The next wave of defence innovation: Q&A with George Hoyem

 
The defence industry is experiencing a period of significant growth. In this Q&A Adam Armstrong, Partner, and George Hoyem, Investment Committee Member, One9/Kensington Capital Partners and Growth Partner, Intrepid Growth Partners, discuss what’s next in this ever-evolving industry.

Adam: The global defence industry is experiencing a boom. As a national security leader who has worked at the intersection of venture capital and defence for many years, what developments are you most interested in?

George: The global defence sector is in the midst of a profound transformation, driven by the rapid deployment of advanced analytics and artificial intelligence across all domains, including land, sea, air, space, and cyber. AI is revolutionizing everything from threat detection to decision support, while cybersecurity resilience has become mission critical as warfare moves into digital and multi-domain operations.

The most exciting trend is the acceleration of dual-use technologies—innovations with both defence and commercial relevance—which opens up vastly larger first markets for investors and innovators, ensuring technology that not only benefits national security but also drives broad commercial value. Autonomous systems, in particular, are scaling fast, creating entirely new operational concepts and investment pathways.

The market for dual-use, defence-first technologies across NATO, the U.S., and Canada is experiencing historic growth and offers substantial opportunities for investors. As of mid-2025, there are over 17,600 dual-use tech scaleups operating across NATO countries, representing 27% of all scaleups in member states, and investment in this sector has surged 25% year-over-year to nearly $1.2 trillion USD. Dual-use infrastructure and technology are now strategically funded; for example, NATO’s new defense investment target includes 1.5% of GDP dedicated to dual-use spending by 2035, signaling enduring, government-backed market expansion.
 

 
 
In the U.S., the overall defence market is expected to reach U.S.$320.9 billion in 2025, driven in large part by R&D and modernization programs that funnel increasing amounts toward dual-use and commercializable technologies. The U.S. leads the world in the creation and scaling of venture-backed dual-use startups, hosting dedicated accelerators and procurement programs to bridge commercial and military adoption.

Canada’s defence budget has climbed from $19.2 billion in 2021 to an anticipated $32.4 billion in 2025, with additional increases planned to reach up to $85 billion annually by 2035 as part of its dual-use infrastructure and technology mandate. Dual-use investment is a centerpiece of the Canadian strategy, with new agencies and streamlined project offices designed to ensure every defence dollar delivers both national security and civilian economic benefit.

Based on all of this, dual-use, defence-first technologies now represent a multi-trillion-dollar market opportunity across NATO, the U.S., and Canada, underpinned by new policy frameworks, accelerated venture investment, and robust public-private collaboration—making this one of the fastest-growing and most strategically important segments in tech investing today.

Adam: You were appointed to the Investment Committee of Kensington’s ONE9 defence and security venture capital platform earlier this year. The platform (born from Kensington’s acquisition of ONE9), strengthens ONE9’s position within the Canadian defence VC ecosystem. Can you please share insights into ONE9 and the technologies you focus on?

George: Joining Kensington’s ONE9 Investment Committee has given me a front-row seat to Canada’s next wave of defence innovation. ONE9 invests in cutting-edge technologies that span cybersecurity, AI, robotics, space, and dual-use platforms critical not only for Canadian national security but also for allied partners. What sets us apart is our proactive approach—partnering closely with end-users from day one, leveraging pilot projects, and streamlining commercialization to power up-and-coming startups for both military and commercial success.

We also get access to amazing deal flow since we invest in Dual Use/Defence first focused VC funds like Funders Fund, Data Tribe, Vanedge, Forgpooint. This allows us to see all their deal flow and double down on winners in these portfolios—a strategy we refined at Kensington Capital and proved works and generates great returns.

Adam: What unique opportunities within the defence sector does the Canadian market present?

George: Canada presents a remarkable opportunity for defence tech investors and entrepreneurs due to increased government spending and a growing strategic shift towards homegrown technology innovation. The nation’s deep strengths in aerospace, marine systems, land platforms, and next-gen cyber capabilities offer a strong foundation for globally relevant solutions. Add in Ottawa’s rich R&D ecosystem, a robust STEM talent base, and close NATO integration, and you get an environment primed for dual-use innovation that can thrive on both sides of the border.
 

 
 
Adam: How can entrepreneurs within the defence industry navigate government procurement and contracting? What are key insights founders straddling public-private partnerships should know?

George: Defence entrepreneurs face a complex but navigable path to government adoption by focusing on evolving contract structures, such as fixed-price vehicles and assured supply models. Building trusted relationships with military end-users and validating solutions with targeted pilot projects are critical steps that are proven to accelerate procurement cycles. Above all, aligning technology solutions tightly to national defence priorities—and patiently engaging with evolving regulatory and procurement frameworks—unlocks the strongest partnerships and long-term contracts.

Adam: There is a significant acceleration of AI adoption and investment within defence. Where do you see the greatest opportunities and challenges within this innovative pocket?

George: AI’s impact on defence is most visible in areas like intelligence analysis, autonomous systems, decision support, and enabling seamless coordination across multiple operational domains. The flip side is that widespread AI brings substantive operational, ethical, and technical risks—especially when integrating these systems at scale in secure environments. Addressing these challenges head-on, with trusted partners and robust frameworks, is key to realizing AI’s full potential for national security and commercial application. This is where fortunes will be made in this area.

Adam: As an active advocate for entreprenuership, you have been involved in championing policies that impact the venture ecosystem. What are your thoughts on how both the Canadian and U.S. governments are supporting defence innovation? Where could they improve? Are there any playbooks from the U.S. that you think Canada could look to?

George: The U.S. has set a global benchmark with models like In-Q-Tel and robust university-industry-government partnerships, accelerating dual-use innovation and bridging the “valley of death” for deployment. For Canada, there’s room to bolster funding visibility, public-private partnership integration, and mission clarity—adopting elements of the U.S. investment playbook could significantly accelerate domestic defence innovation. Deeper collaboration and mission alignment between government and private capital will be pivotal in scaling solutions that strengthen both Canadian and allied security.

Adam: What is your 20-year forecast for the defence industry?

George: Looking two decades ahead, I am confident we’ll continue to see double-digit growth in the defence sector, fueled by leaps in AI, autonomy, cybersecurity, and space technologies. Multi-domain operations and public/private innovation models will become industry norms as geopolitical risk and technological innovation keep reshaping the investment landscape. The nations that most effectively mobilize these dual-use technologies and foster collaborative ecosystems will set the pace in both security and commercial market leadership.