Academic Hubs To Economic Engines: How To Build Self-Sustaining Startup Ecosystems In Universities

The Ninth Tokyo International Conference on African Development (TICAD 9), held in Yokohama, Japan, from August 20–22, 2025, aimed to “Co-create innovative solutions with Africa” by focusing on economic growth, peace, and social development. For developing nations like Ethiopia, it signaled reinforced Japanese commitment to partnerships that promote sustainable growth, private sector engagement, and a digitally inclusive economy, urging local leaders to adopt African-led solutions to regional challenges.

This month, an innovation expert from the University of Tokyo took part in a workshop at Addis Ababa University (AAU), where he offered practical lessons from Japan’s startup ecosystem to inspire Ethiopia’s innovation landscape. This rare exchange provided valuable insights for local entrepreneurs, educators, and policymakers on building globally competitive ventures and positioning Ethiopia as a co-creator of global solutions, with a special appeal to female entrepreneurs seeking actionable strategies.

Professor Shigeo Kagami (PhD) is the current president of a Japanese university and a former professor of Innovation and Entrepreneurship at the University of Tokyo. While at the University of Tokyo, he served within the Graduate School of Engineering’s Department of Technology Management for Innovation (TMI) and as Deputy Director-General of the Division of University Corporate Relations (DUCR) from 2002.

He continues to work at the University of Tokyo as a part-time professor and has been pivotal in developing the university’s startup ecosystem since 2004.

Kagami’s academic background includes a degree from Hitotsubashi University (Japan), an MBA from IMD (Switzerland), and a doctorate from the Weatherhead School of Management, Case Western Reserve University (USA). Prior to his retirement at the end of March this year, he served for five years as a professor of graduate school philosophical science.

The author of ‘Global Clusters of Innovation’ (2004) and ‘Clusters of Innovation in the Age of Disruption’ (2022), Kagami visited Ethiopia to share the insights he gleaned during two decades of building Japan’s university startup ecosystem as part of a partnership between AAU and the University of Tokyo. His visit also aimed to share expertise and encourage the university to focus on innovation and startups, in line with the objectives of the Yokohama Declaration.

Kagami contends that a well-designed policy, coupled with proper implementation, is essential for a country to enable innovation and entrepreneurship under the framework of a robust startup ecosystem.

In a wide-ranging discussion with The Reporter’s Abraham Tekle, the expert addressed several crucial subjects, including entrepreneurship education and startup creation. Key themes of the conversation included cultivating an entrepreneurial mindset adapted to Ethiopia’s cultural and academic context, enabling universities to become national innovation hubs, and identifying practical steps to ensure women become leaders within the startup ecosystem. EXCERPTS: 

The Reporter: The University of Tokyo’s move toward autonomy in 2004 catalyzed entrepreneurship education and startup creation. How did its autonomy enable that shift? What key structural steps should Addis Ababa University prioritize to establish a sustainable startup ecosystem as it moves toward autonomy?

Professor Shigeo Kagami (PhD): Even if we say autonomy, I think we call it the incorporation of national universities, including the University of Tokyo. That is, the University of Tokyo will be celebrating its 150th anniversary soon, because the university was founded in 1877. The University of Tokyo has existed for quite a long time. In the year 2004, there was what I call academic reform. In a simplified fashion and for the first time in history, in 2004, we created a balance sheet and income statement of the university, because now it is a separate entity from the government and the Ministry of Education. So, you call that autonomy.

But at the same time, the government said in Japan, even though you might have more freedom as an independent organization, unfortunately, we are not able to continue to support you as we used to do and have decreased budget allocations year by year. But I think you might get access to external funding, so you might be able to be an independent organization, managing education and managing research. At the same time, you may utilize university assets — that might include intellectual property rights or patents, whatever comes from the research results. So, you might be able to use those research results, even those patentable researches and then license the technology out to existing organizations, or you might be able to use a particular technology for a startup.

Again, we reincorporated the National University back in 2004. You may call that autonomy quite similar to something happening here in Ethiopia. As Addis Ababa University is a leading university, the University of Tokyo is also a leading university in Japan. That is the similarity between. In that sense, my experience might be of some help in understanding what’s really going on after autonomy in Japan. Particularly, as I indicated, university research used to be very important — and it has always been very important.

In Tokyo, we produce 500 to 600 inventions a year. This invention used to be part of the individual researcher. But after 2004, the invention belonged to the university based on a principle. After that, a company called TLO, one called Tech Trust Office Professional, evaluates each invention’s worth; whether the technology is attractive enough to be used for business. If that’s the case, this technology might generate revenue in the future even if the invention belongs to the university, researchers should be motivated.

