Japan: an open door for UK tech pioneers

This article was originally published in Startups Magazine on 30 April 2024.

High-level commitments

The UK’s relationship with Japan continues to grow stronger, as the two island nations’ governments join forces in crucial areas of innovation and economic development, encouraging their businesses to work closely together for mutual benefit.

Last year, this was cemented by The Hiroshima Accord, a historic bilateral partnership focusing on economic, security and – crucially – tech collaboration.

And this was supplemented by memoranda of cooperation across sectors including cyber, semiconductors and space tech – areas where the two countries have shared interests and play to one another’s strengths.

So, the stage is set, agreements have been penned, and the stars are aligned for Japan and the UK to shine in their joint efforts. And there are initiatives in place, like the UK-APAC Tech Growth Programme, to help UK businesses take their first steps in making the most of the commercial potential Japan offers.

But where exactly do the synergies lie, and how can UK companies access the opportunities?

Rishi Sunak and Fumio Kishida meet in 2023 to sign the Hiroshima Accord

Well-aligned nations

Japan is hungry to win back the ‘global tech powerhouse’ position it boasted just a couple of decades ago. This will require sweeping changes – both in terms of how innovation is managed domestically, and which sectors and technologies the country will focus on.

Should Japan try to close the gap with its fast-developing neighbours South Korea and China in semiconductors and electric cars by becoming more agile, efficient and price-competitive?

Or should it get ahead of the pack in nascent fields like quantum computing, robotics and artificial intelligence by investing in innovative startups and attracting global talent?

Whatever the answer (probably a mix of all the above!), Japan cannot do this alone – collaboration with global innovators will be key in achieving its goals.

And it’s no coincidence that Japan is seeking tighter bonds with the UK, because many of its technological gaps align with the UK’s strengths, presenting significant opportunities for British businesses at the cutting edge.

The UK Government has outlined the country’s five key tech areas as: artificial intelligence, quantum technologies, engineering biology, semiconductors and future telecoms. And my Tokyo-based colleagues and I have identified notable trends and opportunities in Japan for each of these sectors:

Further afield

But the areas of potential for UK and Japanese companies to work together don’t end there.

Take space tech, for example: the UK Space Agency (UKSA) and Japan Aerospace Exploration Agency (JAXA) joined forces in 2023, enabling Viasat and Mitsubishi Heavy Industries to develop an in-orbit telemetry relay service named InRange. The joint venture builds upon a memorandum of cooperation signed in 2021 between the space agencies and further partnerships are soon to follow.

Energy is another area where important collaborative milestones are being reached, driven by both countries’ commitments to green transition. Kyoto Fusioneering and the United Kingdom Atomic Energy Authority (UKAEA), for example, have begun collaborating on fusion energy projects – including the development of technology focusing on tritium ‘breeding blanket’ designs, tritium fuel cycles, remote handling and power conversion technologies. These are just a few areas where the UK’s leading fusion power innovators can find lucrative opportunities.

Japan is also working to strengthen its financial services industry by investing in and adopting fintech and insurtech solutions – areas in which the UK has much to offer. In fact, two Japanese insurance giants, Dai-ichi Life and Aioi Nissay Dowa, have operations in the UK focused on open innovation in these fields. Dai-ichi Life invested £75 million in UK scaleup Yulife in 2022, while Aioi Nissay Dowa launched an R&D lab in Oxford with its partner Mind Foundry in 2023.

And these collaborative efforts continue: we have been helping Dai-ichi Life’s and Aioi Nissay Dowa’s UK teams to identify more exciting UK startups and scaleups to work with through a series of pitch events last year – as you can see from the video below.

Meanwhile, Japanese investment in UK scaleups has continued to grow. Not only was Japan’s Softbank the UK’s largest Asian investor, but other Japanese investors conducted a record 97 funding rounds into UK businesses in 2023 – up from just 55 five years ago.

Most notable was Japanese VC SBI Investment’s lead role in Oxford Quantum Circuits’ £100 million funding round, which helped the company release the world’s first enterprise-ready quantum computer last year.

Where to start?

Investments, tech partnerships, memoranda of cooperation … there’s clearly a great deal of commercial potential between Japan and the UK. But how to take advantage of this climate of collaboration isn’t always clear.

One solution is applying for the UK-APAC Tech Growth Programme – the government-funded initiative we’re running that provides support to British tech companies interested in Japan (or the wider APAC region). The programme offers a wide range of free and subsidised services, from workshops and one-on-one consultations to pitches to Asia’s largest corporates and even in-market business development support.

Here are some startups and scaleups we’re already helping with their Japan market entry:

1. SpaceFlux – a London-based developer of a proprietary global network of optical sensors for space situational awareness
2. Natcap – an Oxford University spin-off that provides a ‘nature intelligence platform’ to help companies manage their use of natural resources
3. Brill Power – an Oxford-based developer of an innovative ‘battery intelligence platform’
4. Accelerated Materials – a Cambridge University spin-off which develops high performance nanomaterials to enhance product development
5. Open Cosmos – an Oxford-based developer of satellites which provide data on global issues such as climate change and sustainable use of natural resources

Take the plunge

To sum up: UK and Japanese government commitments are in place, Japanese investors’ capital is flowing, and the innovation teams within many Japanese corporations are ready to collaborate with British tech scaleups.

This all makes Japan a highly fertile market, and innovative UK businesses will find ample commercial opportunities to fill the gaps in Japan’s technological endeavours.

So, if you’re tempted, why not take the plunge and see what opportunities Japan is holding for you?

For more information and to apply to join the UK-APAC Tech Growth Programme, click here

You can also contact our programme manager, Tom Miller, at tom.miller@intralinkgroup.com

And if you’re curious about any aspects of the Japanese market, feel free to email Heidi Salmela at heidi.salmela@intralinkgroup.com