Canada has made its intentions clear: now is the time to build a robust defence, security, and resilience (DSR) economy. As Prime Minister Carney convenes the inaugural Canada Investment Summit, and has launched a new Defence Industrial Strategy (DIS), national priorities are taking shape. The newly chartered Defence, Security and Resilience Bank (DSRB) will be headquartered in Canada, selected on the strength of its commitment to capital markets as a driver of growth and security, positioning the nation as a leading voice across the Allied defence market. Canada also now intends to join the NATO Innovation Fund (NIF). Together, these moves reflect something important: in a more dangerous and divided world, economic security and national security are inseparable.
The vision is in place. The political will is clear, as is the commitment. The question now is execution.
Canada’s innovation economy is large – it encompasses powerful regional innovation ecosystems including Toronto, Halifax, Edmonton, Vancouver, Montreal, and more. These hubs are increasingly generating start-up ventures focused on the DSR agenda. Propelled by a talent base featuring some of the world’s best universities and strongest research institutions, entrepreneurial ambitions are rising, prompted by the opportunity to support a once-in-a-generation ambition: 5% of GDP on defence and security by 2035, a rebuilt Arctic presence, and a new submarine fleet.
The funding trajectory, however, tells a more complicated story. According to NIF analysis of proprietary Dealroom data, investment in Canada’s defence, security and resilience start-ups rose from $128 million in 2020 to $760 million in 2023, but collapsed to $260 million in 2024 before partially recovering to $515 million in 2025. This volatility is a problem. Canada has the scientific and entrepreneurial talent and sophisticated capital markets, but these strengths have not yet come together to support a sustained growth trajectory.
Closing that gap is not a market problem; the reasons are systemic. Building a durable DSR innovation economy requires three interlocking systems to move together. Canada has, until recently, been working on them one at a time: innovation ecosystems that generate ideas and start-ups; an industrial base that produces those ideas at scale to allow for fielded capability; and a ‘capital stack’ that carries companies on the journey from prototype to production.
Get one right without the others and you get brilliant demos that never ship, primes that cannot find suppliers, or capital sitting on the sidelines waiting for demand signals that never arrive. Canada now has a real chance to align all three.
Innovation Ecosystems
Canada’s universities and start-ups produce excellent technology with dual-use potential across AI, quantum, and space. Many of these solutions can be adapted to the increasingly important Arctic context. The expanded $6 billion Defence Platform and dedicated StrongNorth venture fund is a signal of public funding support. The Canadian venture capital (VC) community is also stepping up to support these ventures, but private VC remains too small to match the scale of the challenge and opportunity. It is time for additional private capital, from pension funds and endowments to family offices and corporate venture groups, to crowd into the sector and overcome traditional concerns about defence being antithetical to environment, society, and governance commitments. Even with more early-stage capital, the challenge will be to translate ideas into fielded, production-ready capability that primes are willing to design into their next-generation platforms.
The Industrial Base
Now is the moment to ensure the industrial base is ready to turn novel ideas into products at scale, activating supply chains from across the country and connecting them to Allies and partners. All this requires clear contracts from the government so that industry can be confident the orders will come when its solutions match national priorities. The DIS points in the right direction, with its plan to onboard Canadian firms as strategic partners and its new Strategic Investment Transaction mechanism. Equally promising is the new Defence Advisory Forum, which will bring industry executives from ten sovereign capability areas into direct dialogue with ministers.
The test now is speed of execution. Like many Allies, the temptation is to write further reports – Canada is not immune to this reflex. But it does not need further strategy documents. It needs procurement decisions, contract awards, and demand signals, and it needs them at a pace that reflects the urgency of the moment.
Only government can supply the political will, the sustained funding, and the demand signal that turns a promising technology into capability. That is exactly what the Defence Investment Agency (DIA) is designed to do. It is being built to cut through decades of procurement gridlock to deliver on the nation’s priorities at pace. However, progress has been slower than many in the private sector might like. The DIA’s design and mandate – to consolidate fragmented procurement, engage industry earlier, and align acquisition with Allies – is precisely the kind of demand-side reform that lets fast-moving companies scale inside, rather than around, the defence establishment.
Canada’s procurement choices should actively encourage Canada’s primes and ‘neo-primes’ to treat the ecosystem of agile Canadian start-ups and university spinoffs as extensions of their own R&D. Across the U.S. DSR sector, we are already seeing what this looks like when it works: primes investing directly in start-ups, establishing development partnerships with them, and driving M&A activity to an all-time high – four times what it was four years ago – as neo-primes acquire start-ups to expand their offerings.
This traction is already reaching Canada. Last July, NIF portfolio company Isar Aerospace signed a contract with spaceport operator Maritime Launch Services to build a dedicated launch complex for its Spectrum launch vehicle at Spaceport Nova Scotia, near Canso. That same month, Kelluu – the Finnish company behind the world’s largest autonomous airship fleet, backed by both NIF and NATO’s DIANA accelerator – expanded into Canada, setting up at Area X.O in Ottawa to tap into the industry, government, research institutions, and Canadian Armed Forces that have converged there as the country’s national hub for defence innovation. Both chose Canada deliberately: its Arctic geography, sovereign maritime and sensing capabilities, and defence research infrastructure offer something no other Ally can replicate at scale.
The Capital Stack
A vibrant industrial base requires a strong capital stack – and here, Canada’s position has changed materially in 2026.
Hosting the DSRB is a significant move, one that could lower the cost of capital for Canada and participating nations by providing sovereign guarantees to the sector, backstopping commercial loans (to large companies but especially to SMEs in the supply chain), and linking finance to procurement contracts.
What Canada needs now is to connect the full capital stack for the benefit of its DSR economy: debt and guarantees for infrastructure-heavy, capital-intensive scale-ups; venture capital for early- and scale-up-stage, high-risk opportunities; and domestic bank and pension capital, increasingly willing to look at the sector, filling the space between. Across Europe, we are seeing debt and grants grow alongside venture financing as the DSR economy matures. Canada has a chance to leapfrog straight to that fuller capital stack if it is driven by enlightened leadership from its close-knit financial sector.
Connecting the capital stack and the industrial base to the innovation ecosystems across Canada could create a DSR innovation economy that sets the standard around the world. But none of this happens through markets alone: defence, security, and resilience are essentially public goods. To drive market activity, Government must accelerate contracts for important new technologies and provide precise, sustained demand signals that give industry the confidence to plan and invest at scale in home-grown solutions.
Canada’s innovation ecosystems are thriving, and its entrepreneurs are ready to support the country’s defence and security while also building its economy. What remains is to connect these brilliant, patriotic entrepreneurial teams to an industrial base being modernized in real time, and to a capital stack at the necessary scale to meet the moment. The time to move from commitment to execution is now.
Professor Dame Fiona Murray is Chair of the NATO Innovation Fund and Associate Dean of Innovation at the MIT Sloan School of Management.
The views expressed in this op-ed are the author’s own and do not necessarily represent those of the Institute or its staff.
Photo: Lars Hagberg, Canberra, Australia, March 5, 2026 – Craig Hardie speaks with Prime Minister Mark Carney and other dignitaries during a Defence Science and Technology Showcase at RAAF Defence Establishment Fairbairn. Office of the Prime Minister of Canada. https://www.pm.gc.ca
