Japan, South Korea, and Taiwan are engineering a remarkable transformation of East Asia’s innovation landscape, collectively producing 47 unicorns worth over $250 billion and challenging Silicon Valley’s dominance in deep tech. While each country leverages distinct advantages—Japan’s research excellence, Korea’s digital-first culture, and Taiwan’s semiconductor supremacy—they face shared challenges of talent scarcity and funding gaps that are reshaping how they compete and collaborate regionally.
The three ecosystems exhibit fundamentally different scales and approaches. South Korea leads with 33 unicorns and a $237 billion valuation despite having the smallest geographic footprint, driven by hypergrowth in fintech and e-commerce. Japan’s 11 unicorns belie its strength in deep tech and AI, with Tokyo ranking #10 globally. Taiwan punches above its weight with just 3-4 unicorns but dominates global semiconductors, controlling 63% of the market. Recent trends show dramatic convergence: all three are pouring billions into AI infrastructure, reforming visa programs to attract foreign talent, and pivoting from domestic-first to global-first strategies as aging populations shrink home markets.
Ecosystem scale reveals divergent growth trajectories
South Korea demonstrates the most dramatic growth story, with its ecosystem valuation exploding from $40 billion in 2020 to $237 billion in 2024—a nearly 6x increase in four years. Seoul’s ascent to #8 in the Global Startup Ecosystem Report represents its highest ranking ever and signals Korea’s emergence as Asia’s most dynamic startup hub outside China. The country’s 26,900+ startups benefit from aggressive government backing, with the Seoul Metropolitan Government targeting 50 unicorns by 2030 through its Seoul Unicorn Startup Hub initiative.
Japan’s ecosystem appears more modest with 11 unicorns worth $9.8 billion, but this masks extraordinary strengths. Tokyo ranks #10 globally and #1 in the Knowledge category, reflecting its concentration of research talent and university partnerships. The ecosystem grew 36% in 2024, with funding rising 43.47% to ¥779.3 billion ($5.6 billion). Japan’s government set an audacious goal in its 2022-2027 Startup Development Five-Year Plan: invest ¥10 trillion ($72.4 billion) to create 100 unicorns and 100,000 startups. Notably, Japan already counts “41 hidden unicorns”—companies that reached $1 billion valuations but exited via IPO before achieving unicorn status privately, a uniquely Japanese pattern reflecting its IPO-oriented exit culture.
Taiwan presents the smallest ecosystem but arguably the most innovation-efficient. With only 1,165 active startups, it ranks #1 in Asia-Pacific for innovation capability and #4 globally. Its 3-4 unicorns include Appier ($1.465B in AI marketing), Gogoro ($2.35B in electric vehicles), and ProLogium ($1B in battery tech). Taiwan’s small domestic market of 24 million people forces immediate global thinking, making it the most internationally-oriented of the three. The ecosystem grew 8.4% in 2025, with Taipei hosting 775 startups (75% of Taiwan’s total).
Funding patterns show recovery after 2022 downturn
All three countries experienced a funding peak in 2021-2022 followed by contraction, with divergent recovery patterns. South Korea saw the most volatile swings: from a crypto-fueled peak of $24.1 billion in 2020, funding crashed to $4 billion in 2023 before recovering to $8.95 billion in 2024 (9.5% YoY growth), bucking global downward trends. Early-stage funding reached $4.7 billion in 2024, though Q1 2025 posted the worst quarterly results since Q3 2018, signaling ongoing volatility.
Japan’s funding proved more stable, peaking at ¥988.9 billion ($7.1 billion) in 2022 before moderating to ¥753.6 billion in 2023 and rebounding to ¥779.3 billion in 2024. The distribution heavily favors early stages: 61% of VC funding concentrates in Seed and Series A rounds, with median seed rounds at ¥80M ($560K) and Series A at ¥300M ($2.1M). Corporate VCs dominate, providing $3.4 billion in 2023—up 24x from $140M in 2013. Japanese CVCs participated in 50-62% of all deals between 2015-2022, the highest corporate involvement rate among the three countries.
Taiwan demonstrated steady growth through the downturn: $1.33 billion (2020), $2.68 billion (2021), $2.54 billion (2022), and $2.79 billion (2023), with 542 transactions in 2023 representing a 10.4% increase in deal count. However, 77.3% of funding goes to angel and seed stages, revealing a critical late-stage capital shortage that forces many Taiwanese startups to list on foreign exchanges. Q1 2024 saw $530 million across 107 transactions, maintaining momentum.
The stage distribution reveals a shared challenge: all three countries struggle with growth-stage funding. Japan’s Series D+ rounds show declining median valuations. Korea’s growth-stage funding became “severely constrained post-2022.” Taiwan’s breakout funding (€15-100M) represents a significant identified gap. This late-stage shortage explains why successful startups increasingly look to US or Japanese public markets rather than domestic exits.
Foreign investment patterns differ markedly. Japan attracts growing international capital, with overseas investors providing 10% of total investment—foreign funding grew 7x from $55M in 2013 to $405M in 2023. Eight of the top 20 Japanese funding deals in 2024 included foreign investors, concentrated in H2 2024, with marquee names like Andreessen Horowitz establishing Japan offices and Khosla Ventures, NEA, and NVIDIA actively investing. Korea’s foreign participation reached 44% of COMEUP Stars applicants targeting the US market, with historical investments from SoftBank Vision Fund (which owned 33%+ of Coupang pre-IPO) and growing participation from Sequoia Capital China, DST Global, and BlackRock. Taiwan remains most domestically funded at 89% of deals, though foreign investors write larger checks (average $13.07M vs. lower domestic amounts), with 500 Global, JAFCO Asia, Sequoia Capital, and Temasek active.
Most active VCs demonstrate ecosystem specialization
Japan’s VC landscape divides clearly by stage. At seed, FUNDINNO leads with 25 investments in 2024, followed by ANRI, East Ventures, and United (22 each). For Series A-B, Global Brain dominates with 50 investments, followed by Mitsubishi UFJ Capital (44), SMBC Venture Capital (38), and Mizuho Capital (32)—all bank-affiliated VCs. Late-stage funding concentrates among Global Brain (25), SBI Investment (21), and JIC Venture Growth Investments (10). The prominence of financial institution VCs reflects Japan’s traditional banking relationships extending into venture capital.
South Korea’s most active VCs include Softbank Ventures Asia, Mirae Asset Venture Investment, Atinum Investment, Korea Investment Partners, and LB Investment. Specialized accelerators like Bon Angels, FuturePlay, and SparkLabs Korea provide early-stage support. Government-backed Korea Venture Investment Corporation manages a massive $4.6 billion fund, while K-Growth and the Korea Fund of Funds (established 2005) provide public capital. The upcoming 2025 budget proposes 16.8 trillion KRW ($12.3 billion) for startup support, with half designated for AI and deep tech through fund-of-funds structures.
