Interview: Hiroshi Nerima on Innovation in Japan and Why VCs/CVCs are Expanding There

Japan has long been viewed as a difficult market for foreign startups. But over the past decade, the country has been undergoing a remarkable shift. As Japan accelerates digitization, decarbonization, and global collaboration, corporate innovators are increasingly seeking partnerships beyond their borders.

In this interview, Gina Domanig, CEO & Managing Partner at Emerald, speaks with Hiroshi Nerima, Managing Partner at Nabtesco Technology Ventures, about how Japan’s innovation landscape is transforming, what it means for global startups, and how long-term partnership models (like the one between Nabtesco and Emerald) can help bridge cultural and strategic gaps.

Gina: Japan is pushing hard on many innovation fronts. From your perspective, what has changed that makes Japan more open to foreign startups and venture capital today?

Hiroshi: In the past, Japan was seen as difficult: slow decision-making, language barriers, and long trust-building cycles. But today, things are changing fast. The government is pushing decarbonization and digital transformation, and corporates realize we cannot solve these problems alone. Startups, whether in climate tech, robotics, or industrial IoT, are essential. You see Japanese companies, including Nabtesco, becoming much more willing to pilot foreign technologies and collaborate early. That’s a big shift from even five years ago.

Gina: Would you say it’s still harder to enter Japan than, say, the US?

Hiroshi: Yes, it is harder in some ways – language, culture, and slower processes. But Japan offers something unique: once trust is established, relationships are very long-term and very deep. That means when you succeed here, you have a partner for decades, not just for one contract cycle. For VCs and CVCs, that long-term horizon is very attractive.

Gina: We’ve worked closely together for many years, how has that partnership been valuable for Nabtesco?

Hiroshi: Emerald has been our bridge, translating between the mindset of entrepreneurs and the needs of a Japanese corporate like Nabtesco. Emerald gave us global deal flow and evaluation standards, so our CVC could operate internationally from day one. And they brought discipline: investment committees, monthly BU calls, structured due diligence…keeping us aligned with strategy and financial discipline, not just chasing deals.

Gina: Are there any collaborations that particularly stand out as learning experiences or successes for Nabtesco?

Hiroshi: DeepSea is a standout case for us. We first invested, supported by Emerald, made a follow-on investment, and within two years completed a full acquisition. That journey not only gave Nabtesco access to world-class AI for maritime route optimization, it also taught us how to work with startups and with a Greek culture company very different from our own. The challenge now is true integration: not only leveraging synergies with our control technologies, but also learning to operate an ARR subscription model, which is entirely new for Nabtesco.

Another case is a Scandinavian motor startup we’ve been working with since early last year. Several of our business units have already validated the technology through proof-of-concepts. Electrification is indispensable for the future of motion control, and this motor technology is core to our competitiveness. Nabtesco tried to develop it in-house for a decade, because of our strong attachment to internal innovation, which is the typical ‘Not Invented Here’ (NIH) syndrome. With strong support from Emerald, and with my own cautious approach shaped by long experience dealing with NIH, we were able to overcome those internal barriers and now we see real momentum.

Gina: Looking ahead, how do you see innovation in Japan evolving—and what role do you think partners like Emerald will play?

Hiroshi: Japan has no choice but to reinvent itself. After three decades of stagnation, the government now sees technology, sustainability, and openness to foreign talent as the path forward. Corporates must move from closed, in-house R&D to true open innovation with global startups and investors.

Emerald has been our partner for over seven years, and they are a natural fit for Japan. Like us, they come from a culture of precision and discipline, but they are also global and diverse. That combination lets them both understand Japanese corporates and help bridge the gap to international entrepreneurs.

My vision is that, with partners like Emerald, Japan can transform from a tough market into an attractive destination for climate tech and deep tech startups and VCs – a place where global entrepreneurs know they will find both capital and long-term industrial partners.

Gina: In one sentence: What advice would you give to startups or investors looking to expand into Japan?

Hiroshi: First, find the right partner under the right advice from the right people, then be patient and build trust. Because once a Japanese partner commits, the relationship will be long-term, reliable, and a true gateway into Japan.