After 2004, suppose you are an inventor, and then that invention is great and possibly generates revenue. After the deduction of necessary expenses, 40 percent of the money comes from the user of the technology. We call it royalty money. Royalty goes into the pocket of the University of Tokyo once. Then 40 percent goes to the inventor while 30 percent goes to the department you belong to and the remaining 30 percent goes to the headquarters of the university. That rule came into effect in 2004. This rule is quite similar to the counterpart systems in the US, Singapore, or wherever. We have learnt a lot from this rule and applied it in the Japanese marketplace. 

How can this be incorporated in universities to prioritize the startup ecosystem?

This is a policy of the government. The Ministry of Education believes it is the most important thing to change. Some Japanese companies including Toyota were founded either before or during the [Second World] War. All of a sudden, Japan was defeated and everything was gone. And then new companies started coming up with a similar situation. So, in those almost three decades, Japanese companies were deteriorating in their competitive advantage against US, Chinese companies, and other older and big companies. But the Japanese government believes that most of the great company innovations came from the universities in the past — even in the 1930s and 1920s. So, we can pick up lots of companies that came from university technologies.

Like I said, the government policy really fits the notion that the university plays a very important role to make it happen for innovation, either through startups or through technology licensed out to existing organizations. That is the organic government policy and a change of law to incorporate national universities. Universities are now independent national corporations as academic institutions and triggering factors in the sector.

What strategies do you find most effective in cultivating an entrepreneurial mindset among students in Japan? How might those be adopted to Ethiopia’s cultural and academic context and how do you plan to mix that in?

It’s not easy. You’re not able to change instantly. I think we’re in the process of changing as well, even after the year 2004. But again, the first thing that I created myself is changing the university’s staff, as most of the people were not experts in intellectual property rights who came from industry and other sectors. In this case, during the first years, we basically hired those people who were not available before the year 2004. I think, for the first five to ten years, the government, primarily the Ministry of Education, financially supported each national university with money that could be used for hiring people not necessarily available in the old days. Those people might be very key resources to enable  you to have more innovation and to change the mindset of the university.

I’m probably one of them, as I spent 15 to 16 years at a management consultancy — consulting managers, creating a micro-consulting firm. Therefore, I was requested by the university to become such an individual who can create a bridge between science and business. So that is the first thing in terms of changing mindset. The second one is entrepreneurship education. I started an entrepreneurship education program at the University of Tokyo, called a Dojo, a type of martial art style. Using Dojo, we tried to offer programs to the students and researchers about where they could learn how to start a company, how to cope with venture capitalists, and how to capitalize on technology one year after the incorporation of the university.

What are your recommendations for AAU in terms of capitalizing on a Startup Center and ensuring fairness, sustainability, and continued innovation?

At the University of Tokyo, we were lucky enough to start a venture capital arm, dedicated to the university. We even incorporated a national investor back in 2004. So again, we were lucky enough to create a venture capital company and also a tech transfer office called TLO, Technology Licensing Organization. We were lucky enough to start a tech transfer office corporation before the incorporation of the university.

In addition, in 2004, that tech transfer office became a 100 percent subsidiary of the University of Tokyo. Those are some of the key components of encouraging entrepreneurship, where AAU is trying to follow what we did in the past.

In Japan, successful startups often give back to their universities, making the ecosystem self-sustaining. How was this cycle established and what financial mechanisms or policies could AAU adopt to replicate this system in Ethiopia?

As I indicated, the University of Tokyo created a venture-capable company. So, a venture-capable company is in a position to make an investment to a particular company, particularly based on technology. The technology came from a University of Tokyo researcher. The technology is good enough to generate revenue. How can you come up with a great platform for pharmaceutical discovery, for example. How can you really help those who are suffering from a particular disease, with additional business segments that will go public that are acquired by an existing organization and an increased value as well as capital gain. Here the venture-capable are able to generate what is called a capital gain out of it.

So, once they recognize the success in terms of the exit of the startup company, somehow initial public offering, exit from going to the public company, or may be acquired by the company. In this case, money came back to the University of Tokyo through the venture-capable. In most cases, venture-capable people put the donation to the university. That’s one source of money coming back to the University of Tokyo. Also, at the time of the licensing agreement with the startup company, so supposing you agree to research, you have a technology, and then you are willing to start a company yourself, business would be great, as the technology belongs to the university.

In this case, the university is in a position to license technology out to the startup company where research is involved in the invention. The University of Tokyo employs a mechanism to commercialize research-based inventions by licensing technology to startup companies founded on that research. This is formalized through a licensing contract that requires the startup to pay for technology usage. Crucially, the university accepts equity in the company as a form of royalty payment rather than just cash fees. This arrangement has proven highly lucrative, as demonstrated by the success of one company, Capture Dream (offering a drug discovery platform), which went public with a market capitalization exceeding USD eight billion, providing a significant financial return to the University of Tokyo’s programs.

Beyond financial returns, the successful startups contribute to the sustainability of the university’s ecosystem by having their founders return to act as mentors and teachers, and sometimes by providing individual donations. This full-circle mechanism encourages researchers and students to become entrepreneurs, with the understanding that their success is recognized and their contributions will financially and structurally support the University of Tokyo and its system for the long term. That is the general mechanism.