Taiwan’s VC ecosystem centers on AppWorks, which manages $212M across three funds ($11M, $50M, $150M) and has made 228 investments. AppWorks Fund II delivered exceptional returns: 3.3x TVPI, 1.3x DPI, and 34.7% IRR, ranking in the top quartile globally. Portfolio companies include decacorn Lalamove and unicorns 91APP and Carousell. Other major players include CDIB Capital (~$1.2B AUM), Taiwania Capital (Fund I closed at $150M), SparkLabs Taiwan (60+ startups accelerated since 2018), and the National Development Fund’s NT$2B Business Angel Investment Program. The August 2024 Enhanced AI Startup Investment Program added NT$10 billion ($320M) specifically for AI and digital economy companies.
Government support ranges from aggressive to transformational
All three governments deploy comprehensive startup support programs, but differ dramatically in scale and approach. South Korea operates the most aggressive intervention, with the 2025 budget proposing 16.8 trillion KRW ($12.3 billion) for startup projects—a staggering figure representing government determination to maintain ecosystem momentum. This includes 1.1 trillion KRW for fund-of-funds (half for AI/deep tech), 1.3 trillion KRW in “re-challenge funds” for failed founders (addressing stigma and encouraging serial entrepreneurship), and 800 billion KRW in government backing.
Korea’s Pre-Unicorn Special Guarantee Program provides up to 20 billion KRW (~$14.5 million) per company, supporting 141 companies since 2019 with cumulative guarantees of 797.2 billion KRW. This program produced 8 unicorns and 13 IPOs by end of 2024, demonstrating remarkable efficiency. The Startup Korea Fund targets 2 trillion KRW by 2027 for deep tech and global expansion. R&D tax credits reach up to 25% for SMEs (or 50% for incremental spending increases), and startups enjoy 100% corporate tax exemption for 5 years, then 50% reduction for 2 additional years.
Japan’s approach emphasizes long-term structural transformation through its Startup Development Five-Year Plan (2022-2027), targeting ¥10 trillion ($72.4B) investment to create 100 unicorns and 100,000 startups. The government already met its interim goal of 20 unicorns by 2023. Deep tech grants reach ¥3 billion per startup, while the Green Innovation Fund provides ¥2 trillion for carbon neutrality by 2050. The Japan Investment Corporation launched a ¥200 billion Venture Growth Fund in 2023 specifically targeting later-stage scaling. The J-Startup Program selects high-potential companies (92 in first batch) for comprehensive support including branding, global event participation, mentorship, and regulatory sandbox access across IT, IoT, healthcare, biotech, AI, robotics, and fintech.
Taiwan’s government support focuses on maintaining technological leadership while addressing market size limitations. The Taiwan Chips Act provides enhanced semiconductor R&D tax credits: 25% for forward-looking R&D and 5% for advanced manufacturing equipment (2023-2029). Standard R&D tax credits reach 15-25% of expenditures, with a 200% R&D deduction option allowing companies to deduct double their R&D spending from taxable income. The August 2024 Enhanced AI Startup Investment Program committed NT$10 billion ($320M) from the National Development Fund for a 7-year investment period targeting unlisted AI startups. The Small Business Innovation Research (SBIR) program provides up to NT$3M for individual businesses and NT$10M for alliances, while the Young Entrepreneur Loan offers up to NT$18M with 80-95% credit guarantees.
Support organizations demonstrate each country’s priorities. Japan established JETRO Global Acceleration Hubs in 30 cities worldwide and opened the Japan Innovation Campus in Silicon Valley in 2024. Korea’s KISED manages COMEUP (a global startup festival) and the K-Startup Grand Challenge for foreign startups, while operating K-Startup Centers globally. Taiwan’s Taiwan Tech Arena (TTA) flagship program has supported 650+ startups since 2018, helping raise $330M+, while Taiwan Startup Stadium provides co-working spaces and acceleration at reduced rates.
Sector specialization reflects national industrial strengths
Japan excels in AI, deep tech, and robotics, with AI startups capturing 30% of deal count and 46% of deal value in 2024. Sakana AI became Japan’s fastest unicorn, reaching $1.4+ billion valuation in just one year after founding, backed by NEA, Khosla Ventures, Lux Capital, NVIDIA, and 20+ Japanese corporates. Preferred Networks developed the MN-3 supercomputer that topped the Green500 efficiency list. In robotics, Japan leverages decades of industrial automation expertise, with startups in industrial automation, humanoid robotics, agricultural robotics (Kisui Tech), and medical robotics partnering with giants like Fanuc and Kawasaki Heavy Industries.
Japan’s fintech sector achieved mass adoption through PayPay (38M users, 45% market share) and SmartHR (serving 300K+ SMEs globally). Space tech emerged as a strength with unicorn Astroscale (space debris removal, IPO June 2024 at ¥144.8B market cap) and Synspective (SAR satellites, IPO Dec 2024 at ¥41.7B). CleanTech receives 40% of 2024 R&D grants, with focus on nuclear fusion (Kyoto Fusioneering), carbon capture, and next-gen batteries (Enecoat Technologies). SaaS became a leading funding category in 2023-2024 alongside AI.
South Korea dominates gaming, e-commerce, and fintech, reflecting its digital-first consumer culture. Gaming companies like Krafton (PUBG), NC Soft, and Smilegate generate global revenues, while 4:33 Creative Lab and others drive mobile gaming innovation. E-commerce and fashion platforms achieved massive scale: Coupang ($63B IPO), Market Kurly, Musinsa, ABLY (newest unicorn, Dec 2024, $2.1B valuation), and Zigzag dominate youth markets. Fintech leader Toss (Viva Republica) reached $7B valuation with its super app offering 40+ financial services, while Dunamu operates Upbit crypto exchange ($2.2B valuation, down from $17B peak) and Korea Credit Data serves 1.7M business users.
AI represents Korea’s fastest-growing sector, with 102 companies (18.2% of COMEUP Stars 2025 applicants). The government allocated 50% of fund-of-funds to AI/deep tech, committing 260,000+ NVIDIA GPUs for national AI infrastructure—50,000+ for the government AI Computing Center and 50,000+ each for Samsung, SK, Hyundai, and Naver. Top AI startups include Upstage (preparing Korea’s first AI IPO), Liner (ranked #1 on SimpleQA benchmark for AI search), FuriosaAI (AI chips, in Meta acquisition talks), Rebellions and HyperAccel (LLM Processing Units), and Persona AI (proprietary SONA engine supplying SK Telecom and Naver).
Taiwan leverages semiconductor supremacy and hardware excellence, controlling 63% of global semiconductor market share and producing 73% of world’s advanced microchips. Biotech and health tech attracted the largest deal volume with 291 deals and $1.7B investment (2015-2022), including companies like Health2Sync (digital health platforms) and AI-powered medical imaging. Hardware and electronics (155 deals) and IoT devices reflect Taiwan’s traditional manufacturing strength. ProLogium’s $1B valuation in battery technology and Gogoro’s $2.35B valuation in electric scooters with battery-swapping infrastructure demonstrate hardware-software integration capabilities. Appier’s $1.465B valuation in AI-powered marketing shows Taiwan can compete in pure software, while 91App’s omnichannel commerce SaaS reached $1.4B+ market cap through domestic IPO.
