Canada Needs American Dynamism
Building national interests with technology.
Canada stands today where the United States stood in 2022. We made a moral judgment that investing in the national interest was unfashionable. That is changing.
“I was laughed out of the room four and five years ago; investing in defence was literally lumped in with big tobacco, porn, cryptocurrency and cannabis” — Glenn Cowan, Founder, ONE9 (December 17, 2025)
What is American Dynamism
In 2022, a16z launched a practice built on a radical new idea. They were investing in the national interest and were proud of it. American Dynamism invests in companies that involve the government and highly regulated industries, including aerospace, defence, public safety, education, housing, manufacturing, energy, and critical infrastructure. This was not charity, but the idea that massive returns can be found in underserved markets. That you can revolutionize bureaucratic environments with startup technology.
Innovation Lost Forever
New technologies cannot survive without the resources that they need. When young entrepreneurs lack the connections or experience needed to navigate bureaucracy and procurement, innovation dies.
Penicillin, the internet, and the GPS were forged by pathways created by military technology. Innovation does not have a political agenda, nor does it understand the categories that humans place on it. It is unpredictable. Perhaps a cure for cancer lies unfunded in the death valley of procurement cycles. When technology dies, so does its bloodline. After all, computers would not have been built without vacuum tubes. Penicillin, which saved hundreds of millions of lives, was discovered accidentally and nearly ignored. Canada is full of these missed opportunities.
Hassan Ismail is one of many. He spent three years trying to build a defence tech startup in Canada. He could not get a manufacturing licence without a contract, but no agency would contract a product he wasn't licensed to build. Canadian investors wouldn't touch it. Now he’s building a new company in Silicon Valley.
Why Now?
By 2035, Canada will increase its defence investment to 5% of GDP, with 70% of military purchases from Canadian companies, directing over half a trillion dollars into domestic industry and infrastructure. The defence industry as it exists today cannot meet that demand. Not even close. We are woefully unprepared, with neither the support, funding, nor infrastructure available to build. These are difficult problems, with difficult customers, in an industry that has been ignored. But that is the point. This is a new age of defence and infrastructure, an age dominated by technology and startup innovation, and Canada has no choice but to fill the gap. This is not the expansion of an industry, but the building of one.
Even Europe is Years Ahead
Before Ukraine, defence was less than 1% of European venture funding. Between 2021 and 2025, defence tech funding rose 13x to €2.6 billion. It is now the continent's fastest-growing sector. Helsing, an AI defence company, was founded in 2021. Within a year of Russia's invasion, they were deploying on the battlefield. Within two years, they won contracts for the Eurofighter. By 2025, they were worth €12 billion. If they can flip the switch overnight, why can’t Canada?
The Risk-Averse Nature of Canadian Financing
Geopolitical pressures from the United States and threats in the Arctic have forced Canada to confront its financing problem. The Business Development Bank of Canada (BDC) is a crown corporation and Canada's largest and most active VC firm. BDC recently launched its $4b defence deep-tech platform, supporting defence firms and investing directly in dual-use technologies. However, it has shown hesitancy to invest directly in pure defence, which includes several crucial technologies that the Defence Industrial Strategy (DIS) has identified as essential to Canadian sovereignty. Canada cannot be solely reliant on government organizations to fill the gap that private capital considers unfashionable. If our first movers are bureaucrats, then there is a problem.
“We’re not sorry for being a pure defence company. “Dual-use” is real, but it’s too often a euphemism used to soften or sanitize what is ultimately a serious responsibility. As nations take sovereignty more seriously, we must be unapologetic about the most fundamental enabler of that sovereignty: a strong, capable, and innovative domestic defence industry – and we’re proud to build it.” — Paul Ziadé, CEO, North Vector Dynamics (January 9, 2026)
Furthermore, BDC is an LP in over 60% of Canadian capital. As recently as last December, its investment agreements restricted some of the VCs it backed from investing in companies making military equipment, which has been quietly crushing Canadian defence startups.
BDC has since moved to remove these restrictions. Yet this represents the fundamental danger of allowing a single government organization to dictate Canada’s entire startup ecosystem. Canada must attract more LPs. Its largest funds have left. CPP Investments went from 74% domestic investment in 2005 to 12% today.
ONE9, Canada’s only national security VC, was founded by an ex-JTF2 squadron commander. BDC’s investment restrictions on defence meant ONE9’s Special Mission Fund 1 could not receive BDC backing. The fund was only able to raise $10m out of a $50m target. ONE9 was then acquired by Kensington Capital Partners, which had invested $7m of the $10m total.
