Crown corporation explicitly encourages businesses to “apply their skills to defence needs.”
Building upon previous federal commitments, the Business Development Bank of Canada (BDC) has announced a new, $4-billion Defence Platform allowing the Crown corporation to invest in and support Canadian defence technology companies.
The platform, announced Wednesday, includes $3.5 billion for financing and advisory services to help Canadian businesses scale and participate in “major defence contracts and national projects focused on sovereignty.” Another $500 million will be delivered through three streams of venture capital: a deep-tech, dual-use focused StrongNorth Fund, the Catalyst Innovation Fund, and indirect investments in VC funds “aligned with Canada’s defence and sovereignty priorities.”
In its announcement, BDC explicitly encouraged businesses, such as advanced manufacturing companies, to “apply their skills to defence needs.”
The bank, whose sole shareholder is the Government of Canada, is the country’s largest and most active VC through its investment arm BDC Capital. In September, BDC CEO Isabelle Hudon told BetaKit that the bank was preparing to serve the country’s defence tech sector in a “more aggressive way,” as the US trade war spurred Canada to invest more in the country’s military capabilities.
“We know that entrepreneurs aligned to the sector face unique challenges in accessing capital and navigating complex supply chains, and BDC is stepping up to help them overcome these barriers, strengthen our sovereignty, and build a more secure and resilient nation,” Hudon said in a statement.
The funding is part of a larger push from the federal government to boost defence spending in Canada to a target of five percent of GDP by 2035. The federal commitment has made Canadian investors, including BDC, more keen on the defence sector, which ranges from cybersecurity software to quantum computing to weapons technology.
Budget 2025 allocated nearly $82 billion toward defence spending, $1 billion of which went to BDC to create a new Defence and Security Business Mobilization Program. The program is meant to provide loans, capital, and advisory services to help small and medium-sized businesses contribute to Canada’s defence and security. In an email to BetaKit today, a spokesperson for BDC clarified that the $1 billion earmark will go toward the larger $4-billion defence platform.
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In Wednesday’s announcement, BDC explicitly encouraged businesses, such as advanced manufacturing companies, to “apply their skills to defence needs.” BDC said its support will prioritize sectors “critical to national security,” such as manufacturing, robotics, critical minerals, quantum computing, aerospace, cybersecurity, AI, and technologies that can be used for civilian and military purposes.
BDC also indicated that it would look to hire industry experts and create a “dedicated team” to serve the defence sector. The Crown corporation has been undergoing a continued reset and leadership churn across its various funds. It laid off staff from its Deep Tech Venture Fund earlier this year, and Hudon told BetaKit in September its successor fund would be defence tech-focused. She also said the Crown corporation had no need to rewrite its governing rules to make direct investments in defence-related startups.
This week, however, BDC Capital executive vice-president Geneviève Bouthillier wrote in an email to investors viewed by BetaKit that BDC was willing to “alleviate” restrictions in fund documents to allow VCs to invest in companies that make or sell military-related products.
Feature image courtesy BDC