Expansion strategies shift from domestic-first to global-first
Historical patterns show dramatic evolution. Japan’s startups previously focused 83% domestically, but 83% of seed-stage startups now have global expansion strategies—a complete reversal reflecting recognition that domestic market saturation limits growth. Korea similarly showed 93% domestic focus historically, with only 7% expanding overseas in 2022. Taiwan’s 24 million population forced global thinking from inception, with 48% targeting Southeast Asia as primary overseas market.
Target markets reveal regional integration patterns. Southeast Asia emerges as the primary expansion destination for all three countries: Japan’s startups target Singapore, Indonesia, Vietnam, Thailand, and Philippines, leveraging JETRO Global Acceleration Hubs in 30 cities and time zone proximity. Korea designates Southeast Asia as its #1 regional focus through the New Southbound Policy, with SparkLabs and DreamPlus expanding accelerator operations across Japan, China, and SEA. Taiwan invests $5.5 billion in New Southbound countries (2023), viewing the region’s similar economic structure (agriculture + manufacturing) and $200B digital economy by 2025 (Google/Temasek forecast) as ideal growth markets.
Japan-Korea bilateral expansion intensified dramatically. Korean startups like DoctorNow (telemedicine) expanded to Japan with founders spending 4 days/week in Tokyo and 3 in Seoul, while Underdogs (coaching startup) collaborates with Japanese government-funded companies. The K-Startup Center opened in Tokyo in 2024 to strengthen ties. Japanese startups like popIn (online advertising) expand to South Korea and Taiwan. Notably, 34% of Korean COMEUP Stars applicants target Japan as their priority market, recognizing it as a valuable proof-of-concept before broader Asian expansion.
Taiwanese startups demonstrate the most aggressive internationalization due to market necessity. Aiello (AI travel-tech) expects Japan revenue to surpass Taiwan in 2025. KKday operates in 550 cities globally. Appier generates 67.7% of revenue from Japan/Korea and only 22.4% from Greater China, with offices in 17 locations globally. iCHEF expanded its restaurant POS system to 10,000+ restaurants across Hong Kong, Singapore, and Malaysia. The government’s New Southbound Policy facilitates this through tax benefits and partnerships targeting Southeast Asia, South Asia, Australia, and New Zealand.
Challenges to international expansion remain significant. Japan faces language barriers (English proficiency), risk-averse culture, lack of global talent, preference for stable corporate employment, limited serial entrepreneur pool, and storytelling/marketing weaknesses. Korea encounters similar language barriers, cultural differences in business practices, need for localized strategies per market, and extended paths to profitability compared to Western startups. Taiwan’s small domestic market offers no fallback option—startups must succeed internationally or fail, creating both urgency and risk.
Cross-border collaboration accelerates through formal frameworks
Japan-Korea-Taiwan collaboration intensified dramatically in 2024-2025 through both government initiatives and grassroots connections. The Japan-Taiwan Innovation Summit held its 3rd annual edition in 2024, bringing together 30+ Taiwan startups, 30+ VCs/accelerators, and 40+ Japanese companies, with Tokyo Metropolitan Government and JETRO as official partners. Focus areas include semiconductors, AI, and digital transformation. A formal MOU between Tokyo Governor Koike and Taiwan’s Startup Island Taiwan initiative was signed in 2024, creating structured collaboration pathways.
The Taiwan-Japan University Technology Alliance led by National Yang Ming Chiao Tung University partnered with Hokkaido, Kyushu, Kumamoto, and Tohoku universities, hosting the 1st Taiwan-Japan Global Partnership Semiconductor and Innovation Startup Forum in December 2024. This academic collaboration extends to corporate partnerships, with TSMC establishing JASM (subsidiary) in Kumamoto with Sony and investing in Japanese university research programs. The presence of 40+ Taiwanese startups in the Kansai region—doubling in just 2 years—demonstrates accelerating bilateral integration.
Korea-Japan relations warmed through technology cooperation after years of political tension. The K-Startup Center established in Tokyo (2024) helps internationalize Japan’s ecosystem while providing soft landing for Korean startups. Venture Café Tokyo hosts regular East Asian startup events connecting Korea, Japan, and Taiwan founders. Korean and Japanese startup founders increasingly gather in Silicon Valley for mutual learning and deal flow, creating a diaspora network that strengthens regional ties. DoctorNow’s telemedicine expansion and Underdogs’ education platform collaborations with Japanese government programs demonstrate operational integration.
The APEC 2025 framework formalized regional cooperation through multiple mechanisms: the APEC SME Ministerial Meetings facilitated Taiwan-Korea bilateral discussions on AI startup policies and overseas expansion. The Korea-China Innovation Startup Partnership Program (announced APEC 2025) created structured R&D cooperation and co-investment frameworks extending to joint expansion in Southeast Asia and Middle East, with AI, biotech, and green technology as focus areas. The ASEAN Regional Comprehensive Economic Partnership (RCEP) free-trade agreement includes Korea and covers 30% of world population, facilitating startup expansion.
Cross-border investment demonstrates deepening integration. SoftBank and Line (Japan) invested in Taiwanese Appier, while Naver (Korea) invests across the region. Eight of Japan’s top 20 funding deals in 2024 involved international investors, concentrated in H2 2024. AppWorks (Taiwan) actively invests throughout Greater Southeast Asia including Japanese and Korean startups. The rationale for collaboration centers on complementary strengths: Japan excels in research and quality, Korea in digital consumer applications and execution speed, and Taiwan in semiconductor/hardware innovation. All three face shared challenges of aging populations, declining birthrates (Korea below 0.7, Taiwan at 5.81 per 1,000), and need for automation/AI solutions applicable across East Asia.
Unicorns and exits reveal different paths to scale
Japan’s 11 unicorns demonstrate deep tech focus: Sakana AI (generative AI, $1.4B+, fastest Japanese unicorn at 1 year), SmartHR (cloud HR software, $1.27B, serving 300K+ SMEs globally), Spiber (biotech materials, $1.17B, unicorn since 2021), Preferred Networks (AI/deep learning, $1.04B+, unicorn since 2018), SmartNews (news aggregation, $2B+, unicorn since 2019), and Astroscale (space debris removal, IPO June 2024 at ¥144.8B market cap). Japan uniquely counts “41 hidden unicorns”—companies reaching $1B valuation but exiting via IPO before unicorn status, reflecting IPO-oriented exit culture.
Japan’s IPO market remains extraordinarily active: 49 startup IPOs in 2024 (up from 43 in 2023), far exceeding other Asian markets. Notable 2024 IPOs include Timee (¥176B market cap, part-time job service), Astroscale (¥144.8B), Synspective (¥41.7B, SAR satellites), dely/Kurashiru (¥49.6B, web media), and SORACOM (¥33.5B, IoT platform). M&A activity also accelerated with 253 deals in 2024 versus 186 in 2023, including Cancerscan (¥14.2B to JMDC), Saticine Medical (¥9.3B to Euglena), and Club Nets (¥5.8B to SHIFT). Japan averages 40-55 startup IPOs annually, making it more IPO-focused than M&A compared to US/China.