A few years later, Canada is projected to spend over $1.2 trillion on defence in the next decade, roughly four times its prior spending.
“Raising a first-time fund in a Canada that shied away from defence felt almost impossible.” — Glenn Cowan, Founder, ONE9
We feel the need to ask for permission. Canadian VCs are now investing in fewer deals and leading fewer rounds. “Six in ten Canadian seed rounds include foreign investors.” There is a belief that if a startup wants to be taken seriously, it must become American. But American firms cannot provide support for Canadian problems. Canadians can, and Canada must lead.
“An ecosystem of “follower investors” produces an economy of subsidiaries, when what we need are global leaders.” – Amiral Ventures, Manifesto
Firms such as Amiral and Georgian are now taking the first real steps. Canadian financing is coming together slowly, but the opportunity was yesterday. Reaction is not enough. Those who build the foundation today will benefit from what is built above.
Home-Built Industry
Technology is more than B2B SaaS. Software is profitable, convenient and necessary. But it is not everything. We must also build physically and in highly regulated environments. Climate, energy, defence, infrastructure, space, and housing. These are issues that demand boldness. Not incrementalism. When entrepreneurs see successful companies in new industries, they will follow. But someone has to be first. Canada built Shopify into a global giant. Built the Canadarm. Took Vimy Ridge. Stormed Juno Beach. We have the talent. We sit on one of the richest territories on earth and produce a fraction of what we could. We can be a global leader. But we need to be ambitious.
Canadian founders have built some of America’s biggest unicorns. But when emergencies occur, we cannot rely on the goodwill of our allies. We can be confident that they will do what’s best for their people. We must be prepared to do the same. We need ownership and a home-built industry. Canada must not merely be nice but respectable. If we sell our capacity to build, we lose our bargaining power. Why would a country give us a good deal when we can’t say no?
Venture Capital Is Not Only Financing
In the US, Decisive Point Ventures acts as a “bolt-on government relations team” for its portfolio companies. 8VC assembles teams of Navy SEALs, Nobel winners, and Palantir Alumni. Trae Stephens, a partner at Founders Fund, sat on the Defence Innovation Board.
In Canada, defence procurement is complicated and can take an average of 16 years. Procurement is improving through organizations like the Defence Investment Agency (DIA), but it will not happen overnight, and it will never be simple. To get through the valley of death, founders in highly regulated industries need more than just financing. They need support and patience.
American Dynamism’s Success
The first American Dynamism fund was launched in 2023 with $600 million. In January, it raised another $1.176 billion. Its portfolio companies are now worth tens of billions of dollars, including Anduril, Hadrian and Shield AI. In 2025 alone, the number of global VCs investing in defence increased by 41%.
Investing in national interest has now flipped from taboo to necessary.
It’s Time For Canadian Dynamism
“From studying the outcome of past expeditions, [Shackleton] believed that those that burdened themselves with equipment to meet every contingency had fared much worse than those that had sacrificed total preparedness for speed.” —Alfred Lansing, Endurance: Shackleton’s Incredible Voyage
The foundation Canada once relied on is shaky, and that has created urgency. But Canada is building. Dominion Dynamics is building Arctic sensor networks. Reaction Dynamics is building rocket propulsion. Irréversible is building efficient AI chips. But urgency does not last forever. Now is the time for startup technology to revolutionize the nation. If Canada waits, builders like Hassan Ismail will continue to leave.
Canada does not need to wait for perfect conditions. It needs action. American Dynamism is a philosophy of leadership. When a16z began investing in national interest, it was criticized. Their model has now been proven in both the United States and Europe.
With Canada's Defence Industrial Strategy, we can be next. We have the opportunity to build something that we can be proud of. This is not merely about defence, but building the infrastructure Canada needs to compete in the modern world. Financing is no longer about predicting change, but about creating it.
When we decide which industries can thrive, our hubris outbids the laws of nature. Generations of future technologies are strangled by groupthink and bureaucracy. A company unbuilt is a stepping stone unpaved, a cure undiscovered. We must not only build what is fashionable, but also what is necessary.
For more on Canadian defence tech opportunities, consider reading my other articles:
![Can Investment in Defence Kickstart a New Era of Canadian Innovation? [Industry Spotlight]](https://substackcdn.com/image/fetch/$s_!vhj9!,w_140,h_140,c_fill,f_webp,q_auto:good,fl_progressive:steep,g_auto/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F3d9ceef1-f24a-4481-9dba-46cfdfe0548d_1440x1080.png)
I adore the concept of not needing to wait for permission, but rather, replacing that with action. Noted.