(Bloomberg) — Two of Japan’s most promising tech firms together secured more than ¥35 billion ($230 million) of financing this week, underscoring growing investor interest in the country’s burgeoning AI scene.
Japanese self-driving tech startup Turing Inc. said Monday it raised about ¥15.3 billion from investors including Toyota Motor Corp. supplier Denso Corp. Separately, Sakana AI said it raised ¥20 billion at a valuation of about $2.6 billion. Sakana, which works closely with the financial industry, got new capital from existing backer Mitsubishi UFJ Financial Group Inc. as well as new investors Factorial Funds, Macquarie Capital and Santander venture capital fund Mouro Capital.
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Tokyo-based Turing’s valuation nearly quadrupled from a year ago after the Series A funding round, which valued it at about $388 million, people familiar with the matter said, asking not to be identified as the details are private. The round included a ¥5.5 billion syndicated loan, the company said.
Turing was co-founded by Issei Yamamoto, one of Japan’s best-known AI developers, who rose to fame after his algorithm defeated the top-ranked player of Japanese chess in 2017. The startup, set up in 2021, aims to build a fully self-driving automotive system and now employs about 85 people, mostly engineers.
“It’s the technology that’s difficult to perfect, not the business model,” Yamamoto said in an interview. “The message from companies like Denso is that once the technology is there, they’d be eager to support mass production.”
The back-to-back startup funding rounds highlight insatiable demand for AI even as worries over high valuations grow. The deals also coincide with an effort by the Tokyo Stock Exchange and Japanese lawmakers to discourage premature public debuts. Regulators are seeking to delist companies that fail to reach a market value of at least ¥10 billion within five years of going public, starting 2030 — a move that is spurring a record number of startup acquisitions.
“We are seeing a record amount of capital pouring into AI compute at a rate which may not be sustainable,” Sakana AI co-founder David Ha wrote in a blog post. Still, “for Japan, with a declining workforce and an aging population, the benefits of AI technology are clear.”
