UK-Japan Open Innovation: Building Bridges for Future Growth

27 May 2025

In the wake of increasing global uncertainties, the path to sustainable economic growth has become more challenging for businesses worldwide. At Ocean Bridge Management, we've witnessed firsthand how open innovation across borders can be a powerful catalyst for addressing these challenges. Following our CEO Masako Eguchi-Bacon’s participation as a speaker at SusHi Tech Tokyo 2025 on the topic "Now is the Time for Europe-Japan Open Innovation: 'Why?' and 'How?'", we are pleased to share some key insights on why UK-Japan innovation partnerships represent a particularly promising opportunity.

Panel session at SusHi Tech Tokyo 2025 led by JETRO, featuring Daisuke Nojima (Yokogawa Innovation Switzerland), Oliver Hall (Nordic Asian Venture Alliance), and Masako Eguchi-Bacon (Ocean Bridge Management) discussing Europe-Japan Open Innovation. The session was moderated by Masahide Sakishige, Deputy Director at JETRO London.

One of the most compelling reasons for Japanese companies to consider European partnerships is the region's remarkable resilience and growth in venture capital investment. According to the latest data from Atomico's State of European Tech report, Europe is the only major global region showing positive growth in capital invested when comparing 2023 to 2020.

The data reveals a striking contrast: while capital investment in the United States (-1%), China (-7%), and the Rest of the World (-8%) all declined compared to 2020 levels, Europe achieved an impressive 18% growth. With $45 billion invested in 2023, Europe has demonstrated remarkable resilience despite challenging global economic conditions.

Within Europe, the UK firmly maintains its position as the continent's undisputed venture capital leader. Fresh data from Dealroom's Europe Tech Update for Q1 2025 provides compelling evidence of the UK's dominance:

The UK attracted $4.2 billion in venture capital investment during Q1 2025, more than double the amount invested in Germany ($1.8 billion) and nearly three times that of France ($1.4 billion). What's particularly encouraging is the UK's continued growth trajectory, with an 8% increase compared to the same period in 2024. This stands in stark contrast to major continental economies like Germany (-14%), France (-28%), and the Netherlands (-56%), which have experienced significant declines.

For Japanese companies seeking strategic innovation partnerships in Europe, the UK's combination of scale, growth, and stability makes it an especially attractive destination. The continued inflow of venture capital indicates robust confidence in the UK's innovation ecosystem, creating a fertile environment for cross-border collaboration.

There are several factors that make the UK an especially attractive partner for Japanese companies looking to expand their innovation horizons:

1. From 0 to 1: The UK's Innovation Culture

The UK excels at transformative innovation—what is described in Japan as going from "0 to 1." The country's strong academic institutions, entrepreneurial culture, and supportive ecosystem have created an environment where breakthrough ideas can flourish and develop into commercial realities.  We have observed, however, fewer UK startups are specialised in developing their ideas to commercialisation and mass production, and this is where many Japanese companies have strengths.  So, we strongly believe that collaboration between UK and Japanese companies can be very productive.

2. Global Connections

One of the UK's most underappreciated strengths in Japan is its exceptional global connectivity. The Commonwealth is one of the great examples. As the centre of the Commonwealth network comprising 56 nations, the UK serves as a gateway to a vast international community. The Commonwealth Innovation Hub fosters partnerships across these diverse economies, creating unique opportunities for cross-border innovation.

3. Reasonable valuation

Another compelling factor for Japanese companies considering the UK innovation partnerships is the more reasonable company valuations compared to other major tech hubs, particularly in the US. This creates opportunities for more favourable investment terms and potentially higher returns on innovation investments.

4. Hidden Strengths in Advanced Manufacturing

While the UK is widely recognised for its strengths in financial services and creative industries, its capabilities in advanced manufacturing and engineering are often overlooked by Japanese companies. A striking example is Formula 1, where 7 out of 10 teams are based in the UK, showcasing the country's world-class engineering talent and manufacturing innovation.

5. UK Industrial Policy: Creating Opportunities for Collaboration

The latest green paper for the industrial strategy, which the UK government released in November 2024 to outline its initial proposals and invite feedback, provides a clear framework for potential collaboration. The government has identified eight priority sectors that will drive future growth:

1. Advanced manufacturing

2. Clean energy industries

3. Creative industries

4. Defence

5. Digital and technologies

6. Financial services

7. Life sciences

8. Professional and business services

These priority sectors align well with Japan's own industrial strengths and innovation needs, creating natural opportunities for partnerships.

 The relationship between the UK and Japan has strengthened considerably in recent years. A significant milestone was the Economic 2+2 Ministers' Meeting held on March 7, 2025, where both countries signed Memoranda of Understanding on industrial policy cooperation.

Of particular note was the MOU on quantum science and technology, which aims to enhance infrastructure, test-facilities, and commercialisation efforts while encouraging shared access to research). This agreement demonstrates both countries' commitment to deepening technological cooperation in frontier areas.  Both countries’ governments have continued discussions to identify further areas for collaboration.

For Japanese companies looking to engage in open innovation with UK partners, OBM would emphasise one critical recommendation: “Engage early”.

Many Japanese companies have told us that they would like to consider engaging with UK start-ups after they become mature (typically at the Series A or Series B stage), however, their US and European counterparts start their relationships with the UK start-ups much earlier. By collaborating together from an earlier stage, which does not necessarily require a large investment, both parties will have become real strategic partners by the time investment is made. 

By engaging early in the innovation process, Japanese companies can help shape the development direction, ensure alignment with their strategic needs, and build the trust necessary for effective collaboration.

Amidst global shifts, open innovation with the UK offers a growth pathway for Japanese companies. The UK's leading VC investment, vibrant innovation culture, supportive ecosystem, and strategic advantages provide a strong foundation for impactful partnerships.

For Japanese firms looking to diversify and thrive, engaging early and strategically with UK innovators is key to unlocking these significant opportunities for mutual success.

Ocean Bridge Management has been supporting cross-border business development for over 15 years, including collaborations between large Japanese corporate and Innovative UK companies and Japanese startups's business expansion to the UK. To learn more about how we can help your innovation journey, please contact us.

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＊Slides used in this article were created by JETRO and presented at SusHi Tech Tokyo 2025.