Shares in Japan's unicorns — startups valued at $1 billion or more — can now be bought and sold in overseas markets. Hizojo Partners, a fintech firm backed by a Japanese megabank, will begin brokering such trades this year on private-share marketplaces in the United States and Britain.
The Tokyo-based firm has received approval under a special regime that Japan's Financial Services Agency introduced last year to spur trading in unlisted shares, and will start brokering deals before the end of the year, the Nihon Keizai Shimbun reported on the 28th. It is the first time a Japanese financial institution has brokered unlisted-share trades in overseas markets.
The trades will take place on Nasdaq Private Market, the world's largest marketplace for unlisted shares, and on Britain's VentureBeam. Fidelity, the large U.S. asset manager, and Singapore's sovereign wealth fund GIC are among the key institutional investors active in those venues.
Behind the move are the limits of Japan's startup ecosystem. Japanese startups often go public before their valuations have risen far, so that founders or investment funds can exit and recover their money. That has drawn criticism that earnings and share prices fail to grow as much as expected after listing, leaving the companies unable to develop into major players. To overcome that, the strategy is to attract overseas institutional investors who invest over the medium to long term as buyers of unlisted shares. If the market where existing shareholders can sell shares and recoup their investment while a company is still private grows larger, startups gain room to delay listing until their valuations are high enough.
Hizojo Partners plans to connect institutional investors with startup founders and investment funds looking to sell their holdings, and also to broker trades in shares of university-founded companies held by university endowments. It will also serve demand from large companies and universities seeking to spin off startups nurtured in-house or founded at universities and convert their holdings into cash.
Trading in unlisted shares is indeed surging worldwide. Transaction value this year is expected to reach $260 billion, up 8% from a year earlier, according to Jefferies Financial Group. Shares in U.S. companies such as Anthropic and OpenAI, which are targeting valuations of up to several trillion dollars after listing, trade regularly on Nasdaq Private Market. Japan's market for unlisted shares, by contrast, is small. The venues run separately by the Japan Securities Dealers Association and the Tokyo Stock Exchange handled just 9.4 billion yen and 7.5 billion yen in transactions last year, respectively.
Japan's Financial Services Agency is working on revising the relevant rules, and Smartround, another Tokyo-based fintech firm, also plans to enter the brokerage business. Attention is turning to whether Japanese unicorns will benefit if trading in unlisted shares picks up in overseas markets. Companies recently recognized as unicorns in Japan include the artificial intelligence firms Sakana AI and Preferred Networks. Still, Japan had eight unicorns as of 2024, far behind the United States with 690 and China with 162, according to The Japan News.
