Investment in Japan-originated startups is trending upward, with funding flowing mainly to Mujin and Sakana AI in the physical AI field. Domestic and overseas trends and examples of funding amounts are reviewed.
Domestic funding trends have highlighted physical AI, which uses AI to autonomously control robots and vehicles, as a startup theme attracting investor attention. Reports indicate that funding has flowed to Mujin and Sakana AI. Global investment in the first quarter was well above previous levels, while the number of deals continued to decline, with mega-rounds lifting total funding.
Domestically, funding in 2025 was essentially flat at a preliminary ¥761.3 billion. Average funding per company was approximately ¥310 million, while the median fell 20% from the previous year to approximately ¥62.4 million, indicating that funding is concentrating in specific companies. Higher listing standards are making IPOs more difficult and accelerating the shift of funding toward M&A. Hulic’s acquisition of Sarōwin is viewed as a transaction worth more than ¥10.0 billion, increasing the importance of M&A as a means of returning capital.