Japanese startup Sakana.ai has revealed that it has raised 20 billion yen (around $135 million) in a Series B funding round that values the company at 400 billion yen ($2.635 billion).
The Tokyo firm is now Japan’s most valuable unicorn. It previously raised $200 million in a Series A in September 2024, when it was valued at $1.5 billion.
Sakana said its mission is to “develop AI solutions for Japan’s needs” and, as such, is focused on delivering affordable generative AI models that work with small datasets and are tailored to the country’s “culture and values.”
While acknowledging that AI offers huge benefits for a country faced with a declining workforce and ageing population, the company argued that it has to be implemented responsibly.
The round received support from both new and existing investors, with participants including Mitsubishi UFJ Financial Group, Khosla Ventures, Factorial, Macquarie Capital, Fundomo, Mouro Capital, MPower Partners and New Enterprise Associates.
Sakana was founded in 2023, and its approach is being shaped by a concern that the current landscape — which is seeing enormous amounts of capital pumped into AI compute at a rate that might not be sustainable — is not the way forward for Japan. This, Sakana argued, is “consuming unprecedented levels of energy, to develop AI models under the assumption of near limitless resources,” which Japan does not have.
To date, Sakana has pursued frontier AI research, including the release of architectures that are able to self-improve rather than require retraining, and the merging of models that are able to transfer knowledge.
In doing so, it has secured partnerships with big names such as MUFG, a key investor, and Daiwa Securities Group to develop custom AI for finance. The startup claimed that these partnerships have exposed the gap between general purpose models and the uncodified knowledge needed for domain-specific professional applications.
With new funding, the company says it will strengthen its Applied AI team to target new deployments in defense, engineering and manufacturing, as well as bolster its existing finance partnerships. It’s also looking to intensify research and development to accelerate model optimization for sovereign AI.
Kathy Matsui of investor MPower explained why her company was backing Sakana, saying: “[Its] unique determination to develop frontier AI technology sustainably, through innovation, aligns with our core values as Japan’s first ESG-integrated global venture capital fund investing in technologies that transform industries and society.”