VCs as Transition Partners: Leveraging Networks and Expertise to Improve Fielding Outcomes

Abstract

Venture capital (VC) firms focused on the defense market investments should serve as transition partners with their portfolio companies helping them identify potential defense customers, overcome integration challenges, and scale in advance of demand to improve fielding outcomes just as commercial-focused VC firms assist their portfolio companies with entering new markets, finding additional funding, and connecting with key industry players. Over the years, the DoD created multiple Service innovation organizations to support the identification and maturation of emerging commercial technologies. However, the reported transition rates of commercial technology into programs of record appears to be incredibly low despite the efforts of multiple government offices. The DoD recently created the Office of Strategic Capital to more squarely focus on leveraging private investment capital to meet defense customer requirements. Even still, VC firms find the DoD marketplace challenging to navigate. For VC firms to fully exploit their private investments, and to benefit national security, defense-oriented VC firms must transform their commercial-focused investment best practices into defense focused business engagement models that extend beyond raising capital.