Japan wants to attract entrepreneurs, investors and high-skilled professionals to ease demographic pressures, but it is tightening residency requirements at the same time.
23 September 2026
Japan’s working-age population peaked in 2019 and is now on track to fall from roughly 75 million in 2020 to around 45 million by 2070.[1],[2] By some estimates, it faces a shortfall of up to 11 million workers by 2040.[3]
This demographic challenge has prompted a shift in immigration policy. Attracting foreign capital, skills, and entrepreneurs is a key pillar of public policy today.
Events aimed at founders have become a regular fixture in Japan and even a part of performance metrics for prefectural departments.[4] The residency window for the Startup Visa was increased last year, from six months to two years. That gives founders more time to build a business plan, secure an office, and establish local relationships.[5]
Conference panels of founders and investors have described a Japan that is more international than outsiders often assume. A growing number of Chinese, Korean, American and other foreign entrepreneurs are building businesses there, often supporting larger Japanese enterprises.
However, recent moves to raise the residency bar pose a challenge to this internationalization. Foreign founders will need to navigate much higher financial requirements.
Higher capital requirements for entry
Once settled in Japan, many entrepreneurs and investors apply for the five-year business manager visa. Until October 2025, they could obtain it by investing at least ¥5 million ($32,000) in capital or by hiring two or more full-time staff.
But under the revised rules, new arrivals or existing residents need to stump up ¥30 million ($190,000) in capital. At least one full-time hire is also now mandatory.[6]
The effect has been immediate: average monthly applications since the changes have dropped roughly 96%, from about 1,700 to around 70.[7] Nearly 1,000 foreign residents with business manager visas left Japan in the first half of 2026 — about four times the figure in the same period last year.[8]
One Japanese law firm estimates that 70% of current holders are capitalized at the old ¥5 million threshold and may struggle to secure financing to meet the new minimum.[9]
The population is likely to keep growing, albeit more slowly. Japan is among the world’s best countries for remote workers[10], and the reindustrialization of rural Japan is raising demand for international talent. The regional semiconductor build-out in Kumamoto and Hokkaido is straining local labor supply, and companies accept that they must rely on foreign engineers.[11],[12]
But if they pass the hurdle and stay five years or more, foreign professionals will find that permanent residency requirements have become more difficult. Intermediate Japanese fluency, higher visa application costs, pension contributions equivalent to 30 years of payouts, and qualifying income levels exceeding the average Japanese household income are the new requirements.[13]
Taking on bank loans is already a tall order for founders, investors and skilled professionals keen to establish their own venture in Japan. Japanese lenders are cautious when considering the viability of early-stage foreign-run businesses or giving loans to those without an extensive local credit history as well as to those with limited language fluency or a time-limited visa.[14] One angel investor remarks that getting local and digital banks to accept large inbound transfers from overseas is still a challenge.[15]
Outside investors, strategic partners or bank loans taken overseas could help individuals meet the higher personal capital requirements.
Equity-backed financing is another avenue worth looking into for foreign residents or those looking to immigrate with a long-term interest in running businesses or bringing in foreign capital. Many entrepreneurs, investors and mature skilled professionals may have equity holdings that they have not yet considered monetizing, and could therefore obtain an equity-backed loan to secure additional liquidity.
The rewards for staying put are significant. Japan remains a market worth exploring with its large and sophisticated consumer base, deep manufacturing and technology infrastructure, higher relative income (especially compared to South and Southeast Asia) and a government willing to back ambitious businesses.
The Takaichi administration, in office since October 2025, has announced the Honebuto no Hoshin, or “big-boned policy,” that seeks to commit more than ¥370 trillion ($2.4 trillion) in combined public and private investment across 17 sectors and 62 products and technologies, including AI, semiconductors, biotechnology, defense, energy, robotics and shipbuilding, by 2040.[16]
While the new rules have made it more difficult to secure residency or stay in Japan for the long haul, high-skilled workers, entrepreneurs and the investor class remain essential to the country’s future. A 2022 report from a group of Tokyo-based think tanks found that Japan would need to roughly quadruple its foreign workforce to 6.74 million by 2040 to meet high-growth economic targets.[17]
The policy changes have not shut the door entirely, but they have narrowed the path. For founders, investors and skilled professionals who are willing to make the case that they add value to the country, getting the financing right from the outset is no longer optional.
[1] https://asia.nikkei.com/spotlight/society/japan-s-shrinking-population-defies-efforts-to-stave-off-decline
[2] https://asia.nikkei.com/spotlight/society/japan-s-shrinking-labor-pool-sharpens-quest-for-productivity
[3] https://www.bloomberg.com/news/articles/2023-03-29/japan-to-face-11-million-worker-shortfall-by-2040-study-finds
[4] https://www.disruptingjapan.com/foreign-founders-are-changing-how-japanese-start-startups/
[5] https://corporateimmigrationpartners.com/japan-startup-visa-validity-extended-to-two-years/
[6] https://asia.nikkei.com/spotlight/immigration/japan-wants-more-startups.-its-new-visa-rules-say-otherwise
[7] https://www.japantimes.co.jp/news/2026/05/13/japan/society/business-manager-visa-applications-plunged/
[8] https://www.japantimes.co.jp/news/2026/09/02/japan/japan-immigration-business-manager-visa/
[9] https://asia.nikkei.com/spotlight/immigration/japan-wants-more-startups.-its-new-visa-rules-say-otherwise
[10] https://www.euronews.com/travel/2026/08/17/japan-dominates-the-worlds-best-cities-for-digital-nomads-while-spain-makes-an-impact
[11] https://www.bbc.com/news/articles/c8676qpxgnqo
[12] https://www.ft.com/content/09f0ae79-8935-4070-ab52-dc828b770dce
[13] https://www.cnn.com/2026/09/02/travel/japan-tightens-immigration-rules-intl-hnk
[14] https://www.navigatorjapan.com/blog-2-1/japans-risk-averse-banking-system-why-its-tough-for-foreignersand-how-to-navigate-it-rationally
[15] https://www.disruptingjapan.com/foreign-founders-are-changing-how-japanese-start-startups/
[16] https://asia.nikkei.com/spotlight/policy-asia/can-takaichi-s-2.3tn-bet-on-industrial-policy-revive-growth-in-japan
[17] https://www.reuters.com/world/asia-pacific/japan-must-quadruple-foreign-workers-by-2040-meet-growth-target-report-2022-02-03/
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