Startup Culture in Hokkaido
The startup culture in Hokkaido plays out across many locations, organizations, and individual companies. We were curious: What does Hokkaido have to offer that inspires entrepreneurs to do business in this most northern prefecture of Japan? What is special to Hokkaido that - in terms of culture, incentives, or natural resources - makes this a good place to for a startup to take root or to “take off?”
In our research, the companies we discovered cover a wide range of applications and industries. There are business models you might expect, like companies focused on artificial intelligence. And there are other companies with goals and ambitions more unique to Hokkaido’s local challenges and resources, like technology designed for cows, and also… for rockets and satellites.
At the center of our research on startups is an interview we conducted with STARTUP HOKKAIDO; an organization that blends government programs with private resources to support startup companies operating in Sapporo and other Hokkaido cities.
In the examples below, we share a story of startup programs and companies across several regions of Hokkaido, including local startups with ties to companies in places like Tokyo, and businesses beyond the borders of Japan.
STARTUP HOKKAIDO Helps Entrepreneurs
The research for this article began with our interest in a group called STARTUP HOKKAIDO:
For several years, there was an organization in Sapporo called STARTUP CITY SAPPORO. In 2023, that effort was reorganized to create an “all-Hokkaido” effort called STARTUP HOKKAIDO. The STARTUP HOKKAIDO Executive Committee includes representatives from Sapporo City and the Hokkaido government (specifically, the Hokkaido Bureau of Economy, Trade and Industry), working together to provide resources and enthusiasm for “a startup ecosystem.”
From the STARTUP HOKKAIDO website: “[P]ublic institutions and private companies work together to provide intensive support, aiming for the startup companies' rapid growth.”
STARTUP HOKKAIDO is one of several startup-focused groups in Hokkaido with ties to both local government programs and for-profit companies.
D2 Garage and Digital Garage
That mix of government and private companies at STARTUP HOKKAIDO is apparent in the leading role of D2 Garage - one example of the role of private companies involved in Hokkaido's official efforts to invigorate the startup culture in the prefecture.
On their website, D2 Garage lists two "shareholders." The first is Digital Garage, which (along with an amusing admiration for both penguins and Timothy Leary) describes itself as a mix of "Technology x ESG x Incubation." D2 Garage's second listed shareholder is Hokkaido Shimbun Press - the largest local newspaper in Hokkaido (headquartered in Sapporo).
D2 Garage used to operate a co-working and “incubation” space for startups called DRIVE, which was the original home of STARTUP CITY SAPPORO. That space was apparently housed in property owned by Hokkaido Shimbun Press. We know that (primarily), because when DRIVE closed recently (May 2024), the reason given was “due to the relocation of the Hokkaido Shimbun Press."
The governments of both Sapporo and Hokkaido, an investment firm, a newspaper, and a defunct coworking space, all intertwine in the backstory of Hokkaido's startup culture.
Encouragement or Profit?
Because of the mix of for-profit goals and more basic governmental assistance, the underlying emphasis of STARTUP HOKKAIDO is not immediately clear.
If you work through the list of contacts at STARTUP HOKKAIDO, you will find other members of their team that work for for-profit companies , some selling consulting services that "make Japanese market entry easy." Along with the help offered to local entrepreneurs, there is money to be made.
Did STARTUP HOKKAIDO take an interest in the funding capacity of for-profit companies like Digital Garage, and bring them in to provide capital for startups? Or did interested parties at private companies like Digital Garage lobby the local government to put a public label on private efforts to recruit companies for investment?
Regardless of the origins and intentions of the players involved, there is a lot of energy in Hokkaido aimed at encouraging the spirit of entrepreneurship.
Questions about Startup Culture in Hokkaido
When we contacted STARTUP HOKKAIDO to ask for an interview, we were received by Mutsuo Toyota, an Incubation Group Manager from D2 Garage. He was very generous with his time, and shared a lot of information about the state of startups in the region.
