Shifting Gears: From Managed Decline to a Defence Startup Boom in Europe and (Maybe) Canada

Canada's “Defence Industrial Strategy,” a $6.6-billion plan aimed at building domestic production and curbing dependence on US suppliers, owes much to the EUs "War Unicorns."

In an era of geopolitical tensions, some observers describe the West’s defence sector as undergoing “managed decline,” with legacy contractors struggling to innovate amid budget constraints and bureaucratic inertia.

Goldman Sachs graphic highlighting the major nodes of the growing European Union start-up ecosystem. These startups are clustered around major innovation hubs in London, Munich, Stockholm, Paris, and Helsinki, backed by early-stage investors and public programs, including the NATO Innovation Fund and the EIF Defense Equity Facility. Canadian Prime Minister Mark Carney seems intent on build the same sort of start-up ecosystem in Canada.

However, a counter-narrative is emerging, one that highlights a vibrant shift toward agile defence startups leveraging dual-use technologies. This transformation is evident in Europe and now taking root in Canada, promising to revitalize domestic capabilities and reduce reliance on foreign giants, particularly American ones.

On February 18th, 2026, Zero hedge underscoring the pivot by reporting on the “Rise of Europe’s ‘War Unicorns,’” noting how traditional defence contractors are yielding to a new breed of local startups.

According to Goldman Sachs, Europe hosts over 380 defence tech startups that have raised more than $3 billion, clustered in hubs like London, Munich and Stockholm.

These “war unicorns” focus on dual-use innovations, such as AI analytics, autonomy and cyber resilience, accelerated by the Ukraine conflict, which has demonstrated the need for rapid iteration on digitally enabled battlefields.

The report warns that big primes face an “adapt or die” moment, as procurement moves away from “bloated legacy” systems toward startups capable of weaponizing consumer-grade tech like drones and ground robots.

The concept of “dual use technology,” equipment, machines, goods, and software that can be used for both civilian and military applications, has been kicking around EU and NATO conversations for some time and are are increasingly central to national security, economic resilience, and technological leadership.

For some examples, check out the October 12th, 2017 EU Growth on YouTube post, “Dual use technology in the EU helping SMEs bring innovation to market.”

Canada is mirroring this trend under Prime Minister Mark Carney. The February 17th, 2026, Prime Ministers Office (PMO) press release, “Prime Minister Carney launches Canada’s first Defence Industrial Strategy to strengthen security, create prosperity, and reinforce strategic autonomy,” is the first public statement that the Canadian government plans to follow down the path as the European’s.

The press release is the formal unveiling of the country’s first “Defence Industrial Strategy,” a $6.6-billion plan aimed at building domestic production and curbing dependence on US suppliers.

Described as a “Buy Canadian” approach, it prioritizes Canadian firms for 70 per cent of federal defence contracts within a decade, while boosting exports by 50 per cent and adding 125,000 jobs.

Carney emphasized doubling defence spending to an additional $80 billion over five years, creating $180 billion in procurement opportunities and $290 billion in capital investments.

At its core is a “build, partner, buy” philosophy, supported by the new Defence Investment Agency (DIA), intended to streamline processes and foster innovation.

From a political perspective, this strategy targets sovereign capabilities, echoing Europe’s startup surge by encouraging Canadian entrepreneurs to develop homegrown weapons, from advanced sensors to autonomous systems.

The February 17th, 2026 Politico post, “Canada defense plan aims to reduce ‘dependency’ on US,” quotes Canadian Prime Minister Mark Carney who calls Ottawa’s new “Buy Canadian” defense strategy a plan intended to reduce “Canada’s reliance on the United States while ramping up domestic production after years of underinvestment in the military.”

Critics may argue this risks short-term disruptions, but proponents see it as essential for strategic autonomy amid US protectionism under a series of increasingly “America First!” focused leaders.

By investing in startups, Canada could emerge as a defence innovator, replacing imports from American behemoths with agile, dual-use solutions. This not only strengthens security but also drives economic growth, positioning Canada alongside Europe’s “war unicorns” in a new defence paradigm.

As global threats evolve, this startup-led renaissance may prove the antidote to decline, blending commercial ingenuity with military needs for a more resilient future.

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