South Korea’s 33 unicorns represent the highest count and most diverse sectors among the three countries. Fintech dominates with Toss ($7B, super app with 40+ financial services), Dunamu ($2.2B, Upbit crypto exchange, down from $17B peak), and Korea Credit Data ($1B+, serving 1.7M SME users). E-commerce giants include Market Kurly ($2.7B, grocery delivery), Musinsa (fashion marketplace), ABLY ($2.1B, newest unicorn December 2024, fashion commerce), and Danggeun Market/Karrot ($2.7B, hyperlocal marketplace now expanding to US, Canada, UK, Japan). Gaming unicorn Krafton (PUBG creator) and mobility player SoCar round out the list.
Korea’s Coupang IPO in March 2021 stands as the defining exit event: $63 billion valuation at IPO ($84B at closing), the largest Asian company IPO in the US since Alibaba (2014), raising $4.6 billion. SoftBank Vision Fund delivered $20B+ paper profit. Coupang has since become a Fortune 150 company with Q2 2024 revenue of $8.5 billion (+16% YoY) and turned GAAP profitable in 2023. The Pre-Unicorn Program achieved impressive results with 13 IPOs from 141 companies supported, demonstrating government program effectiveness.
Taiwan’s 3-4 unicorns achieved success through different paths reflecting market constraints. Appier IPO’d on Tokyo Stock Exchange (Mothers Board) in March 2021 at $1.465B valuation, becoming Taiwan’s first major tech IPO abroad. The AI-powered marketing company generates 67.7% revenue from Japan/Korea with operations in 17 global locations, demonstrating forced internationalization. Gogoro reached $2.35B valuation through Nasdaq SPAC merger in April 2022, though it raised only $335M (reduced from $550M target). The electric scooter and battery-swapping company dominates Taiwan’s e-scooter market with 2,100+ battery stations and partnerships with Yamaha (Japan), Yadea/DCJ (China), Hero MotoCorp (India), and Gojek (Indonesia). ProLogium (battery tech) reached $1B valuation through Series E ($326M led by SBCVC, Danfeng Capital, Epoch Capital Partners) in October 2021. 91App uniquely IPO’d on Taiwan’s Taipei Exchange in 2021 with $1.4B+ market cap, demonstrating omnichannel commerce SaaS success domestically.
Taiwan’s exit pattern reveals challenges: most major exits occur on foreign exchanges (Tokyo, Nasdaq, Singapore). 17LIVE listed on Singapore Exchange in December 2023. Gogolook listed on Taiwan Innovation Board (TIB), a 2021 reform designed to ease startup listings with lower market cap requirements, no profitability requirement, and biotech revenue exemptions. AppWorks portfolio company Lalamove became a decacorn focused on last-mile delivery across Southeast Asia, showcasing Taiwan’s regional integration success.
Talent, regulation, and funding gaps constrain all three ecosystems
Talent shortages plague all three countries with varying severity. Japan faces the most dramatic gap: 170,000 IT talent shortage in 2015 projected to reach 590,000 by 2030 (METI data), with 76% of tech hiring managers reporting highly competitive recruitment in 2022. Specific gaps include AI, autonomous driving, financial planning, web analytics, and cybersecurity specialists. Unemployment of only 2.5-2.7% and aging population (29.3% over 65) create fierce competition. Low labor mobility (job-changing rates below 60% vs 90%+ in US/Europe) and lifetime employment culture discourage movement to startups.
Korea’s AI talent crisis intensified in 2024: 81.7% of AI companies cite talent shortage as major challenge, with companies losing half their AI developers to chaebols (Samsung, Hyundai, SK, LG) offering higher compensation and stability. Some AI startups consider pivoting sectors entirely due to talent drain. Startup hiring collapsed: 16,376 hires in 2022 fell to 11,009 in 2024 (cut in half), while job openings dropped 42% from 8,498 to 4,872 (May 2022-June 2025). Stock option adoption declined 29%—recipients fell from 15,055 (2022) to 10,655 (2024)—due to dated tax treatment reducing competitiveness against chaebol compensation.
Taiwan faces compounding talent challenges: declining birth rate (5.81 per 1,000), aging population, and brain drain to larger markets. Engineers possess skills in custom software and ERP but lack experience building proprietary branded products for global markets. Specific needs include AI and deep learning experts (TSMC and others desperately need more), global business operations experience, statistics and mathematics specialists, and product managers with international experience. The government responded with plans to train 200,000 AI professionals over 4 years (10,000 annually in AI/R&D), though execution remains uncertain.
Regulatory and bureaucratic barriers differ by country. Japan’s thorough but slow-moving bureaucracy creates complex compliance requirements, especially in finance and infrastructure. Strict labor laws favor employee protection, making termination difficult and unilateral termination illegal. The IPO-focused exit culture versus M&A creates valuation challenges as companies must demonstrate standalone viability. Consensus-driven decision-making (nemawashi, ringi system) slows processes, while cultural stigma against job changes and individual ambition discourages entrepreneurship.
Korea faces complex financial regulations for fintech, with the “Fadu case” increasing scrutiny on startup valuations and making IPO reviews stricter. Stock option tax structure discourages equity compensation. Limited access to skilled foreign labor (only 10% of foreign workers are specialists) despite chronic domestic shortages reflects immigration policy misalignment. For SME digital transformation, 44.2% cite cost burden and 20.5% lack specialized personnel, with most able to invest less than 100M KRW (~$70K) in AI/digital upgrades.
Taiwan’s Department of Investment Review operates as a “black box” with slow and opaque approval processes for foreign investors, forcing 70% of startups to use Cayman or offshore structures to facilitate foreign investment. Government funding complexity includes unreasonable goals set by review committees and difficult approval processes—one example cited 80% local manufacturing requirements impractical for global supply chains. IPO requirements historically proved difficult (improved with Taiwan Innovation Board 2021). Government policies designed for manufacturing/semiconductors prove less suited for software startups.
Funding gaps manifest differently but constrain growth universally. Japan suffers a valuation gap of 40-60% versus global peers for similar companies, with average Series A only $5M versus much higher in US. Late-stage funding beyond Series C proves difficult. Down rounds increased to 11.8% of total rounds in 2024 (up from 8.9% in 2023). The limited M&A market compared to US reduces exit options and depresses valuations.
Korea’s investment winter hit hardest: funding collapsed from $24.1B (2020) to $4B (2023) before partial recovery to $8.95B (2024). Growth-stage funding became “severely constrained post-2022.” Overcapitalization concerns led to extended times to liquidity, with DPI ratios 15-25% lower than Western funds. Q1 2025 posted worst quarterly deal value since Q3 2018, signaling persistent challenges.
Taiwan’s late-stage capital shortage proves most acute: 77.3% of funding concentrated in angel/seed stages creates a severe Series B+ gap. Many successful startups must list on Tokyo Stock Exchange or Nasdaq rather than locally due to insufficient domestic growth capital. Foreign investors write larger checks (average $13.07M) but represent only 11% of deals, insufficient to fill the gap. The small domestic market (24 million people) makes it unlikely any company serving only Taiwan could reach unicorn status, forcing expensive international expansion at earlier stages than optimal.
