Universities in Japan will be given the right to take long-term equity in spinouts as the government looks to improve availability of funding for homegrown research.
The government of Japan plans to allow universities to take long-term equity in spinouts to help close the innovation funding gap with US institutions, according to Nikkei Asian Review.
The proposal is designed to channel more funding into university research and spawn more technologies based on intellectual property. Lawmakers are expected to begin revising existing legislation within weeks.
While Japan’s universities currently take equity in spinouts in exchange for providing technical assistance, they are expected to sell off shares quickly unless mitigating risks are involved, such as a disproportionate fall in stock price.
Exceptions to the guidelines already exist for institutions including University of Tokyo and Kyoto University, allowing them to directly invest in specific industries for profit. Nevertheless, only three businesses had issued equity to Japanese universities for assistance prior to the 2016 fiscal year, calling the regime’s effectiveness into question.
Japan fell below Germany to become the world’s fourth biggest funder of university research in 2016, according to a report from the Japanese education ministry, spending less than a third of the US’s outlay.
In a bid to arrest this trend, approximately 20 new government-affiliated research institutions could also be permitted to make direct VC investments, a privilege currently only afforded to Japan Science and Technology Agency. Research institute Riken is expected to feature among those benefitting from the proposals.