BDC makes first defence-focused venture bets on rockets and semiconductors
The Crown corporation used its seed venture fund to back Sherbrooke’s Irréversible and Toronto’s Canada Rocket Company, marking a shift toward defence and dual-use tech.
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By Torontoer Staff
The Business Development Bank of Canada has made its first venture investments under a new push to support defence and dual-use technologies, participating in pre-seed financing for Sherbrooke’s Irréversible Inc. and co-leading the seed round for Toronto’s Canada Rocket Company.
The moves come from BDC’s $100-million seed venture fund and reflect a broader strategy to help small and medium enterprises build products that can serve civilian and military markets.
Who got the funding
Irréversible, based in Sherbrooke, is developing analog artificial-intelligence chips designed to connect devices such as drones and sensors while using less power, weight and cooling than conventional designs. The company received participation from BDC in its pre-seed round.
Canada Rocket Company, headquartered in Toronto, raised $6.2 million in a seed round co-led by BDC and Garage Capital. The company is developing a medium-lift rocket intended to place satellites into orbit.
I’m happy to be there at this juncture at BDC for this moment in history. I think this is needed and I’m happy we’re meeting the moment.
Geneviève Bouthillier, executive vice-president, BDC
Why BDC is changing course
BDC has historically avoided defence as a priority area. Rising federal defence spending and government signals to build domestic capability have prompted the Crown corporation to re-evaluate that stance and help finance companies with dual-use applications.
Geneviève Bouthillier, BDC’s executive vice-president, said the bank will prioritise firms with civilian and defence uses but will not categorically exclude pure defence businesses.
What the startups say
A lot of people want to work on rockets, especially in aerospace. That’s why a lot of people go into aerospace, and there hasn’t really been an opportunity to do that up until now.
Hugh Kolias, co-founder and CEO, Canada Rocket Company
Kolias said investment from BDC and other Canadian venture funds has helped attract engineers who had been working abroad to return and build an aerospace industry here. He noted federal announcements about space capability and launch infrastructure have catalysed private capital for costly development work.
How the funding fits into Ottawa’s plans
In December, BDC announced a $4-billion defence platform. The platform allocates $3.5 billion to financing and advisory services aimed at helping Canadian firms participate in major procurements. The remaining $500 million is earmarked for venture capital, primarily through the StrongNorth Fund and the Catalyst Innovation Fund.
- BDC’s $100-million seed venture fund supplied the recent pre-seed and seed investments.
- The $4-billion defence platform targets financing and advisory support for broader defence procurement participation.
- StrongNorth Fund and Catalyst Innovation Fund will channel most of the venture capital portion.
BDC said the recent investments in Irréversible and Canada Rocket Company are part of its overall defence strategy, though they are not counted as part of the $4-billion platform. BDC added that its defence-related investments contribute to Canada’s broader objective of scaling defence capacity over the coming decade.
Support beyond capital
BDC is also partnering with the non-profit Creative Destruction Lab to offer funding and advisory services to startups in Canada and Europe that are part of CDL’s defence stream. The program aims to help early-stage dual-use companies find customers and navigate complex procurement processes.
Bouthillier said building a broader ecosystem will require multiple actors, and BDC does not expect to be the sole financial backer in the space.
This is really important that we take time to build the ecosystem and not be alone around the table.
Geneviève Bouthillier, executive vice-president, BDC
What to watch next
Observers will be watching how quickly private capital follows BDC’s lead, and whether more banks and funds adjust their mandates to support defence and dual-use technologies. Future rounds for companies such as Canada Rocket Company are likely to require substantial private and public financing, especially for launch vehicle development, which remains capital intensive.
Irréversible’s progress on low-power analog AI chips will be watched for applications in drones, sensors and other weight- or power-constrained platforms that have both commercial and defence uses.
BDC’s initial investments mark a deliberate pivot toward an area that has not traditionally attracted broad Canadian financial support. The coming months should reveal whether this shift changes the investment landscape for defence and space technologies.
BDCdefencestartupsCanada Rocket CompanyIrréversible