Toyota san wanted to make sure we came prepared with some comments about startups; and we most certainly did. We had many. What followed was an interesting interview about what STARTUP HOKKAIDO (or Digital Garage?) thinks about startups. In sharing these questions and answers, and from the additional research as we wrote this piece, we can offer some reporting on the current state of startups in the region.
A disclaimer: Almost all of the source materials for our research, including the interview, were based in the Japanese language. As this reporting is in English, our work relies on interpretation. As we share the answers to our questions, and notes collected from other research, readers can take all of this (as they should take all information), as a perspective.
With that disclaimer had, let us dive into our first question from the interview:
What is a “Startup?”
From (a translation of) the STARTUP HOKKAIDO website:
"A company that uses technology to bring innovation to society and achieve rapid growth in a short period of time in order to solve problems in the world."
We put that question to Toyota san, as well:
QUESTION: For readers that don't already understand this concept, how do you define a startup?
Toyota san's take is that while there is no official definition, there are "wide ideas" about what a startup is, and more narrow definitions. The wider definition is that a startup is any new business. But for STARTUP HOKKAIDO, the narrower meaning is a business that can "pop off" and "explode," that can quickly scale up, and potentially have a global impact.
Of those startups in Hokkaido that might make a “global impact,” do they start here in Hokkaido? Or relocate to Hokkaido from other places?
As we researched some of the notable examples of startups in Hokkaido, we discovered a lot of the companies began someplace else.
Startups that Relocate to Hokkaido
Some of the momentum behind the startup movement in Hokkaido is local. But as you dive into the backstories of some of these companies, they often have ties to other locations in Japan and beyond.
QUESTION: For Japanese companies, do you have any examples of startups that moved to Hokkaido from other locations in Japan?
As an example, Toyota san suggested a Japanese company called Sagri that does "visualization of farmland" via satellite.
Sagri's website describes their business model as, "AI-based farmland parcel formation using satellite data." One of the problems they are looking to solve is related to abandoned farmland in Japan. Traditionally, farmland boundaries have to be "patrolled" and surveyed in person. Sagri uses satellite imaging to perform some of these functions from space, using technology to add efficiency to a previously manual process.
(Sagri's efforts to add order to undocumented, abandoned farmland mirrors efforts by the real estate community to find solutions for akiya, the abandoned house phenomenon that is a common story throughout Japan.)
Companies Setting Up Offices in Hokkaido
Many of the companies we researched for this piece were founded in other areas of Japan, and came to Hokkaido later in their development.
Sagri has offices in Tamba (in the Hyogo prefecture), and was originally a project of Gifu University (near Nagoya). The Sagri website URL has a ".tokyo" extension (they do have offices in the Shinjuku area of Tokyo as well). As Hokkaido has a lot of land at play in Japan's agriculture, that helps explain why an established company from Honshu like Sagri would set up a presence here in Hokkaido.
As we did our research, we see Sagri was involved in a 2021 STARTUP CITY SAPPORO program called "Local Innovation Challenge." That challenge is one example of Hokkaido events where businesses pitch their business model to venture funding groups. At those events, venture groups like Digital Garage might choose to invest in some companies, providing capital to help those companies accomplish their objectives and grow more rapidly. These fund-raising events are one way in which companies are first drawn to business opportunities in Hokkaido.
The Sagri example is also a good reference point for understanding how Hokkaido sees the startup culture; as opposed to American-based startups that have focused on software and web-services (like Uber and Airbnb), in Hokkaido, the culture is more of a direct application of technology and hardware.
Aerospace Startups in Hokkaido
QUESTION: What other industries are represented by these startups in Hokkaido?
Toyota san's response included references to space, rockets, and, yes, satellite companies like Sagri.
In our research we came across other aerospace companies like Interstellar Technologies, a proper "dosanko" company. Beginning in 2005 as "Natsu no Rocket-dan," Interstellar Technologies is a rocket company, with a history of rocket tests that dates back to 2011. The company is located in Taiki, Hokkaido, south of Obihiro.
The location of Interstellar Technologies in Taiki, in a small town with a population of only 5,300 people, helps to show that the story of startups in Hokkaido goes beyond the major cities.
