According to a Nikkei survey, Japan has the greatest number of unlisted startups—13—that are on the verge of becoming unicorns. This is because investors are flooding the market with capital for businesses that are providing answers to societal problems like decarbonization and labor shortages.

Valued at over 50 billion yen ($340 million), but below the $1 billion threshold that characterizes unicorns, the ranks of these “pre-unicorns” increased by three over the previous year. It is possible that these companies will become unicorns after one or two more funding rounds.

carried out the yearly survey, which has been going since 2017, with assistance from Tokyo-based investor services provider Kepple and the Japan Venture Capital Association. As of the end of October, the valuations of 132 domestic unlisted companies served as the basis for the results.

While only one to five pre-unicorns were discovered in surveys conducted between 2017 and 2021, things started to pick up in 2022.

In recent years, startups around the world have adopted the theme of companies solving societal issues, and more young Japanese companies are adopting this business model.

The value of robot software developer Mujin surged to 118.6 billion yen, a 29-fold increase from the previous year. By identifying the need for labor-saving strategies in the manufacturing and logistics sectors, it has been successful in raising enormous sums of money.

Kyoto Fusioneering, a possible decarbonization trump card that develops equipment for nuclear fusion power generation, saw a 6.6-fold increase in valuation to 54.5 billion yen. The business has received praise for its cutting-edge technology and expanding international sales networks.

As per the survey, five companies, as opposed to one last year, became unicorns this year. Opn Holdings, a company that primarily serves companies in Southeast Asia with payment infrastructure, achieved that milestone.

But given that the threshold for being deemed a unicorn is set in US dollars, Japanese businesses now have a higher hurdle to overcome in light of the yen’s recent decline.

Because of the tightening of monetary policy in the United States and Europe, investors are growing more cautious globally. According to data from CB Insights, venture capital firms globally invested $193.6 billion in startups between January and September, a 45% decrease from the same period last year.

Conversely, favorable conditions in Japan, such as low interest rates and government support, are helping promising startups raise capital more easily.

As part of a five-year plan unveiled in November 2022, the government has bolstered startup support programs with the goal of producing 100 unicorns by the end of the project. Advanced technology procurement by the government is starting to pay off in fields like space development.

Japan’s unicorn population is still in the single digits. According to CB Insights, as of October, China had 173 unicorns, India had 71, and the United States had 652. The causes have been identified as a thin investment base and a dearth of business models with an international focus.