Pacifist Japan Is Boosting Its Spending on Defense Startups

Near the Japanese city of Nagoya, Takumi Yamaguchi pulls on a motorcycle helmet and sprints along an asphalt track before releasing a drone that looks like a 6-foot-long model airplane. It crashes shortly after takeoff.

Yamaguchi’s startup, AirKamuy, can afford such mishaps because it makes cheap, mass-produced drones—out of cardboard, of all things. He sets off another test run, which goes much better. The drone buzzes around an artificial island not far from Nagoya’s main airport before returning for a landing. Engineers will gather data from the flights to adjust the device before producing the final model. If all ...