In January 2026 a delegation of eight Japanese‑origin startups travelled to Dubai for the United Arab Emirates’ inaugural startup‑exchange program, an event that brought together entrepreneurs from India, Turkey, Britain and Saudi Arabia as well as Japan. The gathering, organized in part by the venture‑capital firm Universal Materials Incubator, was meant to showcase Japan’s growing appetite for cross‑border markets and to connect its deep‑tech firms with Gulf investors. Within two months, the geopolitical backdrop had shifted dramatically: a U.S.–led campaign against Iran escalated into missile strikes over the Persian Gulf, prompting travel warnings and remote‑working mandates across the region. Despite the disruption to physical travel, the participants say their investment pipelines remain intact.
“Even if flights are cancelled, we can keep negotiating online, just as we did during the COVID‑19 pandemic,” said Shosuke Kiba, CEO of Universal Materials. An Arab investor he spoke with confirmed that virtual deal‑making would continue, underscoring the resilience of capital flows in a market that has long been accustomed to geopolitical volatility.
The conflict has also revived concerns about energy security. With the Strait of Hormuz partially blocked, crude prices have hovered above the $100 per barrel mark. Prime Minister Sanae Takaichi warned in a Friday briefing that Japan must prepare for prolonged disruptions to Gulf oil supplies, a scenario that could accelerate demand for alternative energy technologies. Japanese firms that specialize in biofuels, carbon‑capture and other low‑carbon solutions stand to benefit, Kiba noted, because higher oil prices improve the economics of clean‑energy projects.
The eight companies that presented in Dubai illustrate the breadth of Japan’s next‑generation startup ecosystem. hibot, a spin‑off from the Institute of Science Tokyo, builds snake‑like crawler robots for hazardous environments. Its co‑founders—Italian engineer Michele Guarnieri and former Embraer specialist Paulo Debenest—see the oil, gas and power‑transmission sectors in the UAE and Saudi Arabia as early adopters. During the pitch, advisory board member John O’Brien questioned the need for humanoid aesthetics, prompting hibot’s founders to stress functional design over form.
Sakana AI, Japan’s most valuable unicorn with a valuation of roughly 200 billion yen (US$1.25 billion), is taking a more measured approach. Co‑founder David Ha, a former Google engineer and Goldman Sachs banker born in Hong Kong, insists the company must first dominate the domestic market before scaling abroad. “Many startups go global too early,” he said, emphasizing the importance of a solid revenue base in a market still dominated by U.S. software giants.
Applied‑AI specialist Recursive, founded by Portuguese ex‑Google researcher Tiago Ramalho and Japanese serial entrepreneur Katsutoshi Yamada, is targeting sustainability challenges ranging from waste reduction in cosmetics to groundwater forecasting for peatland fire prevention. Head of corporate affairs Oktay Kurtulus acknowledges that the Iran‑UAE conflict adds uncertainty, but he stresses that the firm is pursuing opportunities in the United States, Europe, Southeast Asia and, increasingly, the Middle East.
EF Polymer, a bio‑based super‑absorbent polymer producer created by two Indian entrepreneurs, converts fruit waste into a material that cuts irrigation water use by 40 % and fertilizer consumption by 20 %. The startup is evaluating entry strategies for the Gulf, where water scarcity makes its technology especially relevant, and says its search for a local partner is unchanged despite the security situation.
These firms are courting investors from the region’s sovereign wealth funds, notably Abu Dhabi’s Mubadala Investment Company and Saudi Arabia’s Public Investment Fund, both of which have a track record of venture‑capital participation through vehicles such as SoftBank’s Vision Fund. Historically, foreign capital has accounted for no more than 10 % of Japanese startup financing, with the exception of 2021 when a global tech‑investment surge saw PayPal acquire the “buy‑now‑pay‑later” platform Paidy for $2.7 billion and attracted money to companies like SmartNews and SmartHR.
Japan’s own policy framework is attempting to reverse that trend. The Startup Development Five‑Year Plan (2022‑2027) sets a target of 10 trillion yen in annual startup investment by 2027, a tenfold increase over current levels. The plan also seeks to draw foreign entrepreneurs, though the country’s demographic composition remains a hurdle. As of June 2025, foreign residents numbered just under 4 million, representing 3.2 % of Japan’s 123 million population, according to government data.
Economist Masumi Sai points out that diversity in Japan’s corporate sector is still largely unquantified. While nationality is an obvious metric, she argues that age, gender and professional experience also shape innovation outcomes. “New ideas emerge through interaction, while exclusion of differing viewpoints stifles them,” she said, noting that the benefits of diversity must be balanced against potential slower decision‑making.
Some Japanese founders are already bypassing the domestic market altogether. Takaki Takehana, a 33‑year‑old web‑marketing entrepreneur, relocated his business first to Hong Kong and then to Dubai, attracted by the emirate’s low corporate tax rates, rapid population growth and a labor pool that is 90 % foreign‑born. He cites rising taxes, labor shortages and a shrinking Japanese consumer base as drivers for the move, adding that a weakening yen makes multi‑currency earnings increasingly appealing.
Biotech firm Chitose Bio Evolution, founded by Tomohiro Fujita and based in Singapore, illustrates another pathway. The company engineers microorganisms for applications ranging from antibody production to algae‑based biofuels, positioning itself as a climate‑tech player. After securing backing from Japanese corporate investors, Fujita is now courting a major international partner and aims to list on Nasdaq within two years, a goal he says reflects the global ambition of many Japanese‑led ventures.
The convergence of geopolitical risk, high energy prices and a policy push for greater startup funding is shaping a new export‑oriented mindset among Japan’s deep‑tech community. While travel restrictions and regional conflict pose short‑term challenges, the sector’s emphasis on clean‑energy solutions and its willingness to tap into the Gulf’s sovereign‑wealth capital suggest that Japanese innovation will continue to seek markets far beyond its home islands.
For global investors, the story underscores a dual narrative: the resilience of venture capital amid geopolitical turbulence, and the strategic importance of Japanese technology in a world where energy security and sustainability are increasingly intertwined.