Buying European, Selling Canadian
Canada’s defence ambitions collide with EU rules, export controls, and definitions
🗓️ For our friends on the West Coast: The Icebreaker is pleased to invite the defence tech community to a private box at the Victoria Royals game on January 9th at 7pm. Details here.
🎯 Three-Shot Burst
While the defence tech community awaits Ottawa’s defence industrial strategy following last month’s big boost for defence spending in Budget 2025, questions remain about Canada’s admission into the EU’s €150 billion Security Action for Europe (SAFE) program — the loan-for-weapons scheme that gives Ottawa access to jointly financed defence projects and allows Canadian companies to bid into EU-supported joint procurement projects.
First, what does the SAFE agreement actually allow? Does the deal only let SAFE loans finance Canadian-assembled end products with at least 20% EU content—without lifting the 35% non-EU content cap for products assembled in Europe—and are media reports claiming otherwise simply interpreting the legislation’s potential flexibility rather than the actual Canada agreement? Euractiv is reporting that internal EU drafts may reinterpret or extend SAFE’s flexibilities for Canada, potentially allowing Canadian manufacturers to account for up to 80% of component value, an exception to the usual ~35% non-EU content ceiling.
Second, what does Canada really want out of SAFE? Given Canada’s tiny financial contribution (just €10M, vs. a proposed entry fee of €6B for the UK) and the EU’s view that Canadian firms will see limited export wins, is SAFE primarily about giving Canada access to joint EU defence procurement (i.e. buying European instead of U.S. kit), while politically framing it at home as an export opportunity for Canadian defence companies?
Bottom Line: Canadian defence firms are ready to boom. But first, they need more clarity on how the SAFE actually benefits homegrown firms.
Furthermore, if Canadian companies with controlled exports are going to be integrated into the supply chain of major European firms, Canada requires a more pragmatic approach to export controls — similar to what the UK has just negotiated with France, Germany and Spain.
Last but not least — we need more clarity on what actually qualifies as a ‘Canadian company’.
Related:
Capital formation: Weeks after modifying the bank’s overall eligibility criteria on defence, BDC Capital has sent a letter to its existing fund managers, offering to renegotiate previous LP agreements:
“We recognize that certain fund documents may contain restrictions on investing in entitites that, notably, engage in the manfacture or sale of weapons, ammunition, or defence-related vehicles or equipment. BDC proposes collaborating with funds to alleviate these restrictions…” and is “prepared to support consents or amendments to existing fund documentation”
Microsoft to spend $7.5B on data centres in ‘sovereignty-focused’ pitch raising eyebrows in Canada… The catch-22 of Canadian digital sovereignty
Cybersecurity Certification: If Canada proceeds as it is currently planning it will reinforce existing primes and make it cost prohibitive for SMEs
What the Defence Investment Agency Can Learn from the National Shipbuilding Strategy… Telesat, MDA Space awarded the first contract from Ottawa’s new defence investment agency for Arctic communications satellites… Don’t expect to have access to satellite comms in a conflict
Too nice to fight: Canada’s vulnerability in the age of authoritarian coercion
New defence bank aimed at increasing NATO military spending could bring 3,500 jobs to a Canadian city
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🤝 Deal Corner
A new wave of dual-use and defence-first investing is reshaping global venture capital. George Hoyem breaks down why national security is becoming a core VC theme rather than a niche:
Meanwhile, a Canadian VC says Dual Use Is the Next Frontier of Deep Tech, and Europe struggles with buy vs. build due to a dearth of defence venture funding.
Related:
Pax Silica: US enlists 5 allies to counter China on rare earths and tech… The four decades that China spent building dominance in critical minerals is proving hard to overcome… Silicon Valley Is Racing to Make Critical Minerals—and Blunt China’s Dominance… Trove of Critical Minerals Uncovered in the Utah Desert… US Exceptionalism Versus Chinese Uninvestibility (Part I)… How Japan built a rare earth supply chain without China
Battlefield Energy: A Startup Says It Has Found a Hidden Source of Geothermal Energy… The future will belong to those who build energy systems that are resilient and interoperable by design… China’s AI Power Play: Cheap Electricity From World’s Biggest Grid
Volatus Aerospace Awarded $9M Defence Contract from NATO Partner, Accelerating Growth in Uncrewed Systems
The EU is launching its landmark €5bn Scale Up fund to back deeptech startups in strategic areas and will be hiring a VC firm to manage it… British air force vet raises £5m for solo GP defence and dual use fund… After leading Sweden into NATO, Tobias Billström eyes defence-tech opportunities at Nordic Air Defence
Q + A with A.J. Bertone, Managing Partner, In-Q-Tel… As one of the earliest investors in startups building satellites and rockets, IQT helped launch the private space industry… A top entrepreneur’s perspective on the risks and rewards of startup-style innovation at the Pentagon… Startups now claim 1.3% of Pentagon contracts, up from 0.6% last year… NDAA would mandate new DOD steering committee on artificial general intelligence… Defence authorization bill includes billions for cyber, intelligence matters
AnySignal has raised a $24M Series A led by Upfront Ventures to scale mission-critical infrastructure for space and national security
Nuclear power startup Antares announced a $96 million Series B round Dec. 2 to fund work on developing small nuclear reactors, including for space applications
Switzerland says “no” to Palantir; not that the technology lacks capability, but because it deemed the risk profile unacceptable… US Navy, Palantir Announce $448M ‘Ship OS’ AI Tool for Shipbuilding and Repair
Helsing and Kongsberg plot multi-mission European defence space network
Canada inks $753M deal for 6 Bombardier Global 6500 jets to replace Challengers
Bridging innovators and military end users through NATO DIANA’s Rapid Adoption Service… Twenty Canadian companies join NATO’s largest-ever defence accelerator cohort
Cybersecurity + AI — a look at the early stage investment returns to date
Market map of US defence tech
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Volatus Aerospace is hiring an in-house corporate lawyer with a minimum of 2 to 3 years of business experience.
