Dual use

The current geopolitical environment has generated significant conversations around the economic and sovereign security advantages that certain technological advancements can provide. These technologies, goods, services and software are largely divided into two key types:

• Items or technologies that have a singular focus on military, security or intelligence objectives, with possible commercial use as a secondary outcome are generally described as being for the defence technologies or goods.
• Items or technologies that are primarily interesting for their commercial use, but also have a defence, security or intelligence use case are called “dual-use technologies or goods.”

Thus, dual use is fundamentally a business strategy—selling the same core technology, goods, services or software into both the defence and commercial markets—rather than a distinct sector. For instance, a company could choose to offer a baseline commercial product and a defence variant with controlled capabilities, hardened components or different data interfaces.

These choices have significant implications for the operations and business models of companies that choose to pursue this strategy.

What to consider when thinking about a dual-use strategy

If you’re considering a dual use strategy, you may need to:

• Research the applicability of your product or service for defence by initiating contact with potential buyers. These are likely to be tier 1 or 2 suppliers of defence goods or technologies to the Department of Defence or foreign buyers.
• Establish your level of technological readiness: Does your product need to be redesigned for and tested against new specification or requirements?
• Inform yourself regarding all the potential implications of a defence contract and its obligations. For example, you’ll need to determine whether your products would fall under the purview of Canada’s export control program.
• Evaluate all the costs in capital and time associated with meeting product and contract requirements. This can be time-consuming and daunting, and the return on investment must be determined.
• Some basic requirements likely include defence-specific cybersecurity specifications, Controlled Goods program requirements, quality certifications, risk mitigation strategies, supply chain traceability, an intellectual property strategy and a secure and stable delivery capacity.
• Ensure a financial plan that supports several years of development and commercialization.
• Build and staff a defence-specific business development function or even set up a seperate business entity.

Examples of dual-use goods

Dual-use goods are items have a legitimate civilian or commercial application, but can also be adapted for military, intelligence or security use, and vice versa. Examples include:

• Drones or unmanned aerial systems that can overlap with platforms used for defense, border security or intelligence gathering.
• Semiconductors, which are inherently dual use because they underpin almost all modern electronics.
• Various types of chemicals and pharmaceutical precursors that are widely used in industry, medicine, or research, but may also be relevant to weapons programs or military logistics.
• Many other dual-use items don’t fit into a single category, but are essential across sectors, for instance high-precision machine tools, advanced materials or 3D printers.
• Reverse examples include the Internet, GPS technology, radar, drones and night-vision, which originated in the defense sector before finding commercial applications.

Examples of dual-use technologies

Dual-use technologies often overlap with deep-tech subsectors, as many advanced technologies developed for commercial applications also have military/national security applications. These subsectors include:

• Artificial intelligence and machine learning
• Robotics
• Quantum computing
• Space technology
• Cybersecurity
• Biotechnology

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StrongNorth Fund

As part of our Defence Platform, BDC Capital launched the new StrongNorth Fund dedicated to investing in early-stage companies developing deep technologies with defence-focused or dual-use applications or strategies. Learn more.