Key Takeaways Turing Inc. raised $99 million in Series A funding with participation from automotive supplier Denso, valuing the self-driving startup at $388 million. Sakana AI secured $130 million at...
Two of Japan's most prominent artificial intelligence startups raised a combined $230 million this week, highlighting intensifying investor interest in the country's emerging AI ecosystem as global companies seek alternatives to dominant American players.
Tokyo-based autonomous driving startup Turing Inc. announced Monday it secured approximately ¥15.3 billion ($99 million) in a Series A funding round that included equity investment and a syndicated loan.
The round, which attracted participation from Toyota Motor Corp. supplier Denso Corp., valued the company at roughly $388 million, nearly quadrupling its valuation from a year ago, according to people familiar with the matter.
Separately, AI research company Sakana AI raised ¥20 billion ($130 million) at a valuation of approximately $2.6 billion.
The round included fresh capital from existing backer Mitsubishi UFJ Financial Group Inc., along with new investors Factorial Funds, Macquarie Capital, and Santander's venture capital arm Mouro Capital.
Turing, co-founded in 2021 by Issei Yamamoto, one of Japan's best-known AI developers who gained national recognition after his algorithm defeated the top-ranked shogi (Japanese chess) player in 2017, is pursuing fully autonomous driving technology using end-to-end neural networks rather than traditional rule-based systems.
"It's the technology that's difficult to perfect, not the business model," Yamamoto said in an interview with Bloomberg. "The message from companies like Denso is that once the technology is there, they'd be eager to support mass production."
The company, which now employs approximately 85 people, primarily consisting of engineers, is in discussions with multiple automotive supply chain companies, including Denso, about manufacturing partnerships.
Yamamoto indicated the AI model would most likely first appear in high-end vehicles, though it can be adapted to any vehicle type.
Turing aims to introduce a fully autonomous system in passenger vehicles by 2029, with a goal of powering more than 10,000 vehicles by 2030.
The startup is collaborating with Nvidia Corp. on developing what the industry now refers to as end-to-end autonomous driving, which relies on training neural networks to handle complex scenarios rather than programming specific rules.
"We're one of the very few in Japan working on physical AI," Yamamoto said. "And we have cutting-edge technology in this field — we're going to win that competition, globally."
Sakana AI, founded in July 2023 by former Google researchers David Ha and Llion Jones, along with Ren Ito, has attracted attention for its unconventional approach to AI development.
Rather than building ever-larger models, the company focuses on merging and evolving multiple models to create more efficient systems.
The startup's name, meaning "fish" in Japanese, reflects its philosophy of drawing inspiration from collective intelligence in nature.
Sakana AI works closely with Japan's financial industry and has established partnerships with major corporations, including a multi-year agreement with MUFG to develop AI solutions for banking operations.
"We are seeing a record amount of capital pouring into AI compute at a rate which may not be sustainable," David Ha wrote in a blog post. "For Japan, with a declining workforce and an aging population, the benefits of AI technology are clear."
The back-to-back funding announcements underscore surging demand for AI technology even as concerns mount about elevated valuations across the sector.
The deals also coincide with regulatory efforts by the Tokyo Stock Exchange and Japanese lawmakers to discourage premature public listings, with new rules set to require companies to maintain a market value of at least ¥10 billion within five years of going public, starting in 2030.
Japan's AI industry is working to establish itself as a viable alternative to American and Chinese technology providers.
While the country is home to automotive giants including Toyota and Honda, it has faced criticism for falling behind in next-generation electric and autonomous vehicle development.
Domestically, Toyota is exploring collaboration with Alphabet Inc.'s Waymo on autonomous driving technology, while Honda Motor Co. has partnered with Helm.ai Inc. to develop self-driving capabilities.
However, autonomous driving technology remains challenging across the industry, with numerous companies experiencing setbacks, accidents, and market exits.
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