⚔️ Combat Readiness
War is getting faster, cheaper, and more autonomous — and the West is not ready
Cheap drones and AI are already reshaping war, from Ukraine’s battlefields to China’s drone swarms. The next phase is autonomous systems that find, choose, and kill targets with little or no human input—plus AI-enabled cyberattacks and even genetically targeted bioweapons. The U.S. still leans on expensive, fragile, bespoke systems, while rivals favor cheap, scalable, off-the-shelf tech designed to overwhelm and disrupt.
America has strengths, especially private-sector AI, but lacks coordination. The Pentagon is scrambling to adapt, relying on companies like Palantir and Anduril to build AI targeting, drone defence, and autonomous “wingmen.” Meanwhile, China and Russia are actively testing similar systems and focusing on breaking U.S. networks, satellites, and communications.
Related:
US launches Tech Force, aiming to recruit an elite corps of engineers to build the next generation of government technology with a focus on defence
Home front: The rush to re-arm the Army… Canada’s MINERVA initiative — a blueprint for integrating drones into our operations… Ukraine willing to share drone and military technology with Canada, envoy says… A Risk-Based Approach for Smarter, Cheaper, Faster Decisions… DND scrambles to figure out how to mobilize and equip a citizens’ army… CGI to build secure mobile communications network for NATO
Arctic update: A war game where Canada fought Russia in the Arctic with full NATO support and only managed a draw… The EU is missing political will in the Arctic… Who really benefits from the Arctic Corridor?
Why hardware without integration becomes chaos… The bottlenecks holding back advanced robotics… The AI aircraft debate rages, but both sides are wrong
Air: China’s High-Flying Swarm Mothership Drone Has Flown… Seven students tracked Russian-crewed freighters lurking off the Dutch and German coast—and connected them to drone swarms over military bases… We Might Regret Golden Dome’s Greatest Ambition… The astronomical cost of being able to defeat any aerial attack
Counterpoint: Why the Lessons of Ukraine Don’t Apply to a Conflict With China… Chasing True AI Autonomy: From Legacy Mindsets to Battlefield Dominance
Sea: [VIDEO] Ukrainian Sub Sea Baby UUVs struck a russian Project 636.3 Varshavyanka submarine in Novorossiysk — causing critical damage and effectively taking it out of combat… Ukraine disables ‘shadow fleet’ vessel with sea drones in Black Sea… Atlantic Bastion plans advancing as autonomous submarine XV Excalibur handed to UK Royal Navy… China’s New Underwater Drones Could Threaten West Coast:
From Cables to Submarines: The U.K. and Norway’s Response to Russian Naval Activity… Jamie Dimon Warns: A Weak Europe Is a Major Risk to America… Germany to Authorize Record €52 Billion in Defence Orders… 60 Minutes episode on Germany rearming… Germany’s PEGASUS SIGINT aircraft, by Bombardier, arrives for final integration… NATO Secretary General warns:
“Conflict is at our door. Russia has brought war back to Europe, and we must be prepared for the scale of war our grandparents or great-grandparents endured. Imagine it, a conflict reaching every home, every workplace, destruction, mass mobilisation, millions displaced, widespread suffering and extreme losses.”
