The head of L-Spark says the Kanata-based startup accelerator hopes to launch a program to help emerging Canadian tech companies capture a piece of the federal defence spending pie. In an interview with OBJ this week, L-Spark managing director Leo Lax said the organization has had discussions with potential partners to create an accelerator that […]
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The head of L-Spark says the Kanata-based startup accelerator hopes to launch a program to help emerging Canadian tech companies capture a piece of the federal defence spending pie.
In an interview with OBJ this week, L-Spark managing director Leo Lax said the organization has had discussions with potential partners to create an accelerator that would provide resources, advice and mentorship to startups catering to the red-hot defence-tech sector.
Such a partnership would target small and medium-sized firms that are developing “dual-use” technologies that could be used by military customers as well as other industries, Lax explained.
L-Spark wants to help emerging Canadian defence-tech companies “supply products and capabilities to the Canadian defence establishment through the primes, who are currently the incumbents in that area,” he added.
Based in the Kanata North tech park, L-Spark recently launched a program that will see five startups work with Telus to build, train and deploy cutting-edge artificial-intelligence solutions on the telecommunications giant’s new supercomputer in Rimouski, Que.
The agreement with Telus follows L-Spark’s successful partnership with Kanata-based unified communications provider Mitel. Eight Canadian startups are now certified to provide new AI-powered products to Mitel customers under the program, which was launched just over a year ago.
While L-Spark has long nurtured software-as-a-service companies in fields such as telecommunications networking and health technology, defence-tech ventures have traditionally not been a major focus for the organization.
But defence is already big business in Canada, and it’s poised to get even bigger.
According to the Canadian Association of Defence and Security Industries, the industry generated more than $17 billion in revenues in 2024 and employed nearly 82,000 people. Industry advocates say those numbers could increase dramatically as the federal government ramps up spending on military equipment and personnel as part of its pledge to invest five per cent of the country’s GDP in defence by 2035.
That translates into roughly $160 billion in additional federal defence spending over the next decade. And with the feds planning to prioritize domestic suppliers under the new Defence Investment Strategy, Lax says it makes sense for L-Spark to put more emphasis on incubating companies in the defence sector.
“We haven't forgotten the fact that aside from having sovereign compute capability, we also want to remain as a sovereign nation,” he said. “So we are going to work towards establishing a dual-use defence accelerator.”
L-Spark is working with Canadian Armed Forces veterans on the concept, Lax added, but he stressed the idea is still in its early stages.
“We do have lots of talks, but this is all a dream scenario until somebody signs the contract,” he said.
Funded largely by Terry Matthews’s Wesley Clover investment firm, L-Spark has five full-time employees as well as a network of about 45 serial entrepreneurs, established CEOs and other experienced tech leaders who advise startups on a contract-by-contract basis.
Launched 13 years ago, the organization has mentored more than 160 companies that have collectively raised in excess of $200 million in follow-on funding. Its alumni include network troubleshooting software maker Martello Technologies and online bug detection platform Noibu.
L-Spark isn’t the only member of the Kanata tech hub trying to boost the ability of small and medium-sized businesses to win defence contracts with the Canadian government.
Last fall, Calian Group created a new program called Calian Ventures designed to help SMEs serving Canada’s defence sector scale and market their products globally. Calian Ventures recently led a $100-million investment to fund the development of technology designed to help sensors, drones and other military equipment communicate with each other in remote areas such as Canada’s North.
Another Kanata-based organization, the Alliance of Canadian Defence Companies, officially launched earlier this year. Co-chaired by Eliot Pence, the CEO of local defence-tech startup Dominion Dynamics, the new group bills itself as “an industry-led trade association” that will lobby government on its members’ behalf and “foster deeper co-ordination across the defence supply chain” as Canada looks to beef up its domestic defence capabilities.
The push to supercharge Canada’s defence industry coincides with the federal government’s pledge to make the country’s military less dependent on the United States.
The feds say they plan to raise the share of new defence contracts awarded to domestic suppliers to 70 per cent — up from the current 43 per cent — within a decade. The government expects the boost in business to Canadian-owned firms to create 125,000 new jobs and increase those companies’ revenues by more than $5 billion a year.
But defence industry insiders say the country’s military procurement system is still stacked against small domestic suppliers that lack the expertise to navigate the maze of rules and regulations required and don’t have deep enough pockets to survive years-long procurement cycles.
