Canada is in discussions to join NATO’s more-than-$1.5-billion Innovation Fund, after years of dragging its feet on participating in the defence-and security-focused fund, launched in 2022.

The initiative on Canada’s part is being spearheaded by the Department of National Defence with support from the country’s private-sector investors.

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Canada’s changing tune on defence spending and emphasis on bolstering its small- to medium-sized enterprises working on emerging technologies means the country may finally be ready to join. But only if all 24 of the fund’s existing countries, or limited partners, can agree on a proposal for it to do so.

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The NATO Innovation Fund (NIF) is headquartered in the Netherlands, domiciled in Luxembourg and has regional offices in Poland and Britain. Its 24 participating allies include Germany, Finland, Sweden, Denmark, Greece and Norway.

It’s a stand-alone venture-capital fund that NATO founded, but which NATO itself is not invested in financially – nor is it involved in any of the fund’s decision-making. Rather, the capital for the fund comes from its 24 participating allies.

The innovation fund’s first subfund, established in 2023, focuses on investing in early-stage startups working on technologies that strengthen defence, security and resilience. It can also invest in other funds with similar mandates.

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