Startups (Note 1) are important economic entities for the creation of employment and innovation. Unicorns (unlisted companies with a market capitalization of USD 1 billion or more) are often used as examples of the success of startups. The government's Integrated Innovation Strategy, which was released in June 2018, includes the target of creating 20 unicorn companies within the space of five years (Note 2). By increasing the number of growth company role models, the government hopes to gain the upper hand in the global fight for innovation dominance.
However, it is not possible to intentionally create individual unicorns through a policy program. It is said that the chances of finding a homerun venture are around 1 in 10, even if venture capitalists (VCs) repeatedly look for and consider promising businesses (Note 3). Policy-wise, all one can do in this kind of field is to create an environment that is conducive to unicorns and use the power of private enterprise to widely support potential unicorns (Note 4).
The environments that are conducive to unicorns that have drawn attention in recent years are cities. According to a survey by the World Bank, in the US, which produces the majority of the world's unicorns, over 80 percent of unicorns are found in urban areas (San Francisco, New York, Boston, etc.). Other countries such as China and the UK show similar results (Note 5). In Japan, home-grown unicorns such as Mercari, PeptiDream, Preferred Networks, and Sansan are all from Tokyo.