The Business Development Bank of Canada (BDC) announced Thursday that it is expanding its Defence Platform with another $1.2 billion CAD in funding from the federal government.
This comes in addition to the $1 billion BDC was promised by the Government of Canada in Budget 2025 to support its Defence Platform, which was launched in December. At the time, BDC said that capital would enable it to provide up to $4 billion, including $3.5 billion in financing and advisory services and $500 million in venture capital (VC) funding.
BDC claims this latest $1.2-billion federal injection will help the organization deploy up to $6 billion in loans and investments to domestic small and medium-sized businesses (SMBs) targeting opportunities in Canada’s burgeoning defence sector.
“This is a truly pivotal moment in Canada’s history.”
Peter Dawe,
BDC
In an interview with BetaKit, BDC’s VP of defence strategy Peter Dawe said the bulk of this federal top-up will go towards investments and ecosystem development rather than loans, but did not share a more detailed breakdown. “We think that we’ve gone about as far as we can right now on the debt financing side with that initial allocation,” Dawe said.
The recently-retired Major General, who previously spent 35 years with the Canadian Armed Forces (CAF), joined BDC earlier this year, calling the chance to oversee its Defence Platform “a great opportunity to continue to serve out of uniform.”
Dawe also shared that BDC has appointed Peter Suma to lead its new, $300-million StrongNorth Fund. The fund is an important component of the Defence Platform that’s designed to back startups developing defence and dual-use tech with both civilian and military applications.
These announcements come as Canada ramps up its defence spending after decades of underinvestment. As the feds look to reduce military dependency on the US, BDC has been tasked with supporting the buildout of domestic industry. With today’s $1.2-billion federal investment, the Crown corporation has now been allocated a total of $2.2 billion to fund Canadian SMBs seeking to deliver key sovereign capabilities through its Defence Platform.
“This is a truly pivotal moment in Canada’s history,” Dawe said.
Dawe said the Defence Platform, which has already provided nearly $92 million in financing to 16 companies, will make both pure military and dual-use investments, and this includes the StrongNorth Fund. He said BDC defence investments will need to align with Canada’s Defence Industrial Strategy (DIS) and the key sovereign capabilities it outlines.
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The DIS lists 10 priority areas, including aerospace, ammunition, digital systems, in-service support, personnel protection like medical countermeasures, sensors, space, specialized manufacturing, training and simulation, and autonomous systems. BDC also plans to evaluate SMB investment and financing opportunities on the basis of whether there is clear demand or interest from the CAF or allied nations, Dawe said.
The deep tech-focused, stage-agnostic StrongNorth Fund succeeds BDC’s prior Deep Tech Venture Fund. “Our mission, as handed to us in the DIS, is to stimulate the defense industrial base,” Suma, the StrongNorth Fund’s managing partner, told BetaKit in an interview.
Suma is the co-founder and former chair and co-CEO of Kitchener-Waterloo deep tech startup Applied Brain Research, which catered to defence customers. He plans to draw on his past investing experience and build a 10-person team to support the StrongNorth Fund’s operations. He expects the fund, which is on track to complete its first investments soon, to back 30 to 40 startups over the next four years, leading rounds and cutting cheques of between $1 million and $20 million.
Given Canada’s dearth of defence funds and lack of experience investing in the space, Suma said many investors have an interest in backing defence tech firms but lack the conviction or capital to lead. He sees a role for the StrongNorth Fund to play here. “We have a preference to leading [because] we are trying to break the logjam,” he said.
BDC’s Defence Platform will also make investments in other VC funds and support the growth of existing defence ecosystem support players, but those plans are still under development.
Feature image courtesy Madison McLauchlan for BetaKit.