Ottawa-based One9, led by former soldier Glenn Cowan and Shopify co-founder Daniel Weinand, is raising what it says is Canada’s first fund focused on national-security and critical-infrastructure startups. Here’s what you need to know:

The deals: The fund will invest in companies developing dual-use technologies like AI and cybersecurity, which have both national-security and commercial applications. “Microsoft is a defence contractor. Google is a defence contractor,” said general partner Cowan. “We’re into a blurred new normal” where big companies as well as military, national-security and intelligence organizations are using similar or the same technologies, he said.

One9 aims to invest up to $3 million each at the Series A stage in as many as 10 companies that have over $1 million in annual recurring revenue. It’s primarily focused on the countries that make up the Five Eyes intelligence-sharing network, with the U.S. likely to make up most of the portfolio. “We get access to a lot of deal flow of companies that are coming out of more classified government programs,” Cowan said.

A tenth of the fund will be set aside for pre-seed and seed-stage deals, primarily Canadian startups, with an average cheque size of $250,000. It is currently closing its first such investment, Cowan said; he declined to disclose details. 

One9 is “is not investing in any kinetic weapons system,” said Cowan. “We’re not a military fund.” Tech workers and digital rights advocates have criticized firms for selling AI, facial recognition and other dual-use technologies to militaries and security agencies. 

The money: One9’s objective is to raise $50 million, and it’s “getting very close” to a first close at half that sum, said Cowan. Toronto-headquartered Kensington Capital Partners has committed $10 million; the asset manager is one of four backed by the federal government’s fund-of-funds program. Cowan said other One9 limited partners include ultra-high-net-worth and institutional investors.

The backstory: Cowan retired from the Canadian Armed Forces in September 2016 after 18 years in uniform, including in Joint Task Force 2, the country’s elite special-operations unit. “I want our men and women who are working in the national security-government space to have the best tool sets that they can to solve their problems,” he said. 

Information-security firms alone raised US$16 billion in the first three quarters of 2021, according to PitchBook data. Security tech continues to grow in importance amid rising threats from nation-state actors and cybercriminals, noted Kensington managing partner Rick Nathan. In the U.S., it’s “generally the former NSA, CIA [and] military folks who start these funds,” he said. The Canadian market has been held back by a “lack of domain knowledge on the security side.”

Cowan had that background and network, but when Nathan met him in late 2019, he lacked an investing track record. One9 has since completed three deals with Kensington. Cowan also recruited Weinand, a co-founder of and ex-chief culture officer at Shopify. “There is no company, certainly in Canada, that has a better venture capital brand than Shopify,” said Nathan. 

After leaving the Ottawa-headquartered commerce giant in mid-2017, Weinand started a California-based TV production company. “E-commerce has a large component of security and critical infrastructure,” he said via email. “So I’m familiar with how damaging a cyber threat can be.”