Prance Holdings Co., Ltd. has raised a seed round of funding with DEEPCORE, a venture capital firm focused on AI, leading the round, marking a pivotal moment in addressing Japan’s mounting workforce challenges. As of Q2 2025, the Bank of Japan’s Tankan survey reports that the diffusion index for employment conditions – a net balance of firms reporting excess labour supply – fell to ‑35 across all industries. It was one of the lowest points over the last three decades, indicating widespread labour shortages.
This Prance AI seed funding announcement comes at a critical juncture when two-thirds of Japanese companies are experiencing a serious business impact from a shortage of workers, a Reuters survey showed on Thursday, as the country’s population continues to shrink and age rapidly. Labor shortages in Japan, particularly among non-manufacturers and small firms, are reaching historic levels.
The Scale of Japan’s Workforce Crisis
Japan’s demographic challenges are creating unprecedented pressure on the job market. With the unemployment rate holding steady at 2.5% in May 2025, and the job-to-applicant ratio reaching 1.22 in June 2025, the competition for skilled professionals has intensified dramatically. The situation has reached crisis levels across multiple sectors.
The technology industry faces particularly acute shortages. Japan is projected to face a shortage of 220,000 IT professionals by 2025, with demand especially strong in AI, cybersecurity, and cloud computing. Salaries in IT reflect this demand, with entry-level roles paying around ¥8 million—well above the national average of ¥4.60 million—and experienced specialists earning up to ¥15 million.
Meanwhile, the number of bankruptcies caused by labor shortages in 2024 surged 32% from a year earlier to a record 342 cases, according to credit research firm Teikoku Databank. This stark reality underscores why Japan labor shortage solutions have become an urgent priority for both government and private sector initiatives.
Prance’s AI-Powered Approach to Recruitment
The AI recruitment platform Japan has been waiting for arrives through Prance’s innovative technology. It can handle screening and confirmations for thousands of applicants at once. Interview answers are indeed based on the manner of experienced recruiters, the main characteristics of their interactions being polite, professional, and standardized.
What sets Prance apart in the crowded AI hiring Japan market is its human-centric philosophy. At the core is what Prance calls a Humans First approach. AI takes over repetitive tasks like interviewing, screening, and evaluation. People are freed up to focus on relationship building and decision making where human judgment actually matters.
The platform demonstrates remarkable effectiveness in candidate experience. The majority of the candidates, over 70 percent, give favorable feedback about AI interviews. They point out the objective and standardized evaluations as the reason for their positive view since it largely eliminated bias and harassment as well.
DEEPCORE’s Strategic Investment Vision
DEEPCORE’s leadership in this Prance AI seed funding reflects the firm’s commitment to addressing societal challenges through AI innovation. DEEPCORE is an AI-focused venture capital firm that invests in and supports startups globally through its community and accelerator programs. The firm specializes in backing entrepreneurs who leverage technology to solve pressing problems.
DEEPCORE Inc. is a leading venture capital firm specializing in artificial intelligence investments, dedicated to empowering innovative startups that are poised to reshape industries. By providing not only financial backing but also fostering a robust community for AI professionals, DEEPCORE Inc. creates an ecosystem where entrepreneurs can thrive.
This investment aligns perfectly with Japan’s urgent need for technological solutions to workforce challenges. This funding will be used to strengthen the recruitment of engineers and business personnel, as well as to accelerate product development and expansion.
The Economic Impact of Japan’s Labor Shortage
The financial implications of Japan’s workforce crisis extend far beyond individual companies. Japan is currently facing a shortfall of over 220,000 tech professionals, a gap that, if unaddressed, could cost the economy as much as ¥12 trillion ($78 billion) annually.
Corporate responses to these challenges reveal the severity of the situation. Some 66% of respondents indicated that labor shortfalls were seriously or fairly seriously affecting their businesses, while 32% said the impact was not very serious. “It goes without saying this drives up personnel costs, but it could even pose a business continuity risk,” a manager at a railroad operator wrote in the survey.
HR tech startups Japan are emerging as crucial players in addressing these challenges. The market conditions have created unprecedented opportunities for innovative solutions like Prance’s AI-driven platform to gain traction and scale rapidly.
Innovation Through Necessity: AI Adoption in Japanese Workplaces
Japan’s labor shortage has accelerated technological adoption across industries. Persistent shortages are also prompting investment in labor-saving technologies. Firms in labor-intensive sectors such as accommodations, eating and drinking services, and retailing are leading this shift.
However, AI implementation remains in early stages. More broadly, investment in labor-saving technology has… AI use among Japanese firms remains in its early stages. This presents significant growth potential for companies like Prance that can bridge the gap between AI capabilities and practical workplace applications.
The versatility of Prance’s platform addresses multiple industry needs. The solution is applicable to a wide range of occupations, such as IT, sales, and administration and it is available in Japanese and English. This multilingual capability proves essential as Japan increasingly relies on foreign workers to fill labor gaps.