Regional dynamics balance competition and complementarity with China and Southeast Asia
China relations vary dramatically by country. Japan maintains technological competition with China across AI, robotics, and semiconductors, with China’s 87 unicorns dwarfing Japan’s 11 and Chinese VC availability orders of magnitude larger. The Chinese market remains largely closed to Japanese startups due to protectionism, but US-China tensions create opportunities for Japan as an alternative technology partner for Western companies and governments. Japan ranks #2 in East Asia’s startup ecosystem (behind China, ahead of South Korea), competing on quality over quantity with deep tech and research excellence.
Korea traditionally experienced policy friction with China, but APEC 2025 produced a breakthrough Korea-China Innovation Startup Partnership Program with structured R&D cooperation, co-investment frameworks, talent mobility support, and joint expansion to Southeast Asia and Middle East. Focus areas include AI, biotech, and green technology. The RCEP free trade agreement includes both countries, covering 30% of world population. However, Korean startups increasingly benefit from companies de-risking from China dependence, offering manufacturing and technology alternatives.
Taiwan faces the most complex China dynamic. Investment in China declined sharply, with $5.5B flowing to New Southbound countries in 2023 versus declining China investment. Taiwanese entrepreneurs report “hard to see where Taiwanese startups have an edge in China” due to China’s strong domestic tech companies dominating their home market, hyper-competition, protectionism, and forced technology transfer risks. Cross-strait tensions create geopolitical risk affecting funding and partnerships. However, 90% of ProfetAI’s Taiwan clients versus 10% in China shows some presence remains. The strategic shift away from China (reversing post-1997 Asian financial crisis China-centric expansion) toward Southeast Asia fundamentally reoriented Taiwan’s startup ecosystem.
Southeast Asia engagement represents the primary growth opportunity for all three countries. Japan’s corporate multinationals established strong legacy presence since the 1970s, creating networks that startups leverage for market entry. Japanese startups benefit from reputation for fair transactions and quality projects. Success in Japan facilitates Southeast Asia entry as a springboard effect. JETRO Global Acceleration Hubs in 30 cities provide infrastructure support. Technology transfer in manufacturing and quality control flows from Japan to developing Southeast Asian markets.
Korea positions itself as a hub connecting advanced Asia (Japan, Korea) with emerging ASEAN markets. The 2017 “New Southern Policy” increased Korean VC activity in Southeast Asia, with SparkLabs, DreamPlus, and others expanding operations. Korean startups possess cultural proximity advantages over Western competitors while offering manufacturing and digital expertise to developing nations. Fast Track Asia specifically helps Korean startups expand to Japan and Southeast Asia. The K-Startup Centers provide soft landing programs across the region.
Taiwan’s Southeast Asia focus intensified most dramatically, with 48% of startups targeting the region as primary overseas market—the highest percentage among the three countries. The similar economic structure (agriculture + manufacturing), same time zone, cultural compatibility, lower competition versus China, and fast-growing $200B digital economy by 2025 make Southeast Asia ideal. The government’s New Southbound Policy (launched 2016) targets Southeast Asia, South Asia, Australia, and New Zealand with tax benefits and partnership facilitation. Remarkably, Southeast Asian startups like ShopBack, M17, and Carousell establish engineering and R&D teams in Taiwan, leveraging its manufacturing and talent pool—a reverse flow demonstrating Taiwan’s value as a technology hub.
Competitive positioning reveals complementary strengths: Japan offers research excellence, quality manufacturing, and deep tech capabilities. Korea provides digital consumer application expertise, execution speed, and mobile-first innovations. Taiwan dominates semiconductors and hardware-software integration. All three share demographic challenges (aging populations, declining birthrates) creating demand for automation, AI, and age-tech solutions applicable across East Asia. Supply chain diversification from China benefits all three as Western and Japanese companies de-risk dependencies.
AI, deep tech, and sustainability dominate 2023-2024 investment trends
AI investment reached unprecedented levels across all three countries. Japan’s AI startups captured 30% of deal count and 46% of deal value in 2024, with government establishing AI-focused VC funds (DEEPCORE, UTEC) and major corporate backing from NVIDIA, Microsoft, and SoftBank. Generative AI specifically drove growth, with Sakana AI becoming the fastest Japanese unicorn (reached $1B+ in 1 year). The government prioritized AI in its national strategy, with NEDO (innovation agency) playing a pivotal role in quantum computing, advanced materials, and space tech.
Korea’s commitment proved most aggressive: 260,000+ total NVIDIA GPUs secured—50,000+ for the government AI Computing Center and 50,000+ each for Samsung, SK, Hyundai, and Naver. The government allocated 50% of fund-of-funds to AI/deep tech, with the 2026 budget prioritizing AI with 16.8 trillion KRW ($12.3B). The KPAS 2024 competition identified 20 AI startup finalists as “next AI unicorns” with valuations between 100-700B KRW. Upstage prepares Korea’s first AI IPO, while Liner achieved #1 ranking on SimpleQA benchmark for AI search. Foundation model development accelerated with NAVER, LG AI Research, SK Telecom, and Upstage developing Korean LLMs. Public-private partnerships on AI infrastructure collaboration between government and chaebols demonstrate national mobilization.
Taiwan’s August 2024 Enhanced AI Startup Investment Program committed NT$10 billion ($320M) from the National Development Fund for 7 years, targeting computational power, data, talent, and funding. The generative AI market reached $58.4M (2025) with infrastructure initiatives totaling T$15 trillion and T$100 billion in VC backing. Microsoft invested $10B by 2024 for data centers and AI R&D, creating 30,000 jobs. Google opened its 3rd data center in Yunlin Technology-based Industrial Park. NVIDIA partnered since 2018 for deep learning/AI training. Foxconn builds Taiwan’s largest AI supercomputer. The government targets NT$1 trillion ($31B) AI output by 2026 (from ~NT$800B currently), with plans to train 200,000 AI professionals over 4 years.
Deep tech focus emerged strongly in Japan through quantum computing, advanced materials, and space tech supported by NEDO. Nuclear fusion startup Kyoto Fusioneering raised ¥10.5B, while Preferred Networks’ MN-3 supercomputer topped the Green500 list. Collaboration between universities and startups accelerated. Korea prioritized semiconductors with AI chip startups FuriosaAI (in Meta acquisition talks), Rebellions, and HyperAccel developing LLM Processing Units. Samsung-NVIDIA collaboration on HBM4 next-gen AI memory demonstrates chaebol-startup integration. Advanced manufacturing platforms with AI and digital twin technology, robotics (Neuraomeka surgical robots, Nearthlab autonomous drones), and quantum computing (KIST Center of Excellence) received investment. Taiwan leveraged semiconductor dominance with VC funding for semiconductor companies doubling 2021-2022. TSMC’s Open Innovation Summit and partnership with Silicon Catalyst incubator support the ecosystem. Hardware-software integration remains Taiwan’s competitive moat, with silicon photonics and robotics as government focus areas.
