Further expansion of university startup firms: Calls for expansion of basic research budget

The Japan Association of Corporate Executives has released an opinion paper titled "Toward Further Expansion of the Startup Ecosystem." The article was published by the Startup Promotion General Committee of the Association. This paper provides a set of recommendations aimed at creating startup firms capable of expanding worldwide. The goal is to increase the number of startups with global potential that can continue to grow even after going public. The paper's recommendations are directed at the relevant government ministries and agencies, as well as the other key stakeholders in this process, including startups, venture capitalists, large corporations, national universities, the Tokyo Stock Exchange, and financial institutions.

To restore Japan's clout, a mechanism must continuously nurture a large number of startups with the potential to expand globally. Such a mechanism is also necessary for building a sustainable society. However, Japan's startup ecosystem faces a number of challenges. There is a lack of investment capital for high-risk areas with global potential, a decline in basic research capabilities that support science and technology, and an insufficient number of startups that can grow after being listed on the stock market.

The opinion paper recommends measures for both the government and the private sector, to be introduced in a series of phases: technology creation, company start-up and growth, and sustainable growth of companies. For example, the paper calls for the training and development of personnel working in venture capital and suggests reviewing the criteria for evaluating corporate value. In particular, the paper advocates for expanding the budget for basic research to support university-based startups. It states that it is necessary to introduce a scheme to expand budgets for selected fields of research that address social problems and enhance Japan's industrial competitiveness. This new scheme should provide multi-year funding primarily for researchers leading the next generation in these fields, allocating 1 to 2 million yen per researcher annually for basic expenses.

Sanae Takaichi, Minister of State for Science and Technology Policy, stated the following: "It goes without saying that support for basic research is crucial for expanding the startup ecosystem. At this year's Council on Economic and Fiscal Policy, I called for an increase in operating expense subsidies to support university research in a stable, continuous manner. It is important to have dual support for these basic expenses and competitive research funds. These funds support outstanding research and research with specific objectives. To raise basic research levels, universities must also ensure a stable research environment. They must work further to acquire external funds and use them efficiently and effectively. This will strengthen the management base of the universities. I request all the member companies of the Japan Association of Corporate Executives to provide support to the universities."