Japan SaaS Funding News and Emerging Startup Trends
Japan's SaaS funding landscape in early 2026 shows resilience amid a selective investor environment, with AI-integrated tools and manufacturing-focused platforms securing notable deals. Emerging startups emphasize practical AI adoption and digital transformation in traditional sectors like HR and production. This article explores recent funding news and trends shaping Japan's SaaS ecosystem.
Recent Funding Highlights
SUPWAT, a Tokyo-based DX startup, raised ¥200 million in a pre-Series A round led by INSPiRE Mutualistic Symbiosis Fund 1, targeting SaaS tools for manufacturing efficiency. UnlimiTech followed with a ¥75 million seed round for its AI-driven manufacturing workflows, signaling investor appetite for industry-specific solutions. These deals reflect a broader pattern where late-stage and growth equity funds, like Minerva Growth Partners' ¥7 billion second fund, prioritize scalable SaaS amid rising IPO barriers.
In the first half of 2025, Japanese startups raised JPY 339.9 billion (excluding debt), with flat growth but increased corporate direct investments in large deals over JPY 1 billion. SaaS outperformed overall trends, particularly in HRTech and FinTech, driven by firms like SmartHR. New VC funds, such as UTEC 6 (¥47-50 billion) and Incubate Fund's ¥30 billion growth fund with Tokyo Metropolitan Government support, bolster late-stage SaaS prospects.
SaaS Market Resilience
Despite a 2024 dip in total startup funding, SaaS funding amounts and deal counts held strong, with median and average raises steadily climbing. This contrasts with broader declines, highlighting SaaS as a "bright spot" alongside GenAI. Investors favor horizontal and vertical SaaS adapting to AI, fueled by stronger domestic adoption.
Japan's ecosystem matured post-2021's record JPY 1 trillion total funding, with SaaS leading in 2019 and sustaining momentum. Corporate VCs, university-linked funds, and sovereign investors filled gaps left by reduced overseas VC activity. Public-sector backing, evident in Japan Investment Corp's role in Minerva's fund, addresses late-stage capital shortages.
Key Trends in Emerging Startups
AI integration dominates, shifting from hype to practical use in workflows, per Japan SaaS Insights 2025. Manufacturing SaaS like SUPWAT and UnlimiTech exemplifies this, leveraging IoT and AI for revitalizing primary sectors.
HRTech and FinTech lead funding, but verticals targeting DX in legacy industries gain traction. Selective investing favors quality over quantity, with rising per-company averages indicating strategic bets. Overseas expansion and sustainability focus align with funds like INSPiRE's global bridging mandate.
Investor Shifts and Challenges
Direct corporate investments nearly doubled year-on-year in 2025 H1 large deals, reshaping VC composition. Independent VCs launch oversized funds exceeding ¥100 billion total, targeting growth stages. This counters a cautious market where startups face higher IPO hurdles, pushing reliance on growth equity.
Challenges persist: overall funding declined in 2024, though SaaS bucks the trend. Global economic pressures and a shift from overseas VCs demand local innovation. Yet, with AI and SaaS alignment, positioned startups thrive amid selectivity.
Future Outlook
SaaS will likely remain investor-favored as AI reshapes horizontals and verticals. Funds like Minerva target late-stage gaps, fostering IPO readiness. Government-VC partnerships, as in Incubate Fund's initiative, signal sustained support.
Emerging startups succeed by solving Japan-specific pain points—DX in manufacturing, streamlined HR—while eyeing global markets. Expect more deals blending AI, sustainability, and sector tech, driving ecosystem growth into 2026 and beyond.