The invisible arms race happening in Canadian tech labs isn’t what most people imagine. While global tensions rise and military budgets expand, Canada finds itself at a crossroads where everyday commercial technology increasingly overlaps with defence applications. This intersection—known as “dual-use technology”—represents both an economic opportunity and a strategic imperative that many argue the country isn’t adequately addressing.
“We’re sitting on a gold mine of innovative potential that serves both commercial markets and national security needs, but we haven’t built the proper infrastructure to develop it,” explains Dr. Rebecca Thompson, Director of the Centre for Defence Technology Studies at York University. “Countries like Israel, the United States, and increasingly China have mastered this ecosystem approach. Canada risks falling critically behind.”
The numbers tell a compelling story. Defence Research and Development Canada received approximately $350 million in annual funding last year—a fraction of what comparable nations invest in defence innovation relative to GDP. Meanwhile, Canadian defense procurement processes remain notoriously slow, with acquisition cycles often taking 7-10 years from concept to deployment.
What exactly constitutes dual-use technology? The spectrum is surprisingly broad: artificial intelligence systems that optimize both manufacturing supply chains and battlefield logistics; advanced materials that serve both clean energy and armored vehicle applications; drone systems equally valuable for agricultural monitoring and reconnaissance missions.
Take Waterloo-based Quantum Horizons, whose quantum sensing technology originally developed for mineral exploration now attracts interest from naval defense contractors for submarine detection capabilities. “We never set out to be a defense company,” notes CEO Michael Chen. “But we’ve realized our technology addresses critical security challenges while maintaining our commercial business. The problem is navigating two completely different worlds of funding and regulation.”
The barriers for Canadian companies pursuing dual-use applications remain substantial. Defence procurement requirements often demand proven track records that startups lack. Meanwhile, venture capital investors frequently shy away from defence applications due to longer sales cycles and ethical considerations.
The Council of Canadian Innovators recently published a report highlighting that over 65% of Canadian tech firms with dual-use capabilities cite regulatory complexity as their primary barrier to defence market entry. This stands in stark contrast to the American SBIR (Small Business Innovation Research) program, which provides streamlined pathways for commercial technologies to secure defence contracts.
“It’s not about militarizing Canada’s tech sector,” explains former procurement official Martin Lavoie, who now consults for technology companies. “It’s about creating intelligent frameworks where innovations can serve multiple purposes and markets. When done right, dual-use technology creates resilient companies that weather economic cycles because they aren’t dependent on a single customer base.”
Economic analyses suggest the potential rewards are substantial. The global dual-use technology market is projected to reach $235 billion by 2028, with particularly strong growth in autonomous systems, cybersecurity, and advanced materials. Canadian companies currently capture less than 2% of this market despite the country’s strong foundation in these fields.
The geopolitical context adds urgency to the conversation. Russia’s invasion of Ukraine demonstrated how commercial technologies—from consumer drones to satellite communications—quickly became critical battlefield assets. Meanwhile, China continues aggressive investment in dual-use capabilities that serve both economic and military objectives.
“The lines between civilian and military technology have fundamentally blurred,” observes defence policy researcher Samantha Wright from the Canadian Global Affairs Institute. “Countries that create efficient pathways between these sectors gain both economic and security advantages. Canada needs to acknowledge this reality.”
Several policy recommendations have emerged from industry consultations. These include creating a specialized investment fund for dual-use startups, streamlining security clearance processes, establishing technology transfer offices at major universities, and developing “sandbox” environments where companies can test applications with defence agencies without full procurement commitments.
The federal government has made initial steps through the Innovation for Defence Excellence and Security (IDEaS) program, which allocated $1.6 billion over 20 years starting in 2018. However, industry participants argue the program remains underfunded and overly complicated compared to international counterparts.
“The fundamental question is whether Canada wants to be a creator or just a consumer of critical technologies,” says Marika Benoit, founder of Ottawa-based cybersecurity firm Sentinel Shield. “Right now, we’re producing brilliant innovators who often end up selling to foreign companies because the domestic ecosystem doesn’t support their growth, especially when their technology has security applications.”
Some progress appears on the horizon. The recent defence policy update signals increased attention to innovation, and several Canadian tech accelerators have launched specialized streams for dual-use startups. The Venture Capital Catalyst Initiative has also begun discussions about a dedicated fund for strategic technology investments.
For Canada to truly capitalize on the dual-use opportunity, experts suggest a whole-of-government approach that aligns innovation policy, defence procurement, export controls, and academic research priorities. Without this coordination, the country risks watching its technological advantages erode while other nations race ahead.
As global security challenges mount and technology cycles accelerate, the stakes of this conversation extend far beyond military applications. The same capabilities that enhance national security often drive productivity, sustainability, and quality of life improvements across the civilian economy. The question isn’t whether Canada should participate in dual-use innovation, but whether it can afford not to.
