The Last Word: METI & JETRO publish expanded startup investment agreement guidelines
Japan’s Ministry of Economy, Trade and Industry (METI), together with the Japan External Trade Organization (JETRO), has compiled an expanded version of the “Key Points to Consider in Contracts for Sound Venture Investments in Japan” based on discussions held at the “Study Group on Development of Startup Ecosystems.” These guidelines were originally formulated in 2018, and revised in 2022. Investors and those involved in startup investment, particularly startup companies, are encouraged to make use of these guidelines, taking into account not only the latest business practices but also the investment environment and the circumstances of individual companies.
The updated document has unveiled a sweeping and remarkably detailed blueprint aimed at fundamentally rewiring the nation’s venture capital landscape, a move designed to shift the focus from simply cultivating a large number of startups to forging globally competitive unicorns. METI/JETRO are calling for a radical modernization of investment contracts and corporate governance, seeking to align domestic practices with global standards to attract foreign capital and empower a new generation of ambitious entrepreneurs.
METI/JETRO argue that while Japan’s startup ecosystem has successfully expanded in “breadth”, it now faces the critical challenge of achieving “height”. For the past decade, the focus has been on increasing the number of startups and raising their public profile. The result is a vibrant but shallow ecosystem, often characterized by small-scale IPOs on Tokyo’s Growth Market and a governance culture that lags behind international norms.
This updated guidance, developed in consultation with a panel of leading lawyers, academics, and venture capitalists, represents a direct intervention to address these shortcomings. It serves as both a diagnosis of the current system’s limitations and a prescriptive manual for change, targeting the very legal architecture that underpins the relationship between founders and investors. The ultimate goal is to create a “world-class environment” that is more attractive to international investors and top-tier global talent, in line with the government’s ambitious “Five-Year Plan for Nurturing Startups.”
AloJapan.com