Draganfly, among the six suppliers selected in the first wave of Canada’s Defence Drone Initiative (DDI), has secured US$10 million from two U.S. investors.
Unusual Machines, which manufactures drone motors and control components and includes Donald Trump Jr. on its advisory board, is contributing US$5 million. An unnamed U.S. investment fund is providing the other US$5 million, according to the Canadian Press.
Though modest in the context of Canadian defence spending, the transaction raises two questions relevant to equipment buyers: how foreign investment affects domestic suppliers, and how foreign components shape the systems those suppliers deliver.
How the Investment Is Structured
The financing takes the form of a registered direct offering of 1,869,159 common shares priced at US$5.35 each, according to Draganfly’s announcement. That price was equal to the company’s closing share price on 25 September.
Draganfly intends to use the funds to accelerate the development of advanced strategic capabilities and support working capital. The company initially expected the offering to close on or around 29 September and confirmed its completion that evening.
The transaction follows a US$50 million share offering in February, according to the Globe and Mail. Before the latest announcement, Draganfly’s New York-listed shares had declined approximately 23% this year. Unusual Machines’ shares, by comparison, had gained about 89%.
Trump Jr. joined Unusual Machines’ advisory board in November 2024. The Globe reported that the Trump family’s defence investments have attracted conflict-of-interest scrutiny, with Trump Jr. and Eric Trump also backing drone manufacturers XTEND and Powerus.
The DDI Contract Behind Draganfly’s Position
On 8 September, Draganfly said it had qualified across all five DDI capability streams as of 28 August, according to StockTitan. It subsequently announced, on 11 September, a five-year agreement to provide the Canadian Armed Forces (CAF) with low-cost tactical intelligence, surveillance and reconnaissance (ISR) drones.
The agreement includes a firm purchase of 100 systems and options for up to 4,900 additional systems. Those options would be worth approximately $24.25 million if fully exercised, according to Draganfly.
Draganfly is supplying the Astiia uncrewed aircraft system (UAS). The government identifies it as an Australian design manufactured under licence in Saskatoon, with production, integration, training and sustainment carried out in Canada, according to the Prime Minister’s Office.
The same backgrounder states that the first awards followed an evaluation incorporating Foreign Ownership, Control and Influence (FOCI) assessments. Draganfly is now planning to expand into Edmonton and Ottawa, CTV News reported.
How Ottawa Has Responded
Asked about the transaction on 29 September, Defence Minister David McGuinty played down its significance. “Look, they’re investing. What can I say?” he said, according to CTV News.
Alexander Salt, a senior researcher at the Canadian Global Affairs Institute, placed the deal within the long history of cross-border defence investment. He said Canadian small and medium-sized defence companies are attracting more international capital because of the technology being developed domestically, CP24 reported.
According to that report, the investment also comes as Ottawa works towards directing 70% of defence contracts to domestic companies.
What Changes in Ownership Mean
Draganfly continues to be a Canadian company headquartered in Saskatoon. The disclosed share investment does not by itself establish a change in control. The company has not disclosed the resulting ownership percentage of either investor.
The timing nevertheless raises a procedural question. Draganfly received its DDI award following a FOCI assessment conducted before these shareholders entered. Whether the Defence Investment Agency (DIA) reassesses a supplier when its shareholder base changes, and what level of change would prompt such a review, remains unclear.
The financing therefore offers a practical case for examining how Canada applies FOCI screening after a contract has been awarded.
Where the Components Come From
For procurement teams, the commercial supply relationship is more consequential than the shareholding itself. Unusual Machines CEO Allan Evans said the investment would allow his company to support Draganfly’s production expansion “and deepen our supplier relationships,” according to Draganfly’s release.
The companies have not identified which components Unusual Machines provides to Draganfly, nor whether those components are used in the CAF’s Astiia systems. However, drone motors and flight control components – products for which Unusual Machines is known – are core elements of a small UAS.
The presence of U.S.-origin components in a Canadian-built drone could bring those components within the scope of U.S. export rules. That, in turn, could influence Canada’s ability to re-export or transfer the aircraft to recipients such as Ukraine or European partners without U.S. authorization.
There is not yet enough information to determine whether this affects the Astiia line. It is reasonable to expect, however, that Canadian buyers will increasingly seek clear information from DDI suppliers about the origins of their motors, flight controllers and data links.
Outlook
Defence contracts are giving Canadian drone companies a basis on which to raise capital, including from U.S. investors. Draganfly’s financing appears to be the first such transaction involving a DDI supplier since the initial awards.
With the second DDI intake opening in October, further contracts are likely to bring additional fundraising. Ottawa could consequently face a choice between continuing to treat foreign minority investments as routine transactions and establishing a clearer process for reviewing them after an award.
Suppliers that disclose changes in ownership and identify component origins early could distinguish themselves with buyers assessing sovereignty. Anvil North will track ownership events across DDI suppliers in its supply atlas, beginning with Draganfly.