The group plans for the car to reach heights of 10m above the ground using propellor technology and hopes its prototype could be used to light the Olympic flame during the Tokyo summer games in 2020.
Cartivator aims to develop the prototype for a manned test flight by the end of 2018, to then commercialise the car by 2020.
The firm is using drone technology to make flying cars a reality and says the finished vehicle will have three wheels and four rotors and a projected top flight speed of 100km/h (62mph).
Measuring 9.5ft (2.9m) by 4.3ft (1.3m) Skydrive also claims to be the world’s smallest flying car.
Cartivator, which is based outside Toyota city in central Japan, has mostly relied on crowdfunding and a team of 30 volunteers to work on the technology.
It has also had outside help in the form of drone expert Masafumi Miwa of Tokushima University and Taizo Son, founder of online video game developer Gungho Online Entertainment.