The town of Taiki wants to become the "space version of Silicon Valley." As a part of that plan, they have developed a rocket launching station for commercial purposes called Hokkaido Space Port (or HOSPO), the first public space port in Asia. Taiki sees HOSPO as part of their "revitalization plan" for the city; they would like HOSPO to be a resource that can attract and support other aerospace initiatives.
Agriculture Startups in Hokkaido
When Toyota san considers ideal startups for the Hokkaido area, one criterion he suggested was that companies have a desire to take on challenges specific to Hokkaido that need to be solved. As an example, he suggested Farmnote Holdings.
Farmnote Holdings "supports sustainable dairy production through its cloud-based cow herd management system." As Toyota san described, this company combines a management system with a "wearable device for cows" that helps monitor the mating cycle and other aspects of the dairy business in Hokkaido. Farmnote Holdings lists an office in Tokyo, but has their main office in Obihiro.
Farmnote Holdings is a good example of Toyota san’s desire to see technology companies embrace local Hokkaido interests.
Artificial Intelligence Companies in Hokkaido
In addition to aerospace and agriculture, in our interview we talked about AI businesses in Hokkaido.
QUESTION: Are the startups creating jobs here in Sapporo or Hokkaido? Any examples?
While Sagri has elements of AI (maybe every company wants to make that claim these days), there are several AI-specific business models operating in Hokkaido.
Toyota san referenced a specific AI company as an example of startups that are creating jobs in the prefecture:
AWL is another company that originated outside of Hokkaido, with their head office in Tokyo. "Together with multinational members from 20 countries, AWL develops and offers AI camera solutions to solve issues and enhance value at retail stores." Beginning with some research and development via a partnership with Hokkaido University, they established an office in Sapporo in 2021.
Another example of an AI company in Japan with ties to Sapporo is AIQ.
AIQ wants to "provide comprehensive support from formulating marketing strategies to executing them to reach target customers." An early demonstration of their goals included an "Instagram analysis tool" called AISIGHT (launched in 2019). AIQ originated in Tokyo, and opened a Sapporo office in 2012.
International Startups in Hokkaido
Going beyond Japan's borders, we asked about international interest in Hokkaido.
QUESTION: Are there any examples of foreign companies that have relocated or setup in Hokkaido?
One example of an international company doing business in Hokkaido is Orange Wasabi; a company that combines "wasabi farming with the power of technology." Based in Australia, Orange Wasabi founder Angus Lam came to Hokkaido in 2024 to participate in at least two of these events where entrepreneurs share their company story with potential investors.
The first Hokkaido event for the year for Mr Lam was Hokkaido Innovation Week, an event held by STARTUP HOKKAIDO. Our research found that Lam was also reported to have participated in Tokachi Innovation Caravan, a separate event held in the city of Obihiro, in the sub prefecture of Tokachi.
The Tokachi district has just over 350,000 residents, but is another example of a region of Hokkaido with aspirations for more innovative companies in their future. The Tokachi Innovation Caravan has the intention of creating "collaborative businesses and business emergence between businesses in the Tokachi region and overseas startups." Similar to what the city of Taiki is doing with Interstellar Technologies and aerospace, Tokachi provides another demonstration of a Hokkaido organization working to create both interest in technology and international collaboration.
The Tokachi Innovation Caravan event was held at LAND, "an open space to realize new business plans and ideas originating from Tokachi."
We had some communication with Lam, and he explained he formed a new Hokkaido-based startup called Hokkai Technology Nogyo. Lam confirmed that STARTUP HOKKAIDO helped him with the visa process.
Startup Visas for Entrepreneurs in Japan
The conversation about Orange Wasabi led Toyota san to mention Japan's startup visa.
While Japan has typically offered a business manager visa to entrepreneurs, a special startup visa may offer additional benefits for individuals developing startups in Hokkaido.
