Canada is set to join NATO’s Innovation Fund, an initiative aimed at investing in early-stage defence and security technologies developed by member countries, pending formal approval from the fund’s existing participants, sources familiar with the matter said. The move comes after years of delay, as Canada had initially committed to joining the fund when it was established in 2022 but had yet to follow through until now.
The NATO Innovation Fund is a $1.5 billion venture capital vehicle operated by 24 allied nations. It targets technology startups and venture capital funds headquartered in member states, with initial investments typically capped at €15 million (approximately $24 million). The fund supports innovation in areas critical to defence and security and operates on a 15-year horizon, aiming to help bring emerging technologies into military use.
Canada had agreed to participate in the fund alongside its NATO partners and allocated $107 million over 20 years as part of its 2024 defence policy update, Our North, Strong and Free. However, it was one of eight NATO countries that had not yet become active contributors. Sources indicate that Canada’s stance on defence spending and investment in the defence sector has shifted in recent months, aligning more closely with the goals of the Innovation Fund.
Approval from all participating countries is necessary for Canada to formally join. The process is expected to conclude by the fall. Once approved, Canada would participate in the fund’s first sub-fund, launched in 2023, which focuses on investing in early-stage technology companies. Membership would also give Canada input into possible future sub-funds, which may target specialized areas such as Arctic technologies or later-stage companies.
Canada’s inclusion would mark a significant step, joining only two other recent entrants—Finland and Sweden—who became members following their NATO accession in 2023 and 2024, respectively. Fiona Murray, chair of the Innovation Fund’s board, recently visited Toronto to engage with local stakeholders and assess the country’s startup landscape. She described the board’s outlook on Canada’s potential membership as “incredibly positive.”
If Canada joins the fund, it is expected that a dedicated investment team will be deployed to the country to evaluate opportunities and establish connections within the Canadian defence innovation ecosystem. This follows the Innovation Fund’s usual approach with member states.
Department of Defence spokesperson Kened Sadiku confirmed in late May that Canada was “actively considering options” for joining the fund and reiterated that the previously allocated $107 million remains available. When later asked about the status of the membership, officials indicated additional information would be provided in due course.
Contributions to the Innovation Fund count toward NATO’s target of 5 percent defence spending by 2035, underscoring the initiative’s role not only in fostering technological innovation but also in meeting alliance-wide spending commitments. The fund’s creation was endorsed by former NATO Secretary-General Jens Stoltenberg, who emphasized its long-term vision to support technologies that could transform security over the coming decades.