Japan’s Deep Tech Paradox with Monozukuri Ventures’ Nobuhiro Seki
Nobuhiro Seki is a managing partner at Monozukuri Ventures, a venture capital firm that connects deep tech startups with Japan’s manufacturing ecosystem.
Nobuhiro Seki is a managing partner at Monozukuri Ventures, a venture capital firm that connects deep tech startups with Japan’s manufacturing ecosystem.
What is Monozukuri Ventures’ investment thesis?
Monozukuri literally means “making things” in Japanese, but it carries a deeper meaning about craftsmanship and attention to detail. We invest in hardware and deep tech startups, primarily focusing on robotics and physical AI.
Initially, we tried to connect U.S. startups directly with Japanese manufacturers for prototyping. But we quickly learned that business customs and even basic terminology differ significantly between the two markets. For example, what Americans call a “proposal,” Japanese manufacturers call a “quote.” These misunderstandings created unnecessary friction.
So we pivoted. Instead of prototyping support, we now help our portfolio companies access the global distribution networks and resources of large Japanese corporations. From our second fund onward, we’ve focused on helping startups find the right manufacturing partners to accelerate their growth, particularly in robotics, automation and components.
How did your background lead you to venture capital?
I started as a tech journalist in Tokyo about 30 years ago. During the dot-com boom, I interviewed hundreds of founders in Silicon Valley. They kept telling me to go to business school to understand why companies go public, so I went to Carnegie Mellon.
After business school, I joined a three-person blogging software startup in San Francisco. We sold the platform to Japanese customers for millions while others were charging $25 for shareware. That taught me the value of finding the right market. After seven years and an acquisition, I moved to New York in 2014.
I spent three years trying to help consumer electronics companies integrate software and internet capabilities, but nothing materialized. Big corporations moved too slowly. I realized it was better to work with hardware founders who understood they needed software, rather than teaching software to hardware companies. When these startups succeed, the big companies acquire them anyway.
How does Monozukuri help U.S. startups access Japanese manufacturing?
Let me give you a concrete example. We invested in Arieca, a Pittsburgh startup that makes thermal interface materials for cooling semiconductor chips. They had a lab and could develop compounds, but when they needed to scale for customers like Intel or Qualcomm, they couldn’t just be a lab anymore.
We introduced them to Japanese chemical companies that already manufacture similar materials for Samsung and Intel in their Asian plants. These companies helped Arieca develop sophisticated manufacturing processes and provided introductions to major customers. It’s about finding partners who can help startups bridge the gap from prototype to production.
Why doesn’t Japan have a larger deep tech startup ecosystem?
The cultural difference is significant. In Japan, joining a startup isn’t celebrated like it is in the U.S. When I told people in Japan I joined a startup, parents would ask why their child was joining such a small company. People still believe lifetime employment at a big corporation is the ideal path.
This is especially true in manufacturing, which Japanese people consider their country’s greatest strength. Engineers at manufacturing companies rarely leave to join startups. The government recognized this problem about five years ago and started heavily promoting deep tech startups, particularly university spinouts. But the cultural shift is slow.
What changed to make hardware investable again?
COVID was the turning point. I remember portfolio companies whose products were stuck on container ships for months instead of weeks. Countries fought over face masks. Suddenly, everyone realized how dependent we were on physical production and supply chains.
Then came geopolitical tensions. China dominates about 80% of global manufacturing. When Russia invaded Ukraine and U.S.-China tensions escalated, people realized we needed manufacturing capacity outside China. The combination of supply chain disruptions and national security concerns made hardware strategic again.
Many of our portfolio companies pivoted unintentionally. Drone companies that built for commercial use suddenly had the Department of Defense as their biggest customer. For the time being, quite a few of our portfolio companies are generating significant revenue from defense contracts, though it remains uncertain whether this will persist in the long run. We are, first and foremost, deep tech investors with a strong focus and expertise in advanced manufacturing. However, in today’s geopolitical environment, manufacturing as a whole has become directly tied to national security. In that context, the increase in defense-related investments within our portfolio reflects a natural shift in demand rather than a deliberate change in our investment thesis.
What areas excite you most as an investor right now?
I’m focusing on components and materials. The picks and shovels of the robotics revolution. When people hear “robotics,” they imagine humanoid robots, but I’m more interested in the suppliers.
Think about the autonomous vehicle boom 10 years ago. Many AV companies failed, but lidar companies went public successfully because they could sell to multiple customers. Similarly, we invested in a company making actuators for robots. If nine out of 10 humanoid robot companies fail, the actuator company can still work with all 10 during their growth phase.
When I see big investments in robotics startups, I look at whether they’re building components in-house or buying off the shelf. The suppliers to these companies often have better risk-adjusted returns than the robot makers themselves.
How do you define deep tech?
This is the first time I’m defining it this way, so I might change my mind tomorrow. But I think if you’re fintech or insurtech, you’re not deep tech. You’re “something-tech” where the prefix describes the application. Deep tech isn’t tied to a specific existing industry. It’s creating something fundamentally new that doesn’t fit neatly into traditional categories. Everyone knows deep tech when they see it, but putting it into words is surprisingly difficult.
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