Stakeholders in Addis Ababa stressed that AAU should open its Startup Centre to the wider public. How important is community integration in building a thriving startup ecosystem?

Before the community building, I think a community within the university is very important. In most cases, schools or maybe graduate school are somewhat relevant to the startups, that include medical school, hospital, engineering school, and business school as well. I think the University has those very important academic disciplines. So, those schools are somewhat very important to make it happen for innovation through either students or research results within the university.

As the university may have different campuses, each campus may have a different sort of academic discipline. But even in the University of Tokyo, we have three major campuses, but it’s quite difficult to communicate with the other faculty members if the campus is different. So again, the important thing is that internally, we should have the key relevant schools and academic institutions be involved with this joint effort to really encourage startups.

Therefore, in Tokyo, we used to have a governance board or a council board. This board consists of different academic disciplines relevant to the startup company that have a shared policy. Such kind of stuff is a very important thing, as all these stakeholders within the university should be involved for that, even startup company CEOs. This structure is crucial because it ensures that all stakeholders within the university are involved in the process.

A key concept is the “triple helix,” which refers to the collaboration between industry, academia, and government. This partnership is considered vital. For a leading university like Addis Ababa University, this means its initiatives should be supported, both financially and mentally, by the government, and it should align its strategy with government policy. Simultaneously, the business must be accepted by the industry, requiring relevant industry knowledge.

Furthermore, while an academic researcher can be a technology champion, they are not necessarily skilled in business. Therefore, it is often necessary to bring in a CEO or equivalent manager from the industry. This industry knowledge is essential to bridge the gap between technology and business success. As a leading university, Addis Ababa University should take a leadership role in fostering this essential triple helix relationship. That is the most ideal system.

Can you share successful examples from Japan or elsewhere where universities became national innovation hubs, not just academic centers?

As I indicated, the University of Tokyo, like the AAU, is a leading university. Historically, the University of Tokyo has been a powerful source of national leadership, producing a significant number of prime ministers, finance ministers, and high-level government officials. Academically, it maintains a broad institutional structure, with prominent faculties including medicine, engineering, the largest after medicine, law, and economics. This influential nature and diverse academic foundation provide the university with significant potential for driving innovation.

However, the university must shift its traditional view where graduates are treated merely as alumni with no requirement for deep engagement. For encouraging startups, the university’s graduates are a vital asset. Graduates who have become entrepreneurs, businesspeople, and government officials are important resources who can give back to the university. They can serve as role models, mentors, and teachers for the startup center, making them a crucial element in addition to the triple helix model. So, graduates are very important. In addition to Trippi Helix, I think graduates are considered a very important asset for you.

The recent TICAD9 symposium highlighted youth and women as central elements to co-creating innovative solutions to Africa. What role do you see they could play in global innovation? What practical adjustment should AAU take to ensure both are empowered as leaders in startup ecosystems?

This is something I always say to people here, even to the students. As the young generation is an integral part of any community, the most important thing is to understand how to transform startups into business. I’m 65 years old. I’m going to be 66 soon. But again, anywhere, I’m the oldest. Anywhere in Addis Ababa, I see only young people. That’s quite amazing. But here in Addis Ababa, the population is very young, which is different from Japan where the average age is 44 or 45. This youth is an advantage because young people do not have the unconscious bias, prejudice, or legacy obstacles that exist in a developed country like Japan.

Younger people have great potential for creating real innovation, as seen with founders of companies like Google and Facebook who started in their early twenties. Unlike in Japan, where you must go through multiple technological layers, here you can jump into advanced technology immediately, which is a significant potential advantage for the younger generation. This is something similar to the Chinese experience, where some return to their country from the US and become a leader of a particular technology and startups. I know a few Ethiopian people with the same vision living in the US or Europe.

Therefore, it might be an idea that you might also have those young people involved with the innovation and start-up vision here in Ethiopia. So, integrating the youth into Ethiopia’s innovation and startup initiatives is essential, as their proven capacity for national contribution represents a key developmental asset.

Drawing upon your expertise, do you have a final message or key takeaway you would like to share with our readers?

I’m very much impressed with the fact that you’re a very young nation with smart people. There is a vast similarity between your nation, Ethiopia and Japan as both nations share similarities in different aspects. However, the crucial task for the University, and its entrepreneurial center, is to encourage the youth to explode their passion and apply their energy to solving both local Ethiopian and global problems. This can be done through the dedicated efforts of the university’s key people, the entrepreneurial mindset and atmosphere to bring out future entrepreneurs.

But I think the initial four to five years of building this ecosystem will likely be a painful process, but the key to moving forward lies in achieving a solid, visible success. This first success is the crucial trigger that will inspire others. So, the AAU with its smart students and researchers, has great potential to achieve this success by creating the necessary institutional setting.