Market Dynamics and Future Opportunities
The timing of this Prance AI seed funding couldn’t be more strategic. As we are heading towards the mid-year of 2025, Japan’s job market landscape is set to undergo a rapid transformation due to evolving workplace dynamics, technological advancements, shifting demographics, and a strategy of roping in foreign talents to fill the gaps in labor shortages.
Government policies are also shifting to support these technological solutions. The 2025 Big-Boned Policy highlights the Japanese Government’s commitment to expanding the list of training programmes eligible for Educational Training Benefits, including those focussed on digital and AI-related skills.
The foreign workforce component adds another dimension to the AI hiring Japan landscape. Currently, Japan is experiencing quite a surge in foreign workers, with 2.3 million in 2024, and the trend will continue. As Japan’s labor shortage persists, Japanese companies have taken the route of hiring skilled foreign professionals across the globe in fields like IT, healthcare, hospitality, manufacturing, etc., where specialized expertise is of utmost importance.
Addressing Demographic Realities
Japan’s demographic transition presents both challenges and opportunities for HR tech startups Japan. Japan recorded 67.81 million employed individuals in 2024, a record high despite the country’s declining population. This growth is fueled by greater workforce participation among women and seniors, with 25.7% of those aged 65 and older now working.
The government recognizes the limits of traditional approaches. Labor force participation among women and seniors has increased sharply since the early 2010s, more than compensating for the fall in the working-age population. The current female labor force participation rate is already comparable to Northern European economies. The labor force participation rate for people aged 65 and over was above 25 percent in 2024, which was the second highest among OECD countries, after South Korea.
Technology as the Great Equalizer
Prance’s AI recruitment platform Japan technology offers hope for addressing systemic inefficiencies in the job market. As the estimates suggest, if Japan is able to achieve the level of labour productivity that is achieved in other developed economies, there would be ample workers who would be able to contribute in other productive activities. If that is the case, it could be doubted whether Japan is actually facing a labour shortage.
The platform’s ability to standardize and optimize the hiring process could help unlock this hidden productivity potential. By reducing time-to-hire and improving matching between candidates and positions, AI-driven solutions like Prance’s could significantly improve overall labor market efficiency.
Looking Forward: The AI Hiring Revolution
This Prance AI seed funding represents more than just another investment in the crowded AI space. It signals a fundamental shift in how Japan labor shortage solutions are being addressed through technology. The combination of DEEPCORE’s expertise and Prance’s innovative approach positions the company to become a leader in the AI hiring Japan market.
The implications extend beyond individual companies to the broader economy. As more organizations adopt AI-powered recruitment tools, Japan may finally begin to address the structural inefficiencies that have contributed to its labor challenges. The success of platforms like Prance could serve as a template for other HR tech startups Japan looking to scale in this critical market.
With labor shortages showing no signs of abating and technological solutions becoming increasingly sophisticated, the investment in Prance represents a bet on the future of work in Japan. The company’s human-first approach to AI automation offers a compelling vision for how technology can enhance rather than replace human judgment in critical business processes.
The road ahead will require continued innovation, strategic partnerships, and careful attention to the unique cultural and regulatory environment in Japan. However, with strong backing from DEEPCORE and a proven platform that delivers results for both employers and job seekers, Prance appears well-positioned to play a significant role in shaping Japan’s AI recruitment platform Japan landscape for years to come.
Frequently Asked Questions
What is Prance’s AI hiring platform and how does it work?
Prance operates an AI-powered recruitment platform that automates screening and interviewing for thousands of applicants simultaneously, using standardized, professional interactions while maintaining a “Humans First” approach that frees up human recruiters for relationship building and decision making.
Why did DEEPCORE invest in Prance’s AI recruitment platform?
DEEPCORE, an AI-focused venture capital firm, invested in Prance because the platform addresses Japan’s severe labor shortage crisis, where two-thirds of companies are experiencing serious business impacts from workforce shortages.
How severe is Japan’s current labor shortage?
Japan faces critical labor shortages with unemployment at just 2.5%, a job-to-applicant ratio of 1.22, and bankruptcies due to labor shortages surging 32% to a record 342 cases in 2024, particularly affecting IT sectors needing 220,000 professionals by 2025.
What makes Prance different from other AI hiring tools?
Prance stands out with its “Humans First” approach, achieving over 70% positive candidate feedback through objective, standardized evaluations that eliminate bias and harassment while supporting multiple languages including Japanese and English.
How does AI hiring help solve Japan’s workforce problems?
AI hiring platforms like Prance automate repetitive recruitment tasks, handle thousands of applications simultaneously, and improve matching efficiency, allowing human recruiters to focus on strategic decisions while addressing systemic labor market inefficiencies.
What industries can benefit from Prance’s AI recruitment platform?
Prance’s platform serves multiple sectors including IT, sales, and administration, addressing Japan’s widespread labor shortages across industries from technology and healthcare to hospitality and manufacturing.
How will the DEEPCORE funding help Prance grow?
The seed funding will be used to strengthen recruitment of engineers and business personnel while accelerating product development and expansion, helping Prance scale its AI hiring solution across Japan’s labor-constrained market.
