Of all of the scary economic data that routinely streams out of Japan, this statistic should terrify you: $800 million. That's the total value of venture capital deals completed in Japan in 2015, according to accounting firm Ernst & Young. Compare that to $72 billion in the United States and $49 billion in China. Even tiny Israel managed $2.6 billion in deals. It's a staggeringly small figure, and one that explains a great deal about why the world's third-largest economy continues to struggle, no matter how much cash the central bank pours into it. Too few Japanese are starting new companies.
The reasons for their reluctance are many and complex. For one thing, Japanese seem to be more risk-averse than their peers in other countries. In a 2014 report from the Global Entrepreneurship Monitor, less than one in three working-age adults in Japan considered starting a company a smart career choice — the second-lowest proportion in the study. That sentiment grows out of a conformist culture that puts a premium on stability and success. Fifty-five percent of potential Japanese entrepreneurs admitted in the same survey that they were afraid of failure, the second-highest rate among the countries studied.
Nor do Japanese youngsters get enough experience outside the Japanese system, which could stir their entrepreneurial instincts. According to the Institute of International Education, Japanese account for a measly 2 percent of all foreign students enrolled in U.S. universities, behind not only China and South Korea, but Brazil, Saudi Arabia and Taiwan. Worse, the ratio has been falling.
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