The listing maintenance criteria for the Tokyo Stock Exchange Growth Market are being revised, with a new requirement for a market capitalization of at least ¥10 billion after five years of listing expected to take effect. Meanwhile, the number of IPOs is declining, and startups are increasingly shifting their exit strategies toward M&A.
As part of the Japanese government's startup development policies, plans have been outlined to tighten the listing maintenance criteria for the Growth Market. From 2030 onward, companies will be required to have a market capitalization of at least ¥10 billion after five years of listing under the new criteria. This is expected to increase the risk of delisting for companies with market capitalizations below ¥10 billion and affect startups' growth strategies.
The number of startup IPOs fell sharply to 31 in 2025 from 49 in 2024, raising the difficulty of listing for companies unable to achieve a market capitalization of around ¥10 billion. As a result, the options for post-listing growth strategies are narrowing, accelerating the trend toward considering M&A as a realistic exit option.
In a Japan-US comparison, IPOs in the US are a route primarily for mature companies, while M&A is widely established as the main exit method. In Japan, by contrast, the relatively lenient IPO criteria have resulted in a focus on small-scale IPOs, and exits have continued to be relatively modest in size. Some have pointed to this as an impediment to the turnover of the capital recovery cycle in Japan's market, creating a need to redesign the ecosystem.
The Japanese government and the Ministry of Economy, Trade and Industry published the Startup M&A Guidelines and presented proposals including the phased introduction of preemptive rights for minority shareholders and a review of the conditions governing drag-along provisions. Requirements for management consent and caps on indemnification liability are considered important in improving sellers' ability to foresee the outcome of a transaction.