Sustainability and climate tech received substantial backing. Japan directed 40% of 2024 R&D grants to climate tech, with focus on carbon capture, sustainable batteries, green energy, nuclear fusion (Kyoto Fusioneering), and next-generation batteries (Enecoat Technologies raised ¥5.8B for perovskite solar). The Japan Decarbonization Fund actively invests with partnerships from energy companies JERA and INPEX. Korea included green technology in the Korea-China cooperation framework, with renewable energy companies like BEP attracting $100M from BlackRock. Clean energy startups, smart logistics focusing on efficiency and sustainability, and ESG-driven industries became part of Pre-Unicorn and COMEUP Stars focus areas. Taiwan’s energy tech investments proved popular 2021-2023 in energy saving, generation, and storage systems. Government support for the EV industry (championed by then-premier Lai Ching-te) included moratorium discussions on internal combustion vehicles. Climate tech startups, green energy accelerators, and Gogoro’s electric scooter battery-swapping ecosystem all advanced.
Other emerging trends include SaaS dominance alongside AI as leading funding category in Japan (SmartHR, LayerX, Joesys among top-funded) reflecting shift from B2C to B2B business models and increasing enterprise software adoption. International investor influx brought Andreessen Horowitz Japan presence (2024), Vertex Ventures Japan launch, and Khosla Ventures/NEA activity, with 8 of top 20 deals including foreign investors. Market maturation shows median valuations stabilizing or rising (except Series D+), more selective investing (fewer companies, larger checks), increasing down rounds indicating market correction, and M&A activity increasing (253 deals in 2024 vs 186 in 2023).
Korea’s Web3 and blockchain sector remains active despite crypto winter, with physical AI emerging through Naver Cloud-NVIDIA collaboration on digital twin platforms. AI factories see Samsung building with 50,000+ GPUs, while SK Group builds Asia’s first enterprise-led manufacturing AI cloud. Super apps like Toss expand to 40+ financial services on a single platform. Hyperlocal commerce pioneer Karrot expands its model to US, Canada, UK, and Japan. Taiwan’s Web3/blockchain includes AppWorks dedicated arm led by Ching Tseng, with Blocto and XREX in portfolio. Enterprise software with AI emphasizes machine learning for manufacturing, image recognition, and automation. Digital transformation focuses on Taiwan’s “Five Trusted Industries”: semiconductors, AI, defense, security, and next-gen communications. The Taiwan Innovation Board (TIB) launched 2021 enables easier startup listings with lower market cap requirements, no profitability requirement, and biotech revenue exemptions.
Corporate venture capital involvement shapes ecosystem development
Japan’s corporate VCs wield unprecedented influence, participating in 50-62% of all deals (2015-2022) and providing $3.4 billion in 2023 (up 24x from $140M in 2013). Financial institution CVCs dominate: Mitsubishi UFJ Capital (Top 3 most active, ¥30B fund 2023), SMBC Venture Capital (Top 3), Mizuho Capital (Top 5, ¥32.4B involvement), SBI Investment/SBI Holdings (Top 5, ¥100B fund 2023), Nomura Holdings, and Daiwa House Ventures (¥30B fund 2024). This concentration reflects Japan’s traditional banking relationships extending into venture capital.
SoftBank Vision Fund operates at a different scale: $100B+ fund making it the world’s largest tech VC, with investments in Uber, WeWork, and ByteDance globally, plus Japanese AI startups domestically. Tech and telecom CVCs include Sony Ventures/Sony Innovation Fund (¥15.7B fund 2023 with 3 active portfolios focusing on AI, robotics, entertainment tech), NTT Docomo Ventures (¥20B fund 2023), KDDI (active in Sakana AI), Rakuten, LINE Ventures, DeNA (gaming, healthtech), and Z Venture Capital. Automotive CVCs demonstrate strategic focus: Toyota Ventures/Woven Capital ($800M fund for mobility, AI, robotics plus ¥220B/$1.2B announced 2024 for early and late-stage funds, with Toyota Invention Partners adding ¥100B/$560M), Honda (invested in GM Cruise for autonomous vehicles), and Isuzu, Suzuki, Subaru, Daihatsu, Mazda (each with 2% stakes in MONET, the Toyota/SoftBank mobility JV).
Industrial/manufacturing CVCs include Panasonic (early Preferred Networks investor), Hitachi (Plug and Play partner), FANUC (robotics investments, PFN partnership), Mitsubishi Corporation, Mitsubishi Electric, Kawasaki Heavy Industries, and Canon Marketing Japan (¥10B fund 2024). Global Brain emerged as the most active CVC overall with 50 Series A-B deals and 25 late-stage deals in 2024. Notable joint ventures include MONET Technologies: SoftBank (50.25%) + Toyota (49.75%) for mobility-as-a-service, with additional investors Honda (10%), Hino (10%), plus Suzuki, Mazda, Subaru, Isuzu, Daihatsu (2% each).
South Korea’s corporate VCs concentrate among chaebols. Samsung Group operates Samsung Venture Investment Corporation (SVIC, est. 1999, one of most active globally), Samsung NEXT (Silicon Valley presence), Samsung Catalyst Fund (deep tech), and Samsung C-Lab internal incubation. Samsung builds an AI factory with 50,000+ NVIDIA GPUs and develops HBM4 memory for AI. SK Group operates multiple CVC arms across portfolio companies including SK Networks venture unit and SK Telecom investing in AI/5G startups, building Asia’s first enterprise manufacturing AI cloud (50,000+ GPUs) in partnership with NVIDIA on Physical AI. Hyundai Motor Group maintained in-house venture organization since 2000 with “Korea-first” mindset balancing local dominance with global expansion, collaborating with NVIDIA on AI factory (50,000 GPUs) for automotive AI, autonomous driving, and robotics.
Naver Corporation operates Naver Cloud collaborating with NVIDIA on Physical AI platform while acquiring 60,000 advanced AI processors, developing Korean foundation LLMs, operating Naver D2SF early-stage fund, and supporting AI search and cloud services ecosystem. Kakao Corporation’s Kakao Ventures (formerly K-CUBE, est. 2012, acquired 2015) focuses on seed-stage with 166 portfolio companies. Kakao has 175 total subsidiaries (2nd highest in Korea after SK Group), with spinoff IPOs including Kakao Mobility, Kakao Pay, and Kakao Games. LG Group operates LG Technology Ventures (active in US, Israel, Japan), LB Investment (formerly LG Venture Investment, est. 1996) focusing on healthcare tech, cloud computing, and online platforms with global relationships, and LG AI Research collaborating with FuriosaAI. Other major corporate VCs include GS Holdings’ GS Ventures (launched May 2022, 130B KRW fund), Lotte Ventures (250+ portfolio companies in biotech/healthcare/urban air mobility), CJ Group, Kolon Group, Hanwha DreamPlus accelerator (Korea, Japan, China, SEA), Mirae Asset, and KDB/KB Financial bank-backed venture arms.
The ecosystem impact proves substantial: 17 new CVCs registered in first 8 months of 2024, bringing total to 141 (36.1%) of 390 total VCs. Government eased regulations in late 2021 allowing holding companies to own CVC subsidiaries, with the 2 trillion KRW Korea Fund of Funds becoming more CVC-friendly. Target: 30%+ of venture ecosystem contribution by 2027. CVCs provide long-term partnership even in down markets. Notably, unicorn startups Zigbang and Musinsa launched their own CVCs, creating ecosystem flywheel effects.
