Canada leads NATO at exactly one thing

22 of the 150 companies NATO picked for its 2026 DIANA accelerator cohort are Canadian. More than any other country in the alliance, out of 3,680 applications. Canadian founders led the alliance in applications, too.

Read that again. Canadian founders are out-competing 31 countries for allied defence money. The idea that Canada doesn't do defence tech is already dead, founders killed it. What hasn't caught up is everything around them.

The context, fast: global VCs put $49.1B into defence tech last year, nearly double 2024. Canada finally hit NATO's 2% target, pledged 5% by 2035, roughly $150B a year, shipped its first-ever Defence Industrial Strategy in February, and handed BDC $4B to back Canadian companies in the category. The biggest defence Series A in Canadian history closed in June (Dominion Dynamics - profiled below).

Four takes, since this is the kind of moment that punishes fence-sitting:

1. The demand is durable. Some of the prices aren't. NATO's 2035 timeline, the Arctic, Ukraine, a neighbour you can't plan around,  none of that reverses if markets correct. What can reverse: Anduril doubling from $30.5B to $61B in eleven months looks a lot like 2021. Build for the decade. Don't build a plan that only works if the top of the market holds.

2. Canada's bottleneck is the buyer, not the money or the talent. The Industrial Strategy reads well and commits 70% of contract spend to Canadian firms, but the industry association's own CEO called it light on timelines, and the best-funded startup in the country still doesn't have a federal contract. Until the new Defence Investment Agency signs its first sub-12-month deal with a startup, treat Ottawa as an R&D partner and a story for your deck not a customer in your revenue model.

3. The SAFE deal is the most underrated thing Canada negotiated this decade. Canada is the only non-EU country allowed 80% Canadian content on EU joint defence procurement;  everyone else is capped at 35%. Almost nobody in Canadian tech noticed. If you build secure comms, space data, cyber, or dual-use AI, Brussels just became a closer market than Ottawa.

4. One more thing, because it goes unsaid: the culture argument is over. In 2020, 41% of Canadians wanted more defence spending. By 2025 it was 62%. The debate that kept a generation of Canadian engineers out of this category has moved on, even if a few campus corners haven't.

And if you're already building something dual-use or know a company that is, reply to this email. We're mapping who in the community is working on this, and the list is getting interesting.

Poll:

Eliot Pence led Anduril's international expansion from 2018 to 2022, a front-row seat while a defence startup went from nothing to one of the most valuable in the world. Then he came home to do it in Canada.

He started Dominion Dynamics in Ottawa in June 2025. Last week it closed a $139M CAD Series A, the largest a Canadian defence company has ever raised, and the round that puts Dominion at $169M in its first twelve months.

What they're building: the "autonomy stack for the Arctic." It starts with AuraNet, a mesh of sensors and a map-based command layer that keeps working across thousands of kilometres of the North, where cell service doesn't. Dominion spent eight weeks running it in the field with the Canadian Rangers and put it through Operation NANOOK. Next is Scout, an uncrewed, AI-piloted aircraft built to fly alongside crewed jets into places too dangerous to send a pilot.

The part worth watching isn't the cheque. It's the playbook. Pence isn't waiting on a government tender; he's deploying with the Canadian Forces first and earning the requirement instead of bidding on it. Georgian led both rounds, its first-ever defence bet, with Bessemer, OMERS, BDC, RBC, and Cohere's founders on the cap table.

Canada spent half a century underinvesting here and is now trying to ramp up spending with local companies.

If you're building in Canadian hard tech and haven't made it to a TechTO event yet, the next one's on August 10, 2026.

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