If you’re an angel investor – or a startup founder – looking to enter Japan’s startup ecosystem, there’s one term you’re going to run into very quickly:
J-KISS.
It stands for Japan – Keep It Simple Security, and it’s one of the most important tools that early-stage startups in Japan use to raise money today.
But what exactly is J-KISS? Where did it come from? And what should investors and founders know before using it?
Let’s break it down.
What is J-KISS?
J-KISS is a standardized investment agreement that allows startups to raise capital before issuing shares.
It works similarly to the SAFE note (Simple Agreement for Future Equity) made popular by Y Combinator in the U.S. A startup receives investment now, and that money converts into equity at a later stage – typically when the company does a priced equity round.
This lets startups raise money quickly and cost-effectively without needing to assign a valuation or go through complex legal procedures.
Why J-KISS Was Created
In Japan, early-stage funding used to be a complicated, expensive process. Many startups couldn’t afford the legal costs to issue new shares. Angels often hesitated to invest small amounts due to the paperwork and tax implications. The system was slow and inaccessible.
In 2016, to address this, a group of Japanese investors and legal experts came together to create the J-KISS framework. The goal was to simplify early-stage investing – making it easier for:
- Founders to raise capital
- Angels to invest without heavy legal friction
- The overall ecosystem to grow faster and more transparently
The standard documents are open source and can be freely downloaded and adapted. This has helped startups – especially those pre-Series A – raise funding with fewer legal barriers and lower costs.
How Does J-KISS Work?
Here’s the basic idea:
- An investor gives funds to a startup via a J-KISS agreement.
- The money doesn’t buy shares immediately.
- Instead, it converts to equity in the future – usually when the startup raises a priced round or hits a trigger event like an acquisition.
- The investor receives equity at a discount (e.g. 20%) or with a valuation cap (e.g. capped at ¥500M), giving them a better deal than future investors.
No valuation is set today.
No shares are issued immediately.
No interest accrues like in a convertible note.
This structure is ideal for early-stage startups still validating their product, market, or revenue model.
Key Benefits of J-KISS
For founders:
- Raises capital fast
- Avoids difficult valuation discussions too early
- Keeps legal and admin costs low
- Standardized docs reduce negotiation friction
For angel investors:
- Simpler entry into startup investing
- Friendly deal terms (e.g. discounts or caps)
- Ability to support startups early, before VCs enter
- Clear structure for conversion later
Risks and Considerations
J-KISS isn’t risk-free – it’s still an investment in an early-stage company, often pre-revenue and pre-traction. And it’s not equity until conversion.
Investors should still:
- Understand the terms of conversion (discounts, caps, triggers)
- Ask about other outstanding J-KISS agreements (you may be diluted later)
- Know the legal/tax implications in their own country
- Be clear on when and how the J-KISS converts – especially in the case of failure, acquisition, or never raising a priced round
Why J-KISS Matters for Japan
Japan’s startup ecosystem has grown significantly over the past few years – with more unicorns, international VCs, and larger exits.
But at the earliest stages, there’s still a funding gap.
J-KISS helps fill that gap by making it easier for angels, family offices, and even overseas investors to support early Japanese startups with confidence.
It’s a foundational tool that will continue to shape Japan’s startup landscape – especially as more angels from abroad look to invest.
Final Thoughts
You don’t need to be a lawyer to understand J-KISS – but you do need to treat it seriously. It’s a powerful tool that, when used wisely, creates more opportunities for both founders and angels.
If you’re an investor thinking about entering Japan’s startup ecosystem, learning how tools like J-KISS work is a great place to start.
At Japan Angel Hub, we help new and aspiring investors build the mindset, skills, and structure to invest confidently in Japanese startups – including how to evaluate deals using instruments like J-KISS.
Want to learn more?
Download our free Guide to Angel Investing in Japan + bonus Scorecard and join our community of global investors supporting the next generation of innovation in Japan.
This post is for educational purposes only and does not constitute financial or legal advice. Always do your own due diligence before making any investment decisions.
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