The Team
December 18, 2023

APAC and Japan see spike in generative AI startups

There’s an increasing global interest in the limitless possibilities of generative AI (GenAI). From emerging research centers and investor interest to a rise in start-ups, the technology is on an ever-evolving spree. Over the next decade, GenAI breakthroughs could contribute to a seven per cent growth in  global GDP. 

Amidst this trend, the APAC and Japan (APJ)  are showing remarkable growth signs. Businesses across APJ are exploring GenAI tools for enhanced productivity and efficiency. The APAC population is more open to embracing AI in business than other regions. In fact, 41 per cent of APAC’s workforce expects AI to improve operating productivity. Let’s explore the recent GenAI trends in APJ, and what’s causing it.

Increasing investments in GenAI

Organisations across APAC see great potential in GenAI as an efficiency-boosting business tool. Countering its previous lag, Japan is also emerging with a spike in GenAI developments. 

According to a report released by the International Data Corporation (IDC), 70 per cent of APJ organisations have started exploring or have already invested in GenAI technologies at 2023. A closer look reveals that 26 per cent of digitally-native businesses have already invested in the technology, while the remaining 44 per cent are doing some initial exploration of its potential use cases.

The report read: “Companies in business/productivity software and multimedia and design software have the most deal count and capital invested. These industries have the highest number of start-ups driving GenAI innovation”. 

To date, more than $700 million in capital has been invested in the technology, with experts predicting a rise in the amount in the near future.

Reason behind the Investments

Experts believe that the primary driving factor behind AI's rapid exploration and adoption is that many business leaders see the technology as a powerhouse of efficiency, analysis, and creativity. GenAI’s potential impact and applications across marketing, consumer engagement, and product development make a significant reason for the increased investments. For instance, a recent McKinsey report estimates that GenAI could add up to US$4.4 trillion a year to the global economy.

Emergence of GenAI startups

Several GenAI start-ups are emerging throughout the APJ region, with India, China, and Singapore serving as the hubs for innovation. In India alone, there are around 60 GenAI startups as of Q2 2023, a jump up from 18 start-ups operating in 2021.

Fuelled by the steady rise in investments, APAC’s GenAI landscape is set on a strong growth trajectory. While the US currently leads the venture capital investment race, the APJ region is catching up quickly, with more and more VCs funding new breakthroughs across the countries.

Applications of GenAI

According to Deepika Giri, associate vice president for Big Data and AI Research at International Data Corporation (IDC) the three most promising use cases for GenAI across APJ are code generation, knowledge management, and marketing applications. 

Code generation is suspected to have the largest impact on software development, web development, database management, API integration, and low-code/no-code platforms. In knowledge management, on the other hand, GenAI finds great use in creating content and retrieving information. Finally, the technology helps upscale marketing applications by humanizing chatbots and automating repetitive design tasks.

Future predictions

APJ is emerging as the new hub for innovative GenAI trends and developments. The region reigns in a combined power of supportive VC funding and government support fueling consistent research and development. 

Businesses across the region are expected to embrace GenAI tools in their everyday operations. On this topic, Supriya Deka, Sr. Market Analyst at IDC said: "Future DNBs in APJ will be intelligently generative, thanks to GenAI. However, given that it's still in the early stages and companies are investigating its possible use cases, it is crucial to navigate the challenges of privacy, security, and responsible implementation of this technology”. 

“In the future, DNBs will need to collaborate with regulatory bodies to establish guidelines to govern the use of GenAI to foster trust and transparency in the industry”, she added.