Tokyo

The Japan Development Bank last week announced that it is to set up a dedicated biotechnology fund. The move reflects the growing willingness of Japanese investors to nurture domestic start-up companies.

Biotechnology-related investments by Japanese venture capitalists have tended to focus on established companies or foreign start-ups. In contrast, the new BioIncubation Fund will target domestic companies early in their development.

More Japanese scientists want to become entrepreneurs, following the announcement of new regulations for technology transfer from universities and government laboratories. There has also been a surge in public support for technology-based businesses.

About 20 biotechnology companies are believed to have been set up in Japan during the past year. But Japanese venture capitalists, many linked to large banks or security houses, have been slow to invest in start-ups.

“The increase in the number of newly established companies is very significant,” says Robert Kneller, a professor in the department of intellectual property at Tokyo University's Research Center for Advanced Science and Technology.

Akiko Itai left the University of Tokyo five years ago to set up the Institute of Medicinal Molecule Design, a company developing software tools for drug design. “Many young graduates still prefer the security of a position with a large pharmaceutical company or a national university to working on an annual contract for a venture business,” he says. Recruiting researchers from large companies is not an option, says Itai, because venture businesses can rarely match their salaries.

Biotechnology is not the only field to profit from the surge in venture capital. With a Japanese branch of the Nasdaq shares index opening its doors next summer, large companies and financial institutions are rushing to invest in technology-based companies.

Only about a third of the biotech companies set up last year originated in academia or government laboratories. This suggests that, in Japan, corporations may be a better source of entrepreneurial talent than universities for some time to come.