Drones are seen during NATO Innovation Range demo day in the Selija military training field near Viesite, Latvia, in May.Ints Kalnins/Reuters
Canada has joined NATO’s more-than-$1.5-billion Innovation Fund, pending approval from the other members of the defence- and security-focused initiative, sources say.
The move means Canada will finally follow through on a long-held commitment to join the fund, which was launched in 2022 to invest in technologies being developed by participating North Atlantic Treaty Organization allies.
Canada’s membership in the fund is pending approval by the venture capital fund’s participating 24 countries, or limited partners, which could take until the fall, sources say.
The Globe and Mail is not identifying the sources, who are not authorized to speak publicly about the matter.
Canada, alongside its fellow NATO members, signed off on the creation of the fund four years ago, and even set aside $107-million over 20 years in 2024 to participate in it. But it never followed through, making it one of only eight NATO allies not backing the fund.
Recently, however, the country’s tune has begun to change – not only on the fund itself but also on defence spending more broadly, and its willingness to invest in the previously neglected sector.
Proponents of the fund say its ability to invest in early-stage companies could be meaningful for Canada, whose defence industry is primarily made up of small-to-medium-sized enterprises and whose army is rapidly trying to modernize.
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The NATO fund’s initial investment size is typically up to €15-million (about $24-million), and it only invests in companies or security-focused funds headquartered in one of its participating countries.
At the end of May, Department of Defence spokesperson Kened Sadiku said in an e-mail that Canada was “actively considering options” to join the fund and confirmed that the original $107-million set aside by the government through its 2024 defence-policy update, Our North, Strong and Free, is still available.
A month later, in response to a query from The Globe about Canada officially subscribing to the fund, they said “additional information will be shared in due course.”
If approved, Canada’s membership means it will be joining the initiative’s first sub-fund, which was launched in 2023 to invest into early-stage technology startups, as well as other funds that align with its defence, security and resilience mandate.
It also means that Canada could have a say in the launch of a second sub-fund, or any further sub-funds under the NATO Innovation Fund, that are likely to have different focuses, such as investing in technology for the Arctic or zeroing in on later-stage companies.
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Any money that NATO allies contribute to the fund counts toward their defence-spending target of 5 per cent by 2035.
The opening of the first sub-fund for Canada to join is significant on its own, sources say, as the only other late entrants to the fund have been Finland and Sweden, who each joined when they became NATO members in 2023 and 2024, respectively.
At the end of May, Fiona Murray, chair of the board for the Innovation Fund, visited Toronto to meet stakeholders and learn about the investing and startup landscape there.
“The NATO Innovation Fund board is incredibly positive about the possibility of Canada joining,” she told The Globe at the time.
If Canada’s membership is approved, an affiliated investment team would likely follow, to spend time in the country, get to know the ecosystem and research potential investment opportunities. This is common practice for the innovation fund with its member countries.
When it was initially launched by NATO, former secretary-general Jens Stoltenberg said the fund had a 15-year timeframe to “help bring to life those nascent technologies that have the power to transform our security in the decades to come.”