According to Japan's Ministry of Economy, Trade and Industry (METI), a startup visa is a special visa for entrepreneurs that come to Japan, giving them a one-year visa stay with fewer requirements than the traditional business manager process. After that year, normal requirements for a business manager visa apply. STARTUP HOKKAIDO provides some support and guidance for entrepreneurs that are pursuing a startup visa in Hokkaido.
Outreach to Hokkaido Startups
We were curious to know if STARTUP HOKKAIDO actively recruits startups to form in, or move to, Hokkaido?
QUESTION: Do you reach out to startups? Or do they have to come to STARTUP HOKKAIDO for help?
Toyota san said, "both."
As an example, he talked about a partnership of sorts with the country of Finland.
Toyota san said that Hokkaido and Finland have some similarities (perhaps a snowy climate being the most obvious), and that some solutions developed by startups in one area might benefit the other.
In 2022, there was an event in Hokkaido called Hokkaido Finland Week.
Fees and Support for Startups in Hokkaido
In the interview, there were unclear moments about the overlapping roles of private companies (like Digital Garage) versus support from the local governments in Hokkaido. At one point, we asked about any costs associated with STARTUP HOKKAIDO.
QUESTION: Does STARTUP HOKKAIDO offer paid services? Or government support?
Toyota san said there is almost nothing involved that costs money.
STARTUP HOKKAIDO does offer several specific free services to entrepreneurs and startups in Hokkaido. At the most basic level, there is a startup consultation desk, offering a range of specific consultation on launching a startup, accounting, legal questions, and more.
There is also "certification of specific start-up support projects" that might make you eligible for help from the Japanese government (such as reduced taxes), available via Sapporo City.
Office Space for Startups in Hokkaido
As new startups are formed or relocate to Hokkaido, do they have real estate needs, or any impact on the local real estate market?
QUESTION: Do you see any impact on real estate based on startup activity in Hokkaido?
Toyota san said the startups are not really affecting real estate values. For smaller companies (at least at first), that is likely true; small companies do not need a lot of office space or additional housing for employees.
For some of the larger projects (certainly all the aerospace companies), real estate would be an important consideration. The establishment of the Rapidus semiconductor plant in Hokkaido has already caused the price of real estate in Chitose to increase.
We talked a little about short term real estate considerations, even office space, and Toyota san downplayed those needs. He said these early-stage entrepreneurs want to avoid expenses associated with office space. That is undoubtably true for smaller projects.
We also know that many of the startups that STARTUP HOKKAIDO features have already established offices in Sapporo, Obihiro, and other major cities. And in so far as STARTUP HOKKAIDO wants their favored startups to achieve rapid growth, some offices and other space for operations will be a part of the needs of those companies.
The ongoing growth of startups in the prefecture will consume some of the available housing, and create some demand for real estate in Sapporo and other cities.
Coworking Spaces for Startups in Hokkaido
Moving beyond the comments about office space, the conversation with Toyota san shifted to the role of coworking spaces in entrepreneurship in Hokkaido.
Private businesses in Hokkaido are increasingly prepared to provide services to support individual freelancers, entrepreneurs, and the local startup culture. Services range from virtual office capabilities to collaborative coworking spaces.
There are coworking spaces in Sapporo and other cities.
"When solo-entrepreneurs and startup employees come to Kaeru Creative Square, they find a place to be productive and to network with other professionals. We offer a coworking space where visitors and members can gather, connect, and learn from each other. There are also offices and meeting rooms for rent, when a private environment is needed for calls, meetings, or presentations."
-- Kaeru Creative Square, coworking space in Sapporo
These coworking spaces in Hokkaido fulfill many of the same functions of traditional offices. Digital workers that don't have a formal office find that going to a coworking location can help them avoid the distractions of “working from home." In other cases, coworking businesses in Hokkaido provide not only space for meetings and day-work, but also offer printers, large computer monitors, screens for presentations, and more. Most of the coworking business models in Japan include a cafe. In the case of a business like Kaeru Creative Square, they also offer a group space that can be used as a gallery to showcase art or other events.
