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(Bloomberg) — Dominion Dynamics has raised C$139 million ($98 million) in what the company says is the largest Series A round ever for a Canadian defense startup, underscoring a surge of investor interest in the sector.
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The financing was led by Georgian Partners, with participation from Bessemer Venture Partners, Royal Bank of Canada, the Ontario Municipal Employees Retirement System and other firms including British Columbia’s public sector pension manager.
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The defense technology firm has now raised C$169 million since its launch last year, as investors look for ways into a once-neglected sector in Canada. Prime Minister Mark Carney has rolled out a defense industrial strategy aimed at helping domestic firms grow to meet a coming wave of military spending by Canada and its NATO allies.
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“The ambition is to change the country. So it’s bigger than a company,” Dominion Chief Executive Officer Eliot Pence said in an interview. “That said, I think that the best and most material way of changing the country is by building a large Canadian defense prime.”
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Dominion’s business plan is focused on building technologies for harsh environments, particularly in the Arctic. The company plans to use the new money to accelerate development of AuraNet, its surveillance and data-sharing software, and Scout, an autonomous platform designed to extend the reach of crewed fighter aircraft.
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AuraNet has been deployed with the Canadian Armed Forces during a two-month exercise, where Canadian Rangers used its Arctic-hardened sensors support mission tracking, planning and real-time communications.
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Dominion has opened a 25,000-square-foot factory in Ottawa and a development office in Toronto, and recruited senior engineers from Anduril Industries Inc. — where Pence used to work — Tesla Inc. and Alphabet Inc. It aims to grow its team to more than 100 employees by the end of the year.
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Pence said the company is pushing to revive an era when Canada was a global leader in defense innovation, pointing to projects such as the Avro Arrow aircraft in the 1950s. “We still have a lot of know-how, the technical talent. What we don’t have is a procurement system able to invest at the pace of the threat,” he said.
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The Carney government has moved to speed up military procurement system with a new Defence Investment Agency. But Pence and others have pointed out that it only handles contracts over C$100 million, leaving out the vast majority of Canadian defense deals.
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And while Pence said the Series A round shows Canadian investors are growing more comfortable with defense, barriers remain. Structural restrictions still prevent many funds from investing, particularly in companies with technology tied to offensive capabilities, he said.
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