Startup investors and the net-zero transition: Drivers and barriers to engagement with Japan’s energy and innovation policy

Clean energy and decarbonization technologies are critical to the net-zero transition, yet continue to face steep financial and institutional barriers that impede their development and diffusion. Existing research on government interventions to stimulate innovation and investments has largely portrayed investors as passive policy targets rather than active participants. This study addresses this gap by examining how startup investors perceive and interact with policies in Japan’s energy and innovation arena, where ambitious state measures offer a valuable context for deepening understanding of the investor-policy interface. Drawing on evidence from 21 semi-structured interviews, document analysis, and feedback sessions with stakeholders, we investigate investors’ motivations for policy involvement, policy areas they wish to influence, approaches they employ, and barriers that constrain participation. Our findings reveal three primary areas of policy interest—financial support, (energy) market structure improvement, and ecosystem development—each underpinned by distinct investment challenges. Although investors pursue multiple approaches to engage with policies, Japan’s institutional structures continue to prioritize energy incumbents, marginalizing investors’ policy engagement. These findings highlight the importance of considering the potential roles that investors play in public policies. We conclude with policy implications for fostering a more inclusive entrepreneurial ecosystem, underscoring the need for institutional mechanisms and government-investor communication platforms to incorporate investor perspectives and support climate-tech development.