The Baltic countries are fortifying their frontier regions as a deterrent to Russian aggression… Bloomberg estimates a Russian invasion of the Baltics would cost the world $1.5 trillion in the first year
Local Spies With Lethal Gear: How Israel and Ukraine Reinvented Covert Action:
“Some of the most secret operatives weren’t professional spies or commandos in camouflage. They were ordinary locals empowered by Israeli high-tech gadgetry”
The Reconnaissance Reality Gap: Western Doctrine vs. the Ukrainian Battlefield
If we build it: America can’t make what the military needs… Putting the Industrial Base on a Wartime Footing… America spends $2.7B a day on defence — that money buys inertia and incompetence… America was once the world’s industrial superpower. Now it accounts for just 17 percent of global manufacturing. Together with allies and partners, the United States can match China’s industrial might… CDMC Launches to Rebuild Canada’s Sovereign Defence Manufacturing Capacity
Getting chippy: Intel, AMD Accused of Allowing Chips in Russian Missiles… China wants an AI-powered military built with Nvidia chips, and that’s a problem
How long Britain could really fight for if war broke out tomorrow… Fixing UK defence procurement will not be easy… Europe’s second ‘China shock’ is blessing in disguise:
“There should be no illusions about how easy a task like reindustrialisation will be. Consistent, long-term orders are one thing, but in the heyday of the UK arms industry, the UK was energy self-sufficient and the world’s biggest exporter of coal”
[VIDEO] Ottawa-Gatineau companies show off their defence tech during a tour organized by Invest Ottawa… If you have never heard Invest Ottawa’s podcast, this season features several terrific Canadian defence tech entrepreneur features… Lieutenant Commander (Retired) Mike Nelson has taken the lessons he learned while wearing the uniform and uses them now as an entrepreneur
Space race: NordSpace is hosting the second Canadian Space Launch Conference (CSLC) on May 5th, 2026 at the Canada Aviation and Space Museum in Ottawa… How to Win the Space Race… Connecting Canada’s space sector to national defence… STRATOTEGIC successfully launched a large stratospheric balloon from North Bay airport in some of the most operationally difficult conditions possible
Policy matters: Canada’s defence minister responds to Trump’s new National Security Strategy… Gunboat diplomacy and a direct shot at Canadian sovereignty… Danish intelligence classifies Trump’s America as a security risk… What Trump’s New National Security Strategy Means for Canada, and for Canada’s China Policy and Indo-Pacific Engagement… Canada’s best path to maintaining sovereignty within the North American partnership is making that partnership more valuable to Washington… Is Canada still a middle power in a multipolar world?… Hedging against Trump, Canada reconsiders ties with China
The Digital in War: From Innovation to Participation
The Cod Wars and Lessons for Maritime Counterinsurgency
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Barrack Hill: Navigating Canada’s defence and procurement landscape with precision.
🔫 Hot Shots
Grey war: US army cyber chief: ‘Public doesn’t know full cyber successes against adversaries’… How China is shackling Trump’s cyber agenda… US has failed to stop massive Chinese cyber campaign, warns senator… This one gadget could give China a back door into the U.S. power grid… How Did the C.I.A. Lose a Nuclear Device? A plutonium-packed generator disappeared on one of the world’s highest mountains in a hush-hush mission the U.S. still won’t talk about… China, Russia experiment with stealthy satellites, Space Force official says… U.S. Forces Raid Ship, Seize Cargo Headed to Iran From China… Bravo Zulu to the Cyber Protection Team from the Canadian Forces Network Operations Centre for representing CAFCYBERCOM at NATO’s Exercise CYBER COALITION 25… A new RAND analysis on electromagnetic warfare… Kyiv is urging Tokyo to boost its support in areas such as cybersecurity… New OpenAI models likely pose “high” cybersecurity risk, company says… Germany activates the ability to ban ICT components
Q-Day: A deep dive into “Q‑Day” where the quantum threat to today’s cryptography is not a distant science‑fiction scenario; it is a foreseeable point where today’s public‑key encryption stops being trustworthy and long‑lived data becomes readable in hindsight… New Pentagon requirements for Post-Quantum Cryptography published just before the US Thanksgiving holidays… Accelerating dual-use quantum technology… Quantum Power and National Security: Canada’s New Strategic Imperative… CSMC is advancing space nuclear micro-reactors and quantum sensing technologies that could dramatically improve subsurface mapping on Earth and in space… Federal government funds four quantum computer developers - Anyon Systems Inc., Nord Quantique, Photonic Inc. and Xanadu - as part of effort to keep them anchored in Canada
Defence-as-a-Service: The most critical trade route in the world isn’t the Suez Canal or the Strait of Malacca, it’s the fragile network of fiber-optic cables and pipelines sitting on the ocean floor. Governments are beginning to look at contractor-operated fleets to patrol these depths… Trump Administration Turning to Private Firms in Cyber Offensive
Bad math: As Bombardier showcased its newest jet, the company CEO says he hasn’t “checked the math” on Saab’s claim its fighter jets would bring 10,000 jobs to Canada… If we don’t figure out a way to fight far more cheaply, we won’t be able to afford to win a single battle
Christmas list: AI toys for kids talk about sex and issue Chinese Communist Party talking points, tests show
Silent night: Inspired by true events, follow a Royal Navy Type 45 Air Defence Destroyer on active operations on Christmas Eve… Radar was discovered in 1922 only because two Navy engineers were curious enough to investigate an anomaly
Odds & ends: Centech MTL took ten Canadian tech companies on a defence and aerospace trade mission to France… Australia’s IFM Investors opens Toronto office to back infrastructure investments… New rifles on the way for Canada’s soldiers as defence spending ramps up… Canadian military intelligence member charged with espionage, says DND… DND investigates leak used to discredit Saab’s Gripen fighter jet
If you’ve got battlefield intel, classified tips, or just want to call in an airstrike on our typos, hit “reply” and sound off. Whether it’s a new tech sighting, a rumour from the mess hall, or feedback on our comms, we want your SITREP.