Taiwan’s corporate VCs concentrate among semiconductor and hardware giants. TSMC operates VentureTech Alliance with $165M under management, independently managed but strategically partnered with TSMC. The TSMC Open Innovation Summit brings together startups, investors, and innovators annually, with partnership with Silicon Catalyst incubator providing world-class foundry services for startups. Investment focus enables chip design innovation across autonomous driving, HPC, AI, 5G, IoT, Metaverse, and medical/bio. Many tech giants started with TSMC including Nvidia, Broadcom, Marvell, and MediaTek. Global expansion includes investing in Japan (JASM), US (Arizona), and Germany (ESMC) facilities.
Foxconn (Hon Hai Precision Industry) operates a complex system of 12 sub-groups (A-S) with dozens of strategic investment departments and funds. Investment scope proves extremely broad with 80%+ investments overseas (majority in China), including Chinese unicorns DiDi, MoBike, Megvii, CloudMinds, Xiaopeng Motors (XMotors), CATL (Contemporary Amperex Technology), and Suzhou Spitz Information Technology. Geographic presence spans US, UK, France, Japan, Israel, and India with sector focus on AI, autonomous vehicles, edtech, health/medicine, and blockchain (via HCM Capital subsidiary for fintech). Taiwan strategy shows limited domestic investment due to scope preference for direct establishment (e.g., Foxconn Health Technology). Recent exploration of semiconductor ventures in India with TSMC and TMH demonstrate continued global expansion.
MediaTek Ventures manages $300 million from balance sheet (established 1997) investing in venture and expansion stages. Focus includes IC design, AI, and software sectors with innovation in technology, markets, and business models across electronics and semiconductor ecosystem. Strategy emphasizes creating own markets with “no counterparts ahead” requiring “sharper sense of smell.” The international team brings global vision with American-style evaluation and no geographic constraints, focusing on companies needing resources to “change the world.”
Other active corporate investors include Wistron (major AppWorks LP participating in multiple portfolio companies), Taiwan Mobile ($20M+ in AppWorks funds as major LP), Cathay Life Insurance (AppWorks Fund III LP), Fubon Life ($39.5M committed to AppWorks as Fund III LP), TransGlobe Life, Phison Electronics, Hongtai Group, and Gamania Digital Entertainment. Financial institution CVCs include CDIB Capital (~$1.2B under management as major player), Cathay Ventures (fintech, biotech, Taiwan’s 5+2 industries), and Fubon Financial.
Startup visa programs evolve from restrictive to competitive
Japan’s startup visa program merged Cabinet Office (2015, National Strategic Special Zones, 6-month initial) and METI programs (2018, up to 1-year, broader coverage) with 2024 reforms extending to up to 2 years maximum and nationwide expansion. Key statistics show 716 individuals granted Startup Visa status as of May 2024, with 359 (50%) successfully transitioning to Business Manager Visa and launching businesses. Geographic coverage reached 26 local governments plus private organizations (VCs, accelerators) after October 2023 opening to private sector review.
Requirements differentiate between initial Startup Visa (viable business plan, municipal or private organization endorsement, sufficient funds for 1-2 years, NOT initially requiring office space, ¥5M capital, or employees) and permanent Business Manager Visa transition (office space established with coworking allowed in some cities, ¥5M ~$38K capital OR 2+ full-time employees, viable ongoing business operations). Supporting locations include Tokyo (Tokyo Innovation Base, 1-2 year visas), Fukuoka (first Startup Visa city 2015, comprehensive support, coworking allowed), Shibuya (up to 2-year visa, English support), Kyoto, Osaka, Kobe, Sendai, Aichi/Nagoya (STATION Ai support), and 14+ additional locations.
Key 2024 improvements include extended duration (1 year → 2 years maximum), nationwide availability (versus previously limited regions), private sector involvement (VCs, accelerators can endorse), flexible business continuity assessment (allows debt for qualifying startups), alternative evidence accepted (third-party evaluations, fundraising progress, product development), and recognition that deep tech requires longer development timelines. Foreign entrepreneurs from 43+ countries and territories participated, with success stories including Kisui Tech (Sendai agricultural robotics, raised $700K) and multiple transitions to permanent operations. Challenges reported include time-consuming visa renewal processes (improving), bank account opening difficulties, capital remittance issues, limited English resources (variable by location), and cultural/business practice differences.
South Korea’s startup visas offer multiple pathways. The D-8-4 Technology and Business Startup Visa requires foreign entrepreneurs with advanced technology business, minimum Bachelor’s degree OR Global Startup Immigration Center recommendation, intellectual property (patent, utility model, design) OR completion of OASIS program (60+ points), venture company recognition or pre-venture status, registered corporation in Korea, technology evaluation or IP ownership, business plan demonstrating technology focus, and office space in Korea. Initial validity: 1 year, renewable based on business performance with benefits including full entrepreneur visa status, ability to hire staff, access to government support programs, and path to F-2 residency status.
The D-10-2 Technology Startup Preparation Visa serves as preparation visa before establishing company (allows attending OASIS classes and company registration) with initial duration up to 6 months extendable to 2 years total, requiring physical presence in Korea, Bachelor’s degree OR recommendation letter, OASIS program participation, advanced technology business idea, and pathway to D-8-4 upon company registration. The D-8-4(S) Startup Korea Special Visa (new 2024) focuses on innovation and business potential with less emphasis on academic/technical qualifications, requiring Ministry of SMEs and Startups recommendation with rolling applications accepted and accelerated approval for high-potential founders.
The OASIS Program (Overall Assistance for Startup Immigration System) offers 9 levels of courses each contributing points toward visa eligibility (need 60+ points for D-8-4), operated by KISED and approved private companies. Key courses include OASIS-1 Basic Intellectual Property (10 points), OASIS-2 Advanced IP Knowledge (25 points), OASIS-4 Business Plan Development (15 points), OASIS-5 Coaching & Mentoring (15 points), OASIS-6 Invention/Startup Exhibition (30 points), OASIS-7 Incubation Graduation (15 points), OASIS-8 Corporation Establishment (15 points), and OASIS-9 Commercialization Support (30 points, up to 10M KRW funding). Financial support includes prototype development funding, marketing support, IP application costs, and acceleration and mentoring programs.
The Global Startup Center launched July 2024 provides year-round support for foreign entrepreneurs with office spaces, funding vouchers, mentorship programs, and multiple locations (Seoul, Busan, Daegu, Gwangju, Jeonju, Jeju) offering soft landing programs. The K-Tech Pass Program launched March 2025 targets foreign tech workers with advanced degrees, offering expedited visa processing, F-2 residency status after 1 year (versus normal 3 years), and focus on robotics, AI, and advanced manufacturing. Support ecosystem results show 195 domestic corporations established through KSGC since 2016 and 364 startup visas issued. Cost estimates require minimum 5 million KRW for visa, IP, office, and accounting, with restriction on leaving Korea until residence card received. Recent policy developments include immigration system reorganization for startup-friendliness, E-7 visa requirements relaxed for high-demand industries, Global Talent Center recruiting 1,000 experts by 2030, enhanced support for foreign entrepreneurs versus previous domestic focus, and integration with K-Startup Grand Challenge (1,716 applications from 114 countries in 2024).
