What’s Ahead in 2025: Insights from Five Leading VCs

As has become a tradition, we are honored once again this season to share the insights of female venture capitalists beyond the well-known firms of Silicon Valley.

May 2025 bring us cosmic-level clarity and insight from the universe.

Chiamin Lai: General Partner, Firstlight Capital

1. Inflow of Overseas Capital and Talent:

In 2025, Japan is expected to see increased investment from foreign investors, driven by intensified U.S.-China tech competition under the Trump administration’s China and immigration policies, and supply chain restructuring. This environment presents an excellent opportunity to secure top talent from abroad, which is expected to enhance the global competitiveness of Japanese startups.

2. Full-scale Use of Generative AI:

2024 saw generative AI integrated into many SaaS products, driving operational efficiency. Many large corporations also launched pilot projects using generative AI to address labor shortages. Building on these successes, we anticipate that in 2025 more companies will place generative AI at the core of their operations. Moreover, we expect a rise in AI-native startups based on "Vertical AI" in fields like healthcare, education, logistics, and manufacturing.

3. Rising Potential of Physical AI:

In 2025, Japan is likely to explore the potential of Physical AI to address labor shortages in on-site operations. Physical AI refers to technologies that solve real-world challenges by leveraging data in physical spaces. In industries such as manufacturing, logistics, and healthcare—where a shortage of frontline workers is becoming critical—AI-powered robots, hardware, and IoT sensors will be indispensable. These technologies not only improve productivity but also hold promise for building new labor models and solving structural issues in Japanese society.

Tomoko Masuda: Deputy General Manager, Domestic Investment Management Division I, Daiwa Corporate Investment

Looking back at 2024, Japan’s growth market remained stagnant, with a lingering sense of stagnation. Japan has a unique culture, business customs, and a market of significant size.

For startups, expanding overseas hasn’t been easy, so naturally, many have focused on the domestic market and steadily increased performance. However, with ongoing population decline and aging, it’s no longer feasible to ignore the shrinking size of various markets—and this holds true for startups as well.

For Japanese startups to achieve significant growth moving forward, building businesses with global expansion in mind will be essential. Our fund’s portfolio includes deep tech startups in fields such as space, life sciences, and cleantech—many of which are actively expanding into overseas markets beyond Japan. Similar trends are being observed in other companies as well.

In 2025, we expect a rise in startups launching and fundraising with global expansion as a premise. We aim to continue actively investing in startups that strive to overcome boundaries—whether in business domains or geography—and who carry the ambition to break through stagnation, revitalize Japan’s economy, and create new industries.

Ana Carolina Mexia Ponce: Co-Founding Partner, Nido Ventures

In 2025, the transformative potential of AI will become even more evident across core industries such as agriculture, manufacturing, logistics, healthcare, electronics, and automotive. As AI tools mature, they will be seamlessly integrated into critical processes—enhancing efficiency, cutting costs, and enabling entirely new capabilities.

In agriculture, for example, AI-driven precision farming could optimize the use of water and fertilizers, saving resources while boosting yields. In logistics, predictive analytics and autonomous systems could revolutionize supply chain management—reducing delays and waste in a world increasingly reliant on just-in-time operations.

In manufacturing, AI-driven automation may go beyond robotic assembly lines. Advanced generative AI models could collaborate with engineers to design optimized parts and processes—shortening development cycles and reducing material waste. The electronics industry could benefit from AI-enhanced chip design and predictive maintenance, enabling more efficient production and innovation cycles. Likewise, the automotive industry is undergoing a transformation through AI-powered EV design, autonomous driving technologies, and supply chain optimization.

As these industries explore AI at scale, especially in emerging markets like Mexico, technology is bridging the gap between traditional practices and modern innovation. Companies that combine domain expertise with AI capabilities could redefine the next decade—proving that innovation continues to thrive at the heart of industries that move the world.

Misuzu Matsumoto: Associate, Incubate Fund

I’m paying close attention to the generative AI field. According to Nomura Research Institute’s “ChatGPT Usage Trends in Japan (as of September 2024),” the usage rate of ChatGPT has exceeded 20%. As ChatGPT crosses the chasm, I believe generative AI will become even more accessible in both B2B and B2C domains in 2025.

Personally, I see great potential in domain-specific services at the application layer and in businesses that reconstruct existing models using AI.

From the perspective of entrepreneur demographics, I anticipate that in the latter half of the 2020s, there will be a rise in startup founders coming from startups themselves—just as we saw an increase in entrepreneurs from investment banks and consulting firms in the late 2010s. I’m excited to see what kind of visions and ideas these individuals—who have experienced startup realities firsthand—will bring to the world.

Sera Tsutsumi: Senior Principal, DG Incubation

1. Overseas Expansion by Japanese Founders and Cross-Border Investment:

Japan has long built a startup ecosystem focused on domestic markets. But in 2025, I expect we’ll see a growing number of capable Japanese entrepreneurs with global experience aiming to expand into large overseas markets from the seed stage. This will likely accelerate Japan-overseas cross-border investments and push the ecosystem toward global-standard investing.

2. Evolving Climate Tech:

Following the change in U.S. leadership, there’s talk of the end of Climate Tech. Indeed, changes in regulations and cuts to subsidies are creating a new market environment. However, I believe that even if we stop calling it “Climate Tech,” the underlying technologies, business models, and research related to climate change will continue to evolve. In 2025, I hope to see startups reaching new levels as they are tested for real business potential and competitiveness.

3. Broadening Impact Investment:

Over the past year or two, institutional investors have begun setting impact investment policies and budgets, and are starting to apply them to portfolio companies. Given the growing attention to impact investing and the urgency of social and environmental issues, I expect that in 2025, players such as financial institutions and corporates—who previously hadn’t engaged in impact investing—will begin to adopt investment policies with an awareness of impact creation.