Iain Klugman might best be known for championing Kitchener-Waterloo’s tech scene. But in recent years, the former Communitech CEO has been taking a closer look at another tightly-knit ecosystem.
A Dalhousie University graduate and Advisory Board Member at the Nova Scotia Health Innovation Hub, Klugman has trained his eyes on Atlantic Canada, where he sees emerging strength in hard tech verticals.
“There are companies in this region that have such massive potential to impact our lives for the better.”
Talis Apud-Martinez, Emera ideaHUB
“There’s such a determination right now in Atlantic Canada, whether it’s things like fixing healthcare or saving the planet,” said Klugman. “There just seems to be an urgency and drive that gets me really excited.”
As the global economy tilts toward hardware innovation, major Canadian hubs like Toronto and Montréal might seem like the obvious leaders in the deep tech race.
But Klugman, as well as Talis Apud-Martinez, Associate Director of the Emera ideaHUB at Dalhousie University, and others are encouraging a closer look at Atlantic Canada, pointing to the region’s unique combination of labour conditions, research environment and proximity to industry.
“We are seeing a lot of really interesting hard tech emerge from this region,” Apud-Martinez said. “It’s an important time for Canadians to see that, whether you’re an investor or a founder, it’s worth looking at the opportunity out here.”
With just over two million people spread across a landmass the size of France, Atlantic Canada might seem like an unlikely contender. But many tech sector stakeholders inside and outside of Atlantic Canada see the region betting big on an industry where the stakes are higher, the timelines are longer, and the rules are fundamentally different.
Support that doesn’t take a slice
Hardware innovation is a heavy lift, with high costs and long timelines for research, prototyping, and scaling. But in Atlantic Canada, that burden can be considerably lighter.
Startup Genome puts Atlantic Canada in the global top 15 of tech ecosystems that deliver bang for buck, a distinction Apud-Martinez attributes to the region’s ability to balance affordability with ambition.
“Being based here means you can keep costs low while targeting global markets, which makes the numbers work really well,” she said.
This affordability stems from several factors. Commercial real estate is more available, talent costs are competitive, and regional governments have prioritized business-friendly policies and non-dilutive funding opportunities.
Nova Scotia, for example, offers tax credits covering up to 50 percent of eligible research and development expenditures, which significantly reduces the financial burden on startups developing research-intensive hardware.
Jennifer Wagner, former president of Dartmouth-based CarbonCure Technologies, which embeds captured CO2 into concrete, has credited government funding programs as critical to the company’s early success, stating that without them, “there would be no CarbonCure.”
Apud-Martinez noted that provincial programs and federal programs like the Atlantic Canada Opportunities Agency and NRC-IRAP offer a deep pool of non-dilutive funding to help cover the hefty upfront costs faced by deep tech companies.
Halifax, Atlantic Canada’s largest city, the second-most affordable location for operating a life sciences research centre in Canada and the United States, and has been recognized for having the most affordable ocean tech sector in Canada.
Kendra MacDonald, CEO of Canada’s Ocean Supercluster, told BetaKit that Atlantic Canada’s close ties to the maritime industry, combined with extensive ocean-focused support programs and organizations, are transforming the region into an oceantech powerhouse.
“The economic opportunity, certainly from an oceans perspective, is very significant here, and I think the rest of Canada should be paying attention to that opportunity in Atlantic Canada,” MacDonald said.
A natural testbed
In addition to funding, deep tech startups grapple with unique hurdles in product development.
Unlike software companies that can fix lines of code and iterate quickly, hardware startups rely heavily on early customers to test and validate their technology—a process that is often far more complex than it sounds.
Atlantic Canada, according to Apud-Martinez, is uniquely positioned to support these early-stage efforts.
“The thing that really struck me, when I was out there, was seeing this real momentum around deep tech from a product and a company formation perspective.”
Iain Klugman
“There’s this really interesting combination of low operating costs, a super supportive ecosystem, abundant non-dilutive funding, and opportunities to pilot deep tech right here,” Apud-Martinez explained.
Several startups have already taken advantage of this environment. Halifax healthtech startup Myomar Molecular, for example, piloted its muscle health diagnostic tool with the Nova Scotia’s population before officially launching the product earlier this fall.
Much of this innovation is happening at the Nova Scotia Health Innovation Hub, which connects researchers, clinicians, and startups to test and implement new healthcare ideas, often harnessing its direct ties to the public health system to pilot innovations in real-world settings. “They’re doing stuff that I would argue is leading the country,” Klugman said.
The Center for Aquaculture Technology in Prince Edward Island was one of the first to test Dartmouth-based DeNova’s sustainable fish feed made from greenhouse gases. Halifax-based Planetary Technologies also partnered with Dalhousie University to conduct the first trial of its technology that reduces acidification in the ocean.
Shelley King, founding CEO of Natural Products Canada, told BetaKit that launching and piloting hardware is easier out east thanks to the region’s collaborative and tightly connected community.
“You’ll often see companies that are not in the same sector collaborating, and it’s easier to do that given the smaller geographic footprint that we have here,” King added. “Everybody seems to know everybody.”
Atlantic Canada also offers a robust support system for deep tech startups seeking space, resources, mentorship, or a network, including the Ocean Supercluster, Lab2Market, Propel, Startup Atlantic, and pilot opportunities through agencies such as Invest Nova Scotia.
The Emera ideaHUB is also among these resources. The incubator, which takes no equity from deep tech startups, offers wet and dry labs, hands-on guidance, and access to industry partnerships.
“We provide not just technical support but also strategic advice,” Apud-Martinez said, noting this includes designing for supply chain, manufacturing, or scaling materials.
The deep tech learning curve
While Atlantic Canada is rich in grants, incubators, and government-backed support, private investment lags behind other Canadian regions. For deep tech startups, transitioning from software to hardware amplifies these challenges, particularly when it comes to investor education.
According to Apud-Martinez, one of the biggest hurdles is the steep learning curve investors face when navigating hardware ventures. The region has seen a few sizable software exits in its history, such as Verafin’s $2.75-billion Nasdaq acquisition and the $276-million sale of Radian6. But deep tech is a different ball game.
“The templated model of B2B SaaS just doesn’t work,” Apud-Martinez explained. “You need investors who are comfortable evaluating intellectual property from universities, understanding founders with deep technical backgrounds, and what it really takes for them to scale.”
Hardware investments require more than just capital, she said. They call for specialized due diligence, different valuation models, and most importantly, patience. For investors accustomed to the speed and simplicity of software deals, Apud-Martinez said investors need to understand deep tech can take up to 40 percent longer than software investments to mature.
“You can’t just invest in hardware the way you always invested in software,” she added. “It’s not going to be the same.”
Still, she believes this learning curve is worth the climb. These investments may demand patient capital and a willingness to learn, but they’re already translating into global success stories.
Mount Pearl, NL-based oceantech startup Kraken Robotics, works with global military agencies, including the Canadian Navy to hunt remote sea mines with its advanced robots and sensors.
Apud-Martinez said while Atlantic Canada is poised to become a global leader in deep tech, ambition alone won’t make it happen. It will require investors who are ready to support purpose-driven companies that don’t fit the typical software startup mould.
“There are companies in this region that have such massive potential to impact our lives for the better,” she added.
For his part, Klugman sees many parallels between the Waterloo Region and Atlantic Canada.
“We tend to look at our small size not as a constraint, but as an asset,” he said. “The thing that really struck me, when I was out there, was seeing this real momentum around deep tech from a product and a company formation perspective.”
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