As is customary, I am honoured to be able to feature the voices of venture capitalists beyond the usual Silicon Valley household names and once again publish the wisdom of a fully-female cast of VCs for this season’s set of predictions.
May the universe bring us cosmic clarity and enlightenment in 2025. Happy holidays !
Chiamin Lai： General Partner, FIRSTLIGHT Capital
1. Inflow of Foreign Funds and Foreign Talent:
In 2025, Japan is expected to see even more active investment in Japan by foreign investors due to the intensifying U.S.-China technology competition and supply chain restructuring brought about by the Trump administration’s China policy and immigration policy. In addition, this will be an excellent opportunity to secure talented human resources from overseas, which is expected to improve the global competitiveness of Japanese startups.
2. Full-scale use of generative AI:
The year 2024 was a year in which generative AI was incorporated into many SaaS products and business efficiency improved. In addition, many pilot projects utilizing generative AI were conducted by large companies against a backdrop of labor shortages. Based on these successes, more and more companies will place generative AI at the core of their operations in 2025. Furthermore, we expect to see an increase in AI-native startups based on “Vertical AI” in fields such as healthcare, education, logistics, and manufacturing.
3. Focus on the potential of Physical AI: In 2025, we predict that the potential of Physical AI will be increasingly explored as a way to address labor shortages in Japan’s “frontline” industries. In the manufacturing, logistics, medical, and other industries, a system in which AI-equipped robots, hardware, and IoT sensors support work will be indispensable in the future to address the shortage of human resources who can directly perform tasks in the field. These technologies will not only improve productivity, but also create a new labor model, and should be focused on as a solution to structural issues in Japanese society.
Tomoko Masuda： Director, Daiwa Corporate Investment
Looking back on 2024, Japan’s growth market did not recover, and the year was one of continued stagnation. Japan possesses a unique set of cultural and business practices, yet with a substantial market size. Japanese startups struggled to expand overseas, and their normal course of action involved concentrating on their domestic market with a focus on steady business performance improvements. However, with Japan’s declining birthrate and aging population, it is impossible to ignore the fact that many markets are gradually shrinking in size, and the same is true for startups. In order for Japanese startups to achieve significant growth in the future, they will need to build their businesses with an eye toward overseas expansion.
Our fund has invested in startups in deep tech fields such as space, life sciences, and cleantech, which are not limited to Japan but are aggressively developing overseas markets. Similar moves can be seen in other companies.
I predict that by 2025 there will be an increase in startups and fundraising based on overseas expansion. In order to break through the sense of stagnation and contribute to the revitalization of the domestic economy and the creation of new industries, we will continue to actively invest in startups that have the spirit to develop large markets that transcend business domains and national borders, and possess the requisite ambition to overcome various barriers.
Ana Carolina Mexia Ponce : Co-Founding Partner, Nido Ventures
In 2025, the transformative potential of AI will be increasingly evident across foundational industries such as agriculture, manufacturing, logistics, healthcare, electronics, and automotive. As AI tools mature, they hold the promise of becoming seamlessly integrated into critical processes, driving efficiency, reducing costs, and enabling entirely new capabilities. For example, in agriculture, AI-powered precision farming has the potential to optimize water and fertilizer use, increasing crop yields while conserving resources. In logistics, predictive analytics and autonomous systems could revolutionize supply chain management, reducing delays and waste in a world increasingly dependent on just-in-time operations.
In manufacturing, AI-driven automation might extend beyond robotics on the assembly line. Advanced generative AI models could collaborate with engineers to design optimized parts and processes, shrinking development cycles and reducing material waste. The electronics industry could benefit from AI-enhanced chip design and predictive maintenance, ensuring more efficient production and innovation cycles. Similarly, the automotive sector is poised for transformation, with AI advancing electric vehicle design, autonomous driving technologies, and supply chain optimization. As these industries explore AI at scale, the ripple effects could be immense, particularly in emerging markets like Mexico, where technology is bridging the gap between traditional practices and modern innovation. Companies combining domain expertise with AI capabilities have the potential to redefine the next decade, proving that innovation thrives at the heart of industries that keep the world running.
Misuzu Matsumoto： Associate, Incubate Fund
I am particularly interested in the generative AI area. According to Nomura Research Institute’s “ChatGPT Usage Trends in Japan (as of September 2024),” ChatGPT usage has exceeded 20%. With ChatGPT crossing the chasm, I believe that generative AI will become even more accessible in 2025, both toB and toC. Personally, I see strong potential in domain-specific services at the application layer and businesses that restructure existing business models using AI. In terms of the attributes of entrepreneurs, just as the number of entrepreneurs from investment banks and consulting firms has increased significantly since the late 2010s, I expect the number of entrepreneurs from startup companies to increase from the late 2020s. I am very much looking forward to seeing what kind of visions and ideas those who have seen the realities of startups with their own eyes will come up with to start their own businesses and what kind of world they will create.
Sera Tsutsumi：Senior Principal, DG Incubation
1. Overseas expansion and cross-border investment by Japanese entrepreneurs:
In the past, the Japanese startup ecosystem was focused mainly on the Japanese market. In 2025, however, there will be more Japanese entrepreneurs with talent and extensive experience in the global markets to rapidly expand their businesses to larger markets from the seed stage. This trend will accelerate cross-border investments between Japan and other countries and will require the investment process at the global standard.
2. Climate Tech in a new form:
People often talk about the demise of Climate Tech because of the change of administration in the U.S. In fact, the market environment will be different than before due to the systemic changes and reductions in subsidies. On the other hand, I believe that existing climate change technologies, business models, and research will continue to develop, though we may call them differently like “Next-Generation Industry” rather than “Climate Tech” as we used to. In 2025, we expect to see the level of startups rise as their true business value and competitiveness will be further questioned.
3. Expansion of impact investment:
In the past 1-2 years, institutional investors have started to establish and apply impact investment policies and budgets to promote impact investment. Given the focus on impact investment and the urgency of social and environmental issues, we expect that in 2025, financial institutions and companies that have not been exposed to impact investment will gradually formulate investment policies with impact intentionality.
