ARC Lab and the Moment for Canada: Scaling Dual-Use Innovation in a New Defence Economy

Insights shared by Owen Matthews, Founder & Chair of the Board at Alacrity Canada

Canada is at a turning point. In February 2026, the Prime Minister released the country’s first comprehensive Defence Industrial Strategy, setting out a major shift in how Canada approaches national security, industrial capacity, and domestic technology development. The plan includes up to $180 billion in defence procurement and $290 billion in related investment over the next decade, with a clear goal: more of that spending should go to Canadian companies, and more Canadian technology should be exported.

For Canadian innovators, this is not just policy — it defines where a large amount of money will be spent. But that doesn’t mean it’s easy to access. Many Canadian companies are building technologies — across AI, cybersecurity, clean tech, and advanced systems — that could be used in both commercial and defence settings. The challenge is that defence is not a typical market. Companies need to understand how governments buy, what standards they have to meet, and how to shape their products around defined requirements rather than general demand.

That is the gap ARC (Allied Readiness & Capabilities) Lab was built to address.

Launched by Alacrity Canada, ARC Lab is focused on helping strong companies enter and grow in defence and security markets. The goal is straightforward: take technology that already exists and help companies position it so it can actually be bought and used by government and defence customers.

We spoke with Owen Matthews, Founder and Chair of the Board at Alacrity Canada, about how the market has changed, why this moment matters, and what it takes for Canadian companies to compete in dual-use markets.

Owen, you’ve been deeply involved in building the Alacrity Canada model from the beginning. What continues to drive your work today?

At its core, Alacrity Canada has always been about building companies that create real economic outcomes — revenue, jobs, and long-term value. Historically, that meant starting with demand, not ideas.

We would work directly with large customers to understand where they were actively trying to spend money but didn’t have the right solutions. Then we would build teams around that. Usually small groups of strong engineers, often recent graduates, focused on building and testing prototypes quickly with the customer.

That model works because it’s fast and practical. Small teams can move quickly, respond to feedback, and adjust the product as needed. In most cases, the customer or go to market partner is directly involved in shaping the solution, which makes it much more likely that the product actually gets adopted.

What’s changed is where that same dynamic is now happening. In defence and security, there is a lot of money being committed and a clear need for new technology. Much of that technology is coming from the commercial sector.

The approach is the same. The difference is that companies now need to understand how to fit what they’ve built into how defence buyers actually operate.

How have you seen the tech and business landscape change over the past decade?

The SaaS cycle that defined the last decade has slowed. For a long time, there was a lot of capital chasing growth, and companies were built around that assumption. That environment has changed. At the same time, AI has reduced the cost of building software. What used to take large teams can now be done with fewer people and less capital. Large platform companies will likely hold their position because of their customer base, but many mid-sized SaaS companies are now under pressure from smaller, AI-native competitors that can move faster and operate more cheaply.

Defence is also changing. Governments are spending more, but they are being more deliberate about who they buy from and what they buy. There is more money available, but it is tied to specific needs and stricter requirements, especially around domestic suppliers. At the same time, investment capital is tighter. After the SaaS valuation cycle and ongoing global instability, investors are more cautious. That creates an interesting moment. There is a large and growing pool of defence-related spending globally, much of it looking for new technology. For investors who are willing to engage in that market — and who manage their capital carefully — there is real opportunity.

That convergence seems especially relevant to the launch of ARC Lab. Can you explain what the program is designed to do?

ARC Lab is built to help companies take what they’ve already developed and make it usable in defence and security markets. The core of the program is helping companies take their existing product and map it against specific defence needs — what problems governments are actually trying to solve, what they are buying, and how they buy it. In many cases, that means changing parts of the product, how it integrates with other systems, or how it’s positioned.

We also help companies understand the practical side of working in this market—how procurement works, what requirements they need to meet, and who they need to be connected to in order to move forward. Alongside that, we make introductions to the people and organizations that matter — government teams, prime contractors, and others already operating in the space.

The goal is simple: move companies from being interested in defence to being able to realistically compete for and win work.

Why is this focus on dual-use technologies so important right now?

Because the demand is already there. Governments are increasing defence spending and looking for new capabilities. At the same time, much of the innovation they need is being built by private companies that weren’t originally focused on defence.

The problem is that these companies and these buyers don’t naturally meet. The systems are different, the expectations are different, and the process is harder to navigate. Dual-use technologies sit right in the middle of that gap. ARC Lab exists to help close it.

What specific support does ARC Lab provide to help companies succeed in that environment?

We focus on a few things that matter.

First, helping companies understand how this market actually works — how governments buy, how long it takes, and what requirements they need to meet.

Second, working with them to adjust their product so it fits what customers in this space are actually looking for.

Third, connecting them to the right people — government teams, prime contractors, and partners who are already active in defence and security.

And finally, giving them access to real opportunities, whether that’s through events, trade missions, or direct introductions.

Each of these steps is necessary. Having a strong product isn’t enough on its own — you need to know how to get it into the system.

How does ARC Lab fit within Alacrity Canada’s broader mission?

It’s a continuation of what we’ve always done, just applied to a different market. Alacrity Canada exists to help companies scale. Increasingly, some of the most important markets are not purely commercial — they are shaped by government demand and long-term spending programs.

ARC Lab is about making sure Canadian companies can operate in those markets, not just build technology that sits outside of them. There’s also a broader point around sovereignty. If Canada wants to build strength in key technology areas, those companies need to grow here, not just start here.

What makes the Alacrity model particularly effective in supporting this kind of growth?

It comes back to staying close to real demand. We’ve always built companies around actual buyers, not abstract markets. That means working with customers early, building quickly, and adjusting based on real feedback. That approach works just as well in defence. The difference is that the requirements are more structured and the timelines are longer.

With ARC Lab, we’re applying the same thinking — helping companies take what they’ve built and align it with what customers in this market are actually buying.

What advice would you give to founders who are considering entering defence & security markets but aren’t sure where to start?

Start by understanding that this is a different kind of market. You need to learn how governments buy, what they care about, and how long things take. It’s not as fast as commercial markets, and the requirements are stricter. But if you take the time to understand that and position your product properly, there is real opportunity.

Looking ahead, what excites you most about the future of Canadian innovation?

The talent is strong. Canada continues to produce high-quality founders and engineers. The challenge has always been scaling companies to the point where they can compete globally. What’s encouraging now is that there is more alignment between policy, capital, and market demand. If that continues, Canadian companies will be in a much stronger position to succeed in important sectors like defence and critical infrastructure.

Thank you, Owen. Any final thoughts you’d like to share?

The main challenge for founders today is not building technology — it’s getting that technology into markets that are harder to access but have real long-term value. ARC Lab is focused on helping companies do that.

The goal is to build companies that don’t just exist, but that can compete and win in markets that matter.

To learn more about ARC Lab and how to get involved, visit alacritycanada.com/programs/arC-lab.