While D2 Garage's DRIVE is now closed, other examples of Sapporo coworking spaces include Bokashi, Dorinoki, and EZOHUB.
EZOHUB in Hokkaido
Toyota san mentioned EZOHUB by name, and perhaps that is because D2 Garage is also a partner to that organization.
EZOHUB describes itself as a "regional incubation center that connects Hokkaido and Japan." In the Sapporo location (just east of Sapporo station), they offer a coworking space, with rentable conference rooms and more.
The EZOHUB project includes offices in both Sapporo and Tokyo.
Sapporo City Resources for Startups
In addition to STARTUP HOKKAIDO, there are specific programs run by the city of Sapporo.
Per the website for Sapporo City, there are suggestions of help for "promoting startups within the city." Some of the specific benefits include "a reduction in registration and license taxes," and perhaps reduced-rate loans for qualified businesses.
Hardware Over Software
In our comments about aerospace earlier in this article, we reference that the city of Taiki (home of Interstellar Technologies) says it wants to be the "Silicon Valley" for space. Like the original American Silicon Valley in California, Hokkaido startups make physical things; it’s all about hardware.
The name “Silicon Valley” comes from a reference to the silicon used in microprocessors, and dates back 1971. The Silicon Valley region of California (which includes cities from Santa Cruz to San Francisco) has a history of hardware innovation. California’s early electronics manufacturing history includes products from Hewlett Packard, produced as long ago as the 1930s.
While Silicon Valley has roots in hardware, the modern startup culture in California has shifted; from production of computers, to a focus on computer programmers building apps, social networks, business-to-business software, and other internet-based services.
In contrast to modern American startups, Hokkaido startup culture does seems to have more in common with the original Silicon Valley initiatives; more interest in hardware, rather than software or services. In examples like Interstellar, AWL, and Farmnote Holdings, there is a clear focus on physical technology.
Hokkaido technology startups are centered around technology you can touch; like cameras, rockets, and satellites. Several of the startups have ties to Hokkaido University, and feature research and development that isn't a part of the web-services and software-as-a-service (SaaS) goals of America-based startups.
While Japan has a worldwide reputation in hardware sectors like automobiles and consumer electronics, we don't think of Japan as a leader in terms of adoption of the internet. In many ways, Japanese web services are still behind other developed nations in terms of their use and sophistication.
Where Japan excels online is often via a connection between physical tech and cell phones. Japan offers extensive use of QR codes and digital payment options like PayPay; there, again, hardware components like point-of-purchase technology connect to consumers’ cellphones.
Given its history of electronics and manufacturing, perhaps it's fitting that Japanese startups would again see technology as more of a product than a process.
Venture Capital for Hokkaido Startups
Where Japan and the US have a lot in common seems to be on the investment and venture capital aspects of startups.
The interactions between support from the Hokkaido government, combined with private corporations like Digital Garage, are signs of how the venture community is deeply integrated in Hokkaido's communication with startup companies. It may be that the venture capital companies themselves have had a leading role in driving those strategies.
Again, from STARTUP HOKKAIDO's website:
"A company that uses technology to bring innovation to society and achieve rapid growth in a short period of time in order to solve problems in the world."
Rapid growth is a goal that would have particular appeal to investors, where shareholders demand a return on investment.
While a local government might want to create jobs, or more generally support entrepreneurship in the population, STARTUP HOKKAIDO has a different focus. Going beyond simply supporting local business owners, STARTUP HOKKAIDO puts more emphasis on investment in these “break-out” companies. That is a financial goal that we see on both sides of the Pacific.
As these many examples show, there is both activity and opportunities for startups and entrepreneurship in Hokkaido. The low cost of living and natural beauty will undoubtably help draw more talent and excitement to the region.
Our sincere thanks again to Mutsuo Toyota, to D2 Garage, to STARTUP HOKKAIDO, and to all of the other companies and organizations that helped us with comments for this piece. We deeply appreciate their time and the cooperation. And we are grateful for all their efforts to make Hokkaido a welcoming place for entrepreneurship in Northern Japan.