Why is it that Kyoto, ancient cultural capital of Japan, a conservative and traditional place in many ways, manages to produce Japan’s most innovative (and profitable) high technology entrepreneurial firms? Further, what causes regions such as Kyoto to create a self‐sustaining critical mass, or cluster, of new venture start‐ups in emerging sectors? Can this success in ‘clustering’ entrepreneurial businesses be replicated elsewhere? For example, what are the most effective ways to encourage new start‐ups and connect fledgling firms to critical resources? The findings herein are based primarily on original case study survey and interview data from 29 life science start‐ups and the entrepreneurs at their helms, representing more than half of all life science start‐ups in Kyoto. I identify best practices in firm‐level strategy and entrepreneurship policy in what I call the Kyoto Model of Entrepreneurship and Innovation, highlighting entrepreneurial case studies of successful start‐ups. I also analyze factors leading to successful new business clusterization through analysis of entrepreneurial social networks and resource environments. Situating the findings within national innovation and entrepreneurship policies in Japan, I present a new model for regional innovation systems (RIS) and cluster emergence. I also include brief comparisons to life science clusters (and want‐to‐be clusters) in Japan and the United States, based on additional original survey and interview research in other regional clusters in each country.