The Big Bank Gold Rush: Will Defence Funding Reach the Scrappy Founders?

For years, the playbook for Canada's big banks was simple: avoid the volatility of the defence and dual-use sectors. But as first reported by BetaKit, that hesitation has vanished overnight. In a sudden flurry of activity, the Canadian Imperial Bank of Commerce (CIBC) has pledged $2 billion to finance small and medium-sized businesses (SMBs) specializing in defence and dual-use technologies. This isn't an isolated move. BetaKit notes that the Royal Bank of Canada (RBC) recently debuted a $1.4-billion CAD fund aimed at scaling Canadian tech firms, while the Bank of Montréal (BMO) expressed its goal to mobilize as much as $70 billion over the next ten years for sectors that include defence.

On the surface, this is the kind of news that should make every founder in the Toronto ecosystem celebrate. We are seeing a massive pivot toward supporting the 'dual-use' goldmine—infrastructure, cybersecurity, energy, and advanced technologies that serve both commercial and military needs. CIBC president and CEO Harry Culham framed the commitment as a reflection of confidence in the expertise and ambition of Canadian businesses. Scotiabank is also joining the push with plans to issue defence bonds, and National Bank of Canada has hired retired general Rick Hillier as an advisor to help steer its defence strategy.

However, as a long-time observer of the local scene, I have to ask: who is this money actually for?

BetaKit reports that the Government of Canada is preparing to invest billions to reduce reliance on the U.S. and build a more robust domestic industry under Prime Minister Mark Carney. This federal shift has clearly signaled to the banks that the risk has shifted. But for too long, SMBs have struggled to break into the defence sector. The danger here is that these billions won't flow to the scrappy, innovative founders building the next generation of tech in a garage, but will instead be funneled toward the safe, legacy incumbents who already have the government's ear.

When banks talk about 'scaling' and 'financing,' they often gravitate toward the lowest risk. If CIBC's $2 billion—which The Globe and Mail reports will be deployed over five years—only reaches firms that already have established contracts, we haven't actually solved the barrier to entry for new players. We've just reinforced the existing hierarchy.

It is encouraging to see the big banks finally wake up to the potential of Canadian dual-use tech. But for this to be a true win for the ecosystem, the capital needs to reach the disruptors, not just the dependable. The ambition is there; the question is whether the banks' appetite for risk matches the ambition of the founders they claim to support.