Only capital converts ambition into capability
The world is in a state of persistent competition, often devolving into conflict, enabled in large part by emerging and disruptive dual-use technologies. As Canada contemplates its way forward in this period of heightened geopolitical risk, we must begin by asking what it means to “win” in the 21st century. I argue that winning today is less about tanks, drones, and artillery shells, and more about building a dynamic and agile economy, one that leverages Canada’s comparative advantages to generate prosperity while ensuring our security. Achieving this outcome will only be possible through the deliberate alignment of public and private capital to accelerate the dual-use technologies essential to Canada’s productivity, as well as our national security.
My name is Michael Smith, Chief Operating Officer at ONE9, Canada’s first and only defence and dual-use focused venture capital fund. Before joining ONE9 in 2022, I spent 13 years in the Regular Force with the Office of the Judge Advocate General, specializing in operational and international law. I completed a Master of Laws in 2019, focusing my research on lethal autonomous weapons systems.
This combined experience now shapes how I see Canada’s position in a rapidly evolving global landscape.
Canada finds itself at an inflection point; public and private sectors alike have a rare opportunity to collectively shape the development of our defence and dual-use ecosystem. Taking full advantage of this opportunity demands that we focus on the three core components of any ecosystem: competency, capital, and customers. Other witnesses have already spoken to elements 1 and 3, highlighting Canada’s need to safeguard our talent, as well as our abysmal history in procurement. I will focus on element 2: capital.
Returning then to the idea of “winning” in the 21st century, I begin by cautioning that a defence industrial strategy, in the absence of a broader industrial strategy, risks learning the wrong lesson. Indeed, Canada and our allies didn’t win WWII because of our defence industrial base; we won because we were able to weaponize our existing industrial base, demonstrating the enduring truth that security is achieved not by building more weapons, but by investing to build the economic and technological strength that makes weapons possible in the first place.
China soberingly illustrates this point: by controlling the supply chains and technologies that underpin present and future productivity – rare earth elements, batteries, microelectronics, robotics, and advanced manufacturing – it now possesses the ability to weaponize its manufacturing might without significantly impacting its industrial output. It is estimated that China could weaponize one billion drones using less than one percent of its assembly capacity, less than five percent of its battery output, and only a fraction of its printed circuit board production. That capacity is not the result of a Chinese defence industrial strategy; it is the by-product of industrial strategy executed at scale, built upon a foundation of investment into emerging and disruptive, dual-use technologies.
Canada will never match such industrial scale. We must therefore focus our resources where we can lead. In a world of constrained capital and finite industrial capacity, we must be deliberate about where we invest to build sovereign capability, and where we collaborate with trusted allies, striving to become a net technology maker, rather than taker.
Yes, we must maintain a baseline capacity of classically understood defence capabilities, such as shipbuilding and munitions production, but this alone will not guarantee our success in today’s world. Canada’s recognized strengths – artificial intelligence, quantum, advanced materials, energy, and the critical minerals that underpin them – must form the backbone of a national strategy that builds economic power, strategic autonomy, and deterrence in equal measure.
In the end, only capital will convert this ambition into capability – aligned, coordinated, patient capital. And yet, among our allies, Canada stands out for what we don’t yet have—instruments to align public and private capital toward strategic technologies like the U.S. Office of Strategic Capital (OSC) or the U.K.’s National Security Strategic Investment Fund (NSSIF). Thus, after setting a national strategy that plays to Canada’s strengths, I believe that the single most impactful thing the Crown can do is to seed the venture capital ecosystem to ensure that critical early-stage technologies make the leap from concept to commercialization.
But we do not expect the government to do this alone. Like the OSC and NSSIF, the Crown’s role is not to pick winners, but to shape behaviours and catalyze change across private capital markets. By aligning public purpose with private capital, Canada can show that defence is not a dirty word, but a cornerstone of national resilience, unlocking billions in investment and making capital itself a strategic instrument of national power.
The task before us is not to build a war economy, but a winning one. Government must set clear priorities, provide predictable demand, and align policy so that private capital can flow toward technologies that advance both our prosperity and our security. When public purpose and private capital move in the same direction, we build more than technologies, we build the enduring industrial and economic strength that winning in this century demands.