Key Takeaways
- • Triple Helix's CGAI research paper examines whether venture capital can accelerate the procurement of emerging technologies for Canada's Department of National Defence (DND) and Canadian Armed Forces (CAF), based on over 50 interviews conducted between November 2024 and February 2025.
- • The paper argues that civilian technology startups now drive much defence innovation, and that Canada's traditional procurement processes are ill-suited to acquire dual-use technologies at the pace required.
- • Canada currently has no government-funded VC group comparable to the U.S. In-Q-Tel, which was founded in 1999 to support U.S. intelligence agencies.
- • The U.S. defence VC sector has grown substantially, with defence VC funding for dual-use startups doubling between 2019 and 2022 and the DOD investing upwards of $130 billion in emerging technology firms since 2021, according to the report.
- • The UK's National Security Strategic Investment Fund (NSSIF), established in 2018 with an initial £85 million, offers a model for government-backed defence venture investment.
Summary
A Canadian Global Affairs Institute (CGAI) publication, produced by Triple Helix, examines the potential role of venture capital (VC) in Canada's defence innovation ecosystem. The report's starting point is the June 9, 2025 announcement by Prime Minister Mark Carney that Canada will rebuild, rearm and reinvest in the Canadian Armed Forces, including accelerated defence spending to strengthen the domestic defence industrial base. The authors contend that emerging technologies such as artificial intelligence, robotics, space-based systems, advanced sensors, quantum computing and biotechnologies are increasingly relevant to modern military operations, and that civilian startups, rather than traditional defence contractors, now drive much of this innovation. Many of these firms produce dual-use technologies that move faster than conventional government procurement can handle.
The report notes that Canada's defence policy, Our North Strong and Free (ONSAF), committed to reviewing and reforming defence procurement through Public Services and Procurement Canada and promised a "deeper and more strategic relationship" with industry. The Department of National Defence appointed an Assistant Deputy Minister (Industrial Policy) in fall 2024 to develop a defence industrial strategy. The authors also cite the re-election of U.S. President Donald Trump as increasing the urgency of strengthening domestic defence capabilities.
Internationally, the report describes growing use of alternative funding models, including government-backed VC funds, defence accelerators that offer grants rather than equity, and dedicated investment vehicles. In the United States, In-Q-Tel, founded in 1999, invests in areas such as artificial intelligence, cybersecurity and autonomous systems. The U.S. military also runs accelerators, including the Air Force's AFWERX, the Army's xTech and the Defense Innovation Unit, which rely largely on direct contracting rather than equity. The report cites named private firms such as Anduril Industries and Palantir Technologies as examples of defence-focused hypergrowth.
In Europe, the United Kingdom established the National Security Strategic Investment Fund in 2018 with an initial allocation of £85 million (about $157 million CAD), managed under the British Business Bank. The Defence and Security Accelerator (DASA) partners with early-stage dual-use startups through grants and contracts but makes no direct equity investments.
The study is based on semi-structured roundtables and interviews with stakeholders from Canada's financial, investment and technology communities, conducted between November 2024 and February 2025, with participants mostly holding senior leadership roles. Interviews were anonymous. The report's stated aim is to offer evidence-based policy recommendations for the Government of Canada on funding, regulation and procurement reform for defence-focused startups.
The report notes that Canada's defence policy, Our North Strong and Free (ONSAF), committed to reviewing and reforming defence procurement through Public Services and Procurement Canada and promised a "deeper and more strategic relationship" with industry. The Department of National Defence appointed an Assistant Deputy Minister (Industrial Policy) in fall 2024 to develop a defence industrial strategy. The authors also cite the re-election of U.S. President Donald Trump as increasing the urgency of strengthening domestic defence capabilities.
Internationally, the report describes growing use of alternative funding models, including government-backed VC funds, defence accelerators that offer grants rather than equity, and dedicated investment vehicles. In the United States, In-Q-Tel, founded in 1999, invests in areas such as artificial intelligence, cybersecurity and autonomous systems. The U.S. military also runs accelerators, including the Air Force's AFWERX, the Army's xTech and the Defense Innovation Unit, which rely largely on direct contracting rather than equity. The report cites named private firms such as Anduril Industries and Palantir Technologies as examples of defence-focused hypergrowth.
In Europe, the United Kingdom established the National Security Strategic Investment Fund in 2018 with an initial allocation of £85 million (about $157 million CAD), managed under the British Business Bank. The Defence and Security Accelerator (DASA) partners with early-stage dual-use startups through grants and contracts but makes no direct equity investments.
The study is based on semi-structured roundtables and interviews with stakeholders from Canada's financial, investment and technology communities, conducted between November 2024 and February 2025, with participants mostly holding senior leadership roles. Interviews were anonymous. The report's stated aim is to offer evidence-based policy recommendations for the Government of Canada on funding, regulation and procurement reform for defence-focused startups.
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