Japan's "Homegrown Generative AI" Sakana AI Plans IPO Next Fall

Sakana AI, a Japanese artificial intelligence (AI) development startup, is preparing for an initial public offering (IPO) as early as next fall. Its market capitalization on the first day of trading could become the largest ever for a Japanese startup.

According to The Nikkei on November 10, Sakana AI has begun preparing for an IPO targeted for fall 2027. If the listing goes ahead, it is expected to be the first listing by a Japanese company specializing in generative AI. The largest IPO by a Japanese startup to date was that of secondhand marketplace Mercari in 2018, when its market capitalization on the first day of trading was about ¥680 billion (KRW 5.7705 trillion).

Logo of Japanese generative artificial intelligence (AI) company Sakana AI. Sakana AI.

If Sakana AI's IPO proceeds as planned, it will become the first Japanese company specializing in generative AI to go public.

Sakana AI was co-founded in 2023 by former Google AI researchers David Ha and Llion Jones, and Ren Ito, a former official at Japan's Ministry of Foreign Affairs. In about a year after its founding, it grew into a unicorn, a privately held company valued at more than $1 billion (KRW 1.0334 trillion).

With backing from overseas investors including U.S. companies Nvidia and Google, as well as venture capital firms Khosla Ventures and Lux Capital, it has raised about ¥66 billion (KRW 559.7 billion) in total. As of November last year, its valuation was about ¥400 billion (KRW 3.389 trillion), the highest ever for a privately held Japanese startup.

Sakana AI recently selected U.S. investment bank Goldman Sachs as its IPO adviser. Its business is growing just as rapidly. Sakana AI expects next year's revenue to exceed ¥30 billion (KRW 254 billion), 10 times its forecast for this year. Its major customers include large companies and government agencies, such as Mitsubishi UFJ Bank, Sumitomo Corporation, and Japan's Ministry of Defense. Unlike Mercari, which grew by targeting individual consumers, Sakana AI is focusing on supplying AI to businesses and government agencies, The Nikkei reported.

Sakana AI touts its technology for combining multiple AI models to improve performance as a key strength. Unlike U.S. companies OpenAI and Anthropic, which invest vast sums in developing their own large-scale AI models, it has pursued a strategy of using existing models to reduce development and operating costs. Recently, it has also begun developing its own AI models for areas such as defense and security to reduce its dependence on overseas AI models.

Sakana AI plans to initially use the funds raised through its listing to develop AI models, recruit talent, and expand its sales network. In particular, it aims to strengthen its public-sector business in areas such as defense and cybersecurity. The Nikkei said Sakana AI's growth, supported by its active efforts to attract overseas talent and capital, reflects changes in Japan's startup ecosystem. The company is reportedly also considering a dual listing on a U.S. exchange such as Nasdaq, in addition to the Tokyo Stock Exchange.

Sakana AI is a generative AI startup founded in Japan in 2023 by key former Google employees. It is currently developing its own Japanese-made AI model, tentatively named "Sakana Sawara." The company plans to release a small-scale model next spring and then develop a large-scale model.

This content was produced with the assistance of AI translation services.