total equity deal volume stood at 461 deals in 2025, according to DealStreetAsia data, down 27% from a year earlier and among the lowest in over six years. Deal value rose 18% to USD 5.38 billion, though this was driven primarily by a small number of big deals.
Venture capital firms are also adjusting. A Singapore-based investor said it is increasingly looking to Japan for its new fundraising, citing the country’s large pools of capital and reduced flows from the Middle East amid the Iran war. “We’re definitely not out of the woods yet,” he said on the fundraising environment in Southeast Asia.
Governments and regional organizations are also stepping in to support startups. Singapore’s Enterprise Singapore, Malaysia Digital Economy Corporation (MDEC), and the Economic Research Institute for ASEAN and East Asia (ERIA) set up large booths at SusHi Tech to connect startups with Japanese partners.
Takahiro Miki, project director at the Ho Chi Minh City office of the Japan External Trade Organization (JETRO), said Japan is becoming an important source of later-stage funding. “In Vietnam, there are enough investors for seed and early-stage investments, but not enough venture capital for later stages,” Miki said. “Japanese investors are seen as key source.”
Moreover, limited exit options for startups and investors have been another constraint in Southeast Asia. Even in Singapore, companies such as ride-hailing giant Grab and e-commerce and gaming group Sea have opted to list in the US rather than domestically, reflecting the relatively limited depth and liquidity of local capital markets.
Last November, Singapore’s financial regulator unveiled a plan for the Singapore Exchange and the US-based Nasdaq to introduce a dual-listing program allowing startups to go public on both bourses simultaneously.
Japan is positioning itself as an alternative listing destination. In recent years, the Japan Exchange Group has been actively courting Southeast Asian startups as Japan’s stock market gains momentum, with the Nikkei benchmark hitting fresh highs on Monday.
Vietnam’s Alterno, a climate tech startup developing sand-based thermal batteries to store renewable energy as heat, is among those considering Tokyo. Backed by investors including the Asian Development Bank’s venture arm, ADB Ventures, the company said it is aiming for a public listing in Japan within five years.
“For deep tech startups like us, it’s all about Japan,” CEO Hai Ho said. “It’s a market that understands technology and is willing to invest in new innovations.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.