THE CHALLENGE
Deep technology companies offer great potential for the public good and yet getting these technologies into the public sector is challenging.
These are a category of startups in the life sciences, energy, clean tech, computer sciences, material and chemicals sectors – companies that are trying to solve big issues that affect the world around us and whose solutions have commercial and military applications.
Unlike China, which has an integrated civil-military technology strategy that leverages the full power of its economy, the U.S. Government has limited influence as a “deep tech” buyer or investor. The traditional defense industrial base simply lacks investment capability and forward-looking enterprise technology.
To ensure the U.S. maintains its competitive edge, the U.S. Government needed a way to support existing commercial momentum to transform the technologies available for our civil-military enterprise.
THE RESOLUTION
When the Office of the Secretary of Defense was willing to try something new to leverage private capital for future dual-use capabilities, they turned to BMNT to design and execute a novel program.
The program, The Strategic Innovation Project (SIP) was designed to match the incentives of startups, Venture Capital, and the need to think about future U.S. government use cases, not current/near term requirements. It has examined the future of work, digital twins, trustable AI, environmental intelligence, the future of precision navigation, and many more challenges.
First, we hunted for visionary companies for which acceleration of their commercial solutions would create real impact and increase their potential for private capital. Over nine months, we sourced 1,000 companies, met with 100, and provided $1M to 21 pre-Series-A companies. This funding accelerated their technology and required a demonstration of enterprise value through commercial traction.
- Each engagement got underway in about 44 days (from first email to money in the bank)
- 100% of the funding went to small businesses
- 50% of the funding went to minority or women-owned businesses
By funding commercial projects, BMNT signaled government interest in particular technology, decreased the risk for additional private funding, and reduced transition risk for the government through commercial partnerships.
Throughout, we advised the companies on pathways to trusted capital, bridges or workarounds to the government’s “valley of death,” and strategies related to access to government contracts.
THE IMPACT
As of October 2023, the $21M investment generated $292M in follow-on venture capital and leveraged a total of $385M in private capital.
By investing early, we moved the cost of technology sustainment from the government to the commercial sector, fostered job growth in high technology sectors, and increased alignment between commercial and government investment to eliminate the opportunity cost normally associated with doing business with the U.S. government.
