The Business Development Bank of Canada is upping its defence financing from $4 billion to $6 billion, as the federal Crown corporation takes on a larger role in financing the federal government’s push to grow the defence and security industry.

BDC’s $2-billion top-up is a response to a strong demand from Canadian companies for money to develop technologies in the sector, BDC said. Since the fund launched in December, BDC said it has provided nearly $92 million to 16 businesses through the program, which offers loans, equity investments and advisory services. 

The program’s first deals include a $6.2-million seed round that BDC co-led in Toronto-based space-launch startup Canada Rocket Company, and pre-seed investment in Sherbrooke, Que.-based Irréversible, which is developing low-power AI chips. 

BDC initially earmarked $3.5 billion of the $4 billion in financing to back and advise Canadian businesses involved in projects focused on sovereignty. Most of the remaining $500 million is split between direct investments in private funds and two new BDC equity investment vehicles: the StrongNorth Fund, which will back dual-use technologies—those with both civilian and military applications—and the Catalyst Innovation Fund to support defence startups. 

The bank said it will use the extra $2 billion to help organizations such as incubators, accelerators and universities support startups and small businesses to develop defence technologies for Canada and its allies, and connect those companies with industry partners and customers. 

Growing the defence sector has become a priority for the federal government, as global tensions and supply-chain concerns push Ottawa to strengthen domestic capacity. In its 2025 budget, the government announced $84 billion to grow the industry, including $6.6 billion over five years to improve access to capital and drive research and innovation for companies in the sector. 

BDC—which manages about $50 billion in total assets through its loan and investment businesses—is anticipating demand for defence financing to grow even more. “There’s so much more work to be done as the real peak demand lies ahead in 2027 and 2028,” said Peter Dawe, head of BDC’s defence platform. “We’re building now to be ready.” 

Also on Thursday, the bank named Peter Suma to lead the $300-million StrongNorth Fund as managing partner. Suma has been an investor, advisor and entrepreneur in the deep-tech sector for more than 25 years, including as co-founder and co-CEO of Waterloo, Ont.-based software firm Applied Brain Research, which he left in 2023.