But they warn that the larger number of IPOs budding out of Japan's "new economy", the more selective investors will become, especially after witnessing a savaging in the prices of core Japanese high-technology stocks from late February.

        "It will become clear which startups are viable and which are not. Not all startups will be priced high when they go public," Takashi Imai, head of Japan's powerful Keidanren business lobby, the Federation of Economic Organisations, told Reuters recently.

        Entrepreneurs who only a few years ago had to struggle to squeeze loans out of risk-averse banks can now raise money easily thanks to financial reforms that have reduced listing requirements on new markets.

        "Startups now have various choices for listings, which also can be made fast. We are now entering into the era of massive IPOs (initial public offerings)," said Masaaki Tachikawa, general manager at Japan's largest venture capital firm, JAFCO <8595.Q>.

        A total 162 firms plan to go public this year, up 50 percent from the previous year's 107, according to a survey in March by credit research company Teikoku Databank. It sees the number hitting a record 208 next year.

        More than half are looking for over-the-counter listings, while the others are seeking the Tokyo Stock Exchange's new Mothers market for venture firms, established in December, or Nasdaq Japan, due to open next Monday, Teikoku Databank said.

        Still, some participants question whether Japan will wind up with an Internet "bubble", a sensitive issue in an economy scarred by the bursting of an asset price bubble in the late 1980s.

        Those fears were made all the more real after the crumbling of shares in core Japanese Internet stocks such as Hikari Tsushin <9435.T> and Softbank Corp <9984.T> from late February.

        Softbank, an active invester in global Web startups, has sagged 74 percent and Hikari is down 98 percent from peaks in mid-February as of Tuesday, forcing investors.

        Seven out of the 10 issues so far listed on Mothers are now trading under their IPO prices, battered by global declines in high-tech and Internet shares.

        Of those seven, Internet Research Institute <4741.T> is down 87 percent from a January peak of 77.41 million yen. This is in contrast to a sparkling debut in December when it jumped four-fold from its IPO price.

        "Just when Japan's Internet bubble started, you saw in America depressed Internet stock prices. So you may not have such a bubble in Japan as we had for a year or so in America," said Jay Nelson, senior editor at Success Stories: Japan, a newsletter that tracks the progress of overseas firms in Japan.

        "It may come back. But I think investors are very smart so companies like Softbank will have to prove their value," he said.

        Many foreigners, another force behind Japan's IPO boom, are focusing on firms with a track record and investing via private equity, rather channelling money into IPOs of pure Web startups.

        "We must make the selection of real things and imitation," said Hiroshi Tasaka, a director of Softbank Investment -- a unit of Softbank which operates some 280 billion yen worth of funds that aim to invest in more than 1,000 Japanese Web startups.

        Startups themselves are also anxious.

        "I understand we're in a dangerous situation where we could see a potential share crush," said Taiga Matsuyama, a 25-year-old director of Bit Valley Association, a body set up last year to back Web startups in Tokyo's "Bit Valley" -- Japan's answer to Silicon Valley.

        "That's because shares are priced too high. With a share priced over tens of millions of yen, only institutional investors can play...forcing ordinary investors to the sidelines," he said.

        ((Tokyo Equities Desk +81-3-3432-9404 tokyo.newsroom@reuters.com))

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