Tokyo-based Sakana AI has closed a $135 million Series B funding round, valuing the company at $2.65 billion. This investment underscores the growing trend of specialized AI development – startups focusing on regional languages, industries, or unique features, rather than competing directly with U.S. tech giants like Google and OpenAI.
The Rise of Sovereign AI
Sakana AI was founded in 2023 by former Google researchers Llion Jones, Ren Ito, and CEO David Ha. The company’s core strategy is building affordable generative AI models optimized for the Japanese language and culture, even with limited datasets. This approach diverges from the resource-intensive race to create massive, general-purpose AI models.
The demand for “sovereign AI” – solutions tailored to specific national cultures and values – is rising. Sakana AI aims to meet this demand by prioritizing focused R&D after initial large language model (LLM) training, allowing for efficient development of advanced, localized models.
Investor Confidence and Expansion Plans
The Series B round attracted a mix of Japanese financial institutions, including Mitsubishi UFJ Financial Group (MUFG), and global venture firms such as Khosla Ventures, Macquarie Capital, NEA, Lux Capital, and In-Q-Tel (IQT). This diverse investor base reflects strong confidence in Sakana AI’s strategy.
The company plans to deploy the new capital across three key areas:
- Research and Development: Continued model development and refinement.
- Workforce Expansion: Hiring engineers, sales, and distribution teams in Japan.
- Enterprise Growth: Expanding beyond the financial sector into industrial, manufacturing, and government applications.
Sakana AI has already secured partnerships with leading Japanese enterprises, including Daiwa and MUFG, demonstrating its ability to deliver practical AI solutions.
Strategic Outlook: Defense, Intelligence, and M&A
Looking ahead, Sakana AI is targeting high-growth sectors such as defense, intelligence, and manufacturing. The company is also actively pursuing strategic investments, partnerships, and mergers and acquisitions (M&A) to accelerate long-term global expansion.
This funding round follows a $214 million Series A round raised in 2024, bringing Sakana AI’s total funding to approximately $379 million as of March 2025. The company’s rapid growth and strategic focus position it as a key player in the emerging landscape of specialized AI development.
Sakana AI’s success highlights a broader trend: the increasing demand for AI solutions that are not only powerful but also culturally relevant and strategically aligned with national interests. This trend is likely to drive further investment in sovereign AI initiatives around the world