Taiwan’s Employment Gold Card launched in 2018 offers a 4-in-1 card combining resident visa, work permit, Alien Resident Certificate (ARC), and re-entry permit (unlimited entries/exits) with duration of 1-3 years (applicant’s choice). Approximately 1,500-5,000+ Gold Cards issued with growing adoption. Benefits include open work permit (work for any employer, multiple employers, or start own business), no pre-employment required (don’t need job offer before applying), tax benefits (50% deduction on income exceeding NT$3M for high earners), family inclusion (spouse and minor children eligible for residence), extended family visits (parents and grandparents can visit up to 1 year), and long-term residence (stay over 180 days permitted).
Eligibility covers 8 fields (Science & Technology, Economy at ~66% of applicants, Education, Culture & Arts, Sports, Finance, Law, Architecture/Digital with Digital field added recently). Qualifications include salary-based Article 1 (monthly salary ≥ NT$160,000 ~$5,600 USD proving with tax documents, W-2, or employer statements, most commonly used), experience-based (generally 5+ years expected), field-specific criteria, and Digital Field Bonus 2024 (airfare, accommodation, internet fees covered for industry exchanges until October 31, 2024). Application process uses online Foreign Professionals Online Application Platform with ~30 days processing time (excluding weekends/holidays), cost varying by citizenship and duration, required documents (passport, photo, qualification proof, visa information), and required in-person identity verification at designated offices.
Taiwan’s Entrepreneur Visa launched 2015 and updated July 2023 (extended to 2 years, online application mandatory) attracts international startups and innovative entrepreneurs. Benefits include no business required beforehand, 2 years initial residency (updated from 1 year), extension without leaving Taiwan, group applications (up to 3 people per team), loan access (eligible for Youth Business Start-up Loan), and work authorization included. Individual eligibility requires meeting at least one of: raised funding from recognized investment institutions, received grants from government innovation programs, won awards from government startup competitions, accepted into government-backed incubator/accelerator, patent holder with commercial potential, or established startup meeting “Directions of Recognition for Startups with Innovation Capability.”
Team/group applications allow maximum 3 people who must invest combined total ≥ NT$1 million in Taiwan enterprise with members serving as legal representative, executives, or managers. Extension criteria require meeting at least one of: sales revenue ≥ NT$3M (most recent year or 3-year average), operating expenses ≥ NT$1M (most recent year or 3-year average), or employs ≥ 3 full-time Taiwanese employees. Application process uses online Foreign Professionals Application Platform (National Immigration Agency) with review by Investment Commission, Ministry of Economic Affairs (MOEA), foreign nationals applying via Consular Affairs Bureau (MOFA), and Hong Kong/Macau applying via National Immigration Agency (NIA). Support infrastructure includes soft-landing services, community support for foreign founders, incubator access (Taiwan Startup Terrace, TTA, accelerators), networking (events, mentorship programs), lower barriers compared to other global hubs, and transparent regulations in business-friendly environment.
Strategic implications point toward integrated regional ecosystem
The evolution of Japan, South Korea, and Taiwan’s startup ecosystems reveals a fundamental shift from national competition to regional integration driven by shared challenges and complementary strengths. Demographic crises (Korea’s birth rate below 0.7, Taiwan at 5.81 per 1,000, Japan’s 29.3% over 65) force international expansion as domestic markets saturate. All three pivoted from domestic-first to global-first strategies, with Southeast Asia emerging as primary target market for its $200B digital economy and cultural proximity.
Technology leadership remains distributed: Japan dominates deep tech and research (Tokyo #1 in Knowledge category), Korea leads digital consumer applications and execution speed (Seoul #8 globally), Taiwan controls semiconductors (63% global market share). This specialization creates natural collaboration opportunities—Taiwan manufactures chips designed in Korea using Japanese materials and equipment, while software developed in Korea deploys on hardware designed in Taiwan and sold through Japanese distribution networks. Cross-border investment accelerated with formal frameworks like the Japan-Taiwan Innovation Summit, K-Startup Center Tokyo, and APEC 2025 partnerships institutionalizing previously ad-hoc connections.
Talent shortages constrain all three ecosystems severely, with Japan’s projected 590K gap by 2030, Korea’s 81.7% of AI companies affected, and Taiwan’s declining birth rate compounding challenges. Visa reform represents the most aggressive policy response: Japan extended startup visas to 2 years with private sector endorsement, Korea launched K-Tech Pass offering F-2 status after 1 year for tech workers, Taiwan’s Employment Gold Card issued 5,000+ permits with open work authorization. These reforms signal recognition that domestic talent pools prove insufficient for global competition, requiring foreign entrepreneur and developer attraction.
Corporate venture capital involvement reached unprecedented levels, particularly in Japan (50-62% of deals) and Korea (141 CVCs, 36.1% of total VCs, targeting 30%+ ecosystem contribution by 2027). Chaebols and keiretsu traditionally dominated innovation through internal R&D, but their pivot to external startup investment signals structural ecosystem transformation. Samsung, SK, Hyundai, Naver, TSMC, and Foxconn collectively deployed tens of billions annually, providing not just capital but also manufacturing capacity, distribution channels, and global market access that pure financial VCs cannot match.
AI infrastructure investment demonstrates national mobilization: Korea’s 260,000+ NVIDIA GPUs, Taiwan’s NT$10B Enhanced AI Program and partnerships with Microsoft/Google/NVIDIA, and Japan’s government AI funds and corporate backing create computational advantages over resource-constrained Western startups. This infrastructure play leverages manufacturing relationships (NVIDIA partners with all three countries’ chip makers) and government coordination to build comparative advantages in AI training and inference.
The late-stage funding gap remains the critical constraint requiring solution. Japan’s 40-60% valuation discount, Korea’s DPI ratios 15-25% below Western funds, and Taiwan’s 77.3% funding concentration in seed stages all indicate systematic undervaluation and capital shortage beyond Series B. IPO market reforms (Japan’s consistent 40-55 annual startup IPOs, Taiwan’s Innovation Board lowering requirements, Korea’s Pre-Unicorn program) address exit channels, but growth capital availability determines which companies survive to exit. Cross-border mega-funds, sovereign wealth partnerships, and SPAC structures may provide solutions, but require regulatory harmonization across the three countries.
Regional competition with China shifted from direct confrontation to strategic positioning as alternative. While China’s 87 unicorns and massive VC availability dwarf combined Japan-Korea-Taiwan totals, US-China tensions create opportunities for technology partnerships with Western companies and governments seeking diversification. The three countries’ democratic governance, IP protection, and regulatory transparency provide trust advantages over Chinese alternatives for sensitive technologies. Collaboration with Southeast Asia through investments, soft landing programs, and technology transfer positions all three as bridges between developed and emerging Asia.
The next phase of ecosystem development will determine whether Japan, South Korea, and Taiwan can collectively challenge Silicon Valley and China’s dominance or remain trapped in “middle power” status. Success requires solving talent mobility (visa reforms must translate to actual immigration), late-stage capital formation (domestic LPs must commit growth-stage capital), and exit market liquidity (M&A markets must develop alongside IPOs). The infrastructure, policies, and cross-border frameworks now exist—execution will determine whether East Asia’s startup powerhouses fulfill their potential.
