Tracxn, a leading global SaaS-based market intelligence platform, has released its Geo Quarterly Report: Japan Tech - Q3 2023. The report, based on Tracxn’s extensive database, provides insights into the Japan Tech space.
The Japan Tech startup ecosystem received its highest funding of $1.2 billion in Q3 2022, after which a sharp decline of over 600% in Q4 2022 was recorded since then there has been a continuous increase in funding.
This rise in funding can be attributed to the fact that Japan is considered the third-largest economy in the world and a leader in HighTech research & development. Along with its highly skilled workforce, business environment and stable political system it is a favorable geography for investors.
The Japan Tech sector raised a total of $418 million in Q3 2023, which is a 14% growth compared with $368 million raised in Q2 2023 and a 64% decline from $1.2 billion in Q3 2022. Uwin
This uptick can be largely attributed to early-stage investments, which rose to $272 million in the third quarter of 2023, a growth of 33% compared with $205 million raised in the previous quarter (Q2 2023), and also a 46% decrease from $502 million in the corresponding quarter last year (Q3 2022).
Late-stage rounds as Q3 2023 saw funding of $131 million, a decline of 16% compared with $156 million raised in Q2 2023 and a decline of 78% compared to $606 million in Q3 2022. This space attracted seed-stage funding worth $14.9 million in Q3 2023, a 9% increase from $13.7 million raised in the previous quarter and a 73% drop from $54.6 million in the corresponding quarter last year.
Enterprise Applications, Real Estate & Construction Tech, and Health Tech are the top three segments that received the highest funding in this quarter. Enterprise Applications secured funding worth $91 million in Q3 2023, which is 58% lower than the $219 million raised in Q2 2023 and a decline of 78% compared with Q3 2022.
Only one funding round crossed the $100 million mark. No new unicorns emerged in Q3 2023, as against one unicorn in Q3 2022. The third quarter of the year saw four acquisitions, a dip from five acquisitions in Q3 2022. Further, only one company from the overall sector went public in Q3 2023.
Among Japanese cities, Tokyo took the lead in terms of total funding. Startups headquartered in Tokyo raised $192 million in Q3 2023, followed by Chuo City ($96.9 million) and Minato City ($40.6 million).
Mitsubishi UFJ Capital, Global Brain, and SMBC Venture Capital are the most active investors in this space. Samurai Incubate, CyberAgent Capital and UTokyo Innovation Platform emerged as the top seed-stage investors in Q3 2023, while Mitsubishi UFJ Capital, SBI Investment and Nippon Venture Capital were top early-stage investors. There were no late-stage investors in Q3 2023
