Kathy Matsui Shares Insights into the Startup Economy and the State of “Womenomics” in Japan
This interview originally appeared in the hibiscus journal, published in conjunction with the hibiscus summit in January 2025.
Interview by Lori Teranishi
The serene, contemplative world we all long for feels more elusive than ever. Clashing ideologies, fierce economic competition, armed conflict, social upheaval, and global warming threaten our hopes for a future where everyone prospers.
Fortunately, there are leaders dedicated to social and economic change for the better. Kathy Matsui is a standout in this regard. Current co-chair of the U.S.-Japan Council and co-founder of MPower Partners, Japan's first ESG-focused venture capital fund, she previously served as vice chair of Goldman Sachs Japan and chief Japan equity strategist from 1994 to 2020. Matsui was ranked No. 1 in Japan equity strategy by Institutional Investor magazine multiple times, chosen by The Wall Street Journal as one of “10 Women to Watch in Asia,” and named to Bloomberg Markets magazine’s “50 Most Influential” list.
For decades, Matsui has worked to unlock the full economic contribution Japanese women can make to the nation’s economy, a movement broadly known as “womenomics.” Her leadership at the U.S.-Japan Council supports the belief that the relationship between America and Japan — two democratic, open-market nations that believe in human rights — is critical for global security, stability and prosperity.
While disruption has a negative connotation to many business people, it can also describe sudden positive change for the better, as happened with mobile phones, the internet, social media and now AI. In many countries, a key driver is the startup economy. Is that true of Japan?
KM: While it has grown exponentially, I think the state of the innovation or startup ecosystem here in Japan is still relatively nascent when compared with similar ecosystems in other developed economies like the United States. Japan’s aggregate number of venture investments has increased tenfold in the last decade, but that was coming off a very small base. In absolute terms, its total amount of venture funding is only 1/35th or 1/40th that of the United States’, despite its phenomenal growth.
From an outsider’s perspective, this is puzzling because Japan has talent, technology and capital — the three ingredients necessary to create a thriving startup ecosystem.
KM: You’re pointing out the million-yen question. Why is it so small despite possessing these ingredients? Japan does have high-quality human capital, but most of the best and brightest young people finishing their studies have tended to go to very large, established blue-chip and other companies. Only over the past three years or so has the startup option been seen as viable.
This seems to be decades behind what we experienced in America. Why is that?
KM: Talented workers are willing to take risks they weren’t willing to take before, because the job market is suffering from more acute shortages of talent than was true five, ten and twenty years ago. So, young people, if they’re talented, have many options in front of them. This has presented them with the ability to take more risks.
The University of Tokyo did a survey of its undergraduates and asked them, “What’s your preferred path?” Almost 40% said that they would like to pursue a career in startups.
Let’s say you are working for a large, established company, and a friend from college who is launching a startup asks, “Will you do this with me?” Before, if you did agree to join him and the venture failed, that was sort of the end of your life, so to speak. But now you figure, well, if I fail, I can always go back to my normal, comfortable life working for a large, established company.
Today, Japanese workers from big companies, investment banks, consulting firms and other kinds of businesses are flowing into the startup ecosystem. You typically would not see that in the past.
And government policies have changed in helpful ways as well, right?
KM: I lived in Japan for nearly three decades before I saw the Japanese government put a huge spotlight on the need to develop the startup ecosystem for the first time in 2022. It issued a slew of policies, starting with the ambitious goal of increasing the number of startups tenfold in five years. So now the clock is ticking on this very ambitious goal of expanding the amount of public funding that is directed to startups, to expand accelerator programs, incubator programs and all sorts of initiatives.
Are all the elements for a startup economy now in place?
KM: What’s still probably missing is a global mindset. Japan is sort of blessed and cursed with a relatively large domestic market. It’s large enough that you don’t have to go global from day one, whereas that is a requirement for founders in countries like South Korea or Israel. But this means some Japanese founders lack global ambitions and therefore set out to create smaller-scale businesses.
You have been a proponent of womenomics for many years. How much progress has been made, especially in Japan?
KM: There are a record number of Japanese women working outside the home, and that’s defined in economic terms as a labor force participation rate. That’s the highest rate among the G7, when, a decade ago, it used to be among the lowest. It’s higher than comparable numbers for the U.S. and for Europe.
Another important development in Japan is that there is much more transparency around the state of diversity within companies. For instance, companies are now required to disclose female manager ratios and are encouraged to set targets for those ratios. There are pay-gap disclosure requirements. While not a legal requirement, it’s very strongly recommended by the stock exchange to have at least one female director on a corporate board, so everybody is scrambling to fill those seats.
Now those are the good things. The not-so-good thing is that about half of Japan’s working women are working part-time, as opposed to full-time jobs. Also, we still don’t have enough women in leadership or decision-making positions, whether it be at the private sector or the public sector.
Since you’ve got to start somewhere, and Japan is at least getting many women working outside the home, the next area of focus is converting those in part-time jobs to full-time, while also working hard to get more women in leadership positions.
Headshot courtesy of MPower Partners
