JAPAN Law and Practice Contributed by: Reid Monroe-Sheridan, Takahito Fujii, Haruya Suzuki, Yutaro Ito and Tomohiro Oshige, southgate
1. Trends 1.1 VC Market
also completed a successful IPO with an initial market cap of JPY144.8 billion. There was considerable activity in the M&A space as well, with major acquisitions such as that of fundbook, an investment management SaaS platform, and Cancerscan, a preventive healthcare service for municipalities. These sizable transactions are indicative of the increasing scale and sophistication of Japanese start-ups at a time of growing interest from glob - al investors. 1.2 Key Trends Although the Japanese VC market is relatively small considering the size of Japan’s economy, the market is growing and there is generally a feeling of optimism among market participants. While there is an increasing number of Japanese start-ups facing down or flat rounds, the down - turn has been more moderate than in other key global VC markets such as the United States. The challenges facing the Chinese economy, combined with a significant number of global investors opting to retreat from China, have benefited Japan as the recipient of a substan - tial share of the funds that had previously been pouring into China. Some well-known over - seas VC funds entered the Japanese market in 2024, and Andreesen Horowitz also announced its plans to open a Japan office, bolstering the image of Japan as a stable and low-risk haven in an otherwise volatile region. Despite these positive trends, unicorns (private companies with a USD1 billion-plus valuation) remain rare in Japan. Among the 1,250 unicorns that existed worldwide at the end of 2024, only eight were based in Japan, according to CB Insights’ State of Venture 2024 Report.
In 2024, Japan’s start-up ecosystem witnessed relatively robust VC activity, with several ground - breaking transactions that showcased the grow - ing maturity and global appeal of the country’s entrepreneurial landscape. The most notable VC financing during this period was Sakana AI’s JPY30.1 billion Series C round, led by New Enterprise Associates (NEA), Khosla Ventures, and Lux Capital. In this round, Sakana AI achieved unicorn status, doing so faster than any other Japanese company before it. The participation of foreign investors in the financ - ing round also underlines the increasing interest of international investors in Japanese start-ups. In addition, the Japanese government has decided to invest JPY100 billion in Rapidus, a company that aims to produce next-generation semiconductors within Japan, by the end of 2025. The purpose of this investment is thought to be twofold: to clarify the government’s stance on strengthening support for the domestic semi - conductor industry and to attract the necessary private-sector investment and loans for mass production of Rapidus’s products as quickly as possible. Private companies such as Toyota Motor and NTT are also planning to invest a total of approximately JPY100 billion, bringing the total expected investment amount to around JPY200 billion. The Japanese IPO market also saw several high- profile debuts in 2024. Timee, an on-demand job introduction and matching platform, went public with an initial market capitalisation of JPY176 billion. Astroscale Holdings, a space sustainabil - ity compan focused on removing space debris,
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