2024 Startup Funding Trends in Japan
Introduction
The Japanese startup ecosystem has experienced a slight decline in investing activity in 2024 compared to 2023. While overall startup funding has seen a decline, certain key sectors, such as SaaS and Generative AI, have continued to attract strong investor interest. There were positive trends within the decline in the overall funding activity. Much, if not all, of the data is from Speeda’s report.
Slight Decrease in Overall Funding
The Japanese startup funding environment saw a slight drop in 2024 compared to 2023. This marginal decrease shouldn’t warrant caution, as foreign and domestic investors are still highly optimistic about the Japanese startup scene (especially with continued government support). Japan’s evolving venture capital landscape provides more context on these trends.
Despite the overall decline in funding, there is a silver lining—both the median and average funding per company have increased, indicating that investors are placing larger bets on fewer startups. Seed and Series A companies experienced an increase in check size — investors seem to be writing larger checks to early stage companies.
SaaS and GenAI Stealing the Spotlight
SaaS Investments Outperforming Overall Funding Trends
Gen AI and SaaS startups have emerged as a bright spot within the Japanese startup landscape. Data shows that funding for GenAI and SaaS companies significantly outperformed broader market trends in funding amount and the number of companies that have raised.
Looking at SaaS Fund Raising
Though SaaS companies experienced a similar decrease in overall funding and the number of companies that have raised, the median and average funds raised have steadily increase over the years.
HRTech and FinTech are the sectors that raised the most. As for HRTech, much of the raised value can likely be attributed to SmartHR’s fundraising in early 2024.
With stronger adoption of SaaS in Japan, SaaS will likely continue to be a hot area of interest for investors. With the rise of AI, the horizontal and vertical SaaS sectors of investor interest may change.
Conclusion
Japan’s startup funding landscape in 2024 presents a mixed picture. While total funding has declined, the rise in median and average funding per company suggests a more strategic and selective investment approach. The SaaS sector continues to thrive, demonstrating resilience and attracting consistent investor interest. As Japan’s economy navigates ongoing challenges, startups that align with emerging technological trends—particularly in AI and software—may be better positioned to secure funding and drive future growth. If you are looking to understand the SaaS landscape in Japan, book a free consultation here.
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