Dual-Use Investor Chat with Booz Allen Hamilton and Harpoon Ventures

The Nugget

The Department of Defense (DoD) is increasingly recognizing the value of dual-use technologies developed in the commercial sector, but integrating these technologies into military applications remains challenging due to complex acquisition processes and the need for deep integration with existing systems.

Make it stick

🚀 "Dual-use" technology is commercial tech that also has military applications.
🛡 The Valley of Death is the gap companies face when trying to transition from early-stage funding to securing government contracts.
💡 The DoD is shifting from technology-driven to problem-solving approaches in military procurement.
🌍 The conflict in Ukraine highlights the significance of low-cost, modular solutions for military applications.

Dual-use technologies refer to commercial innovations that have military applications. The DoD is keen on leveraging commercial tech for defense uses but faces challenges in integrating these innovations into its systems.
Examples of successful dual-use technologies include AI, cybersecurity platforms, and deep tech like AR/VR and quantum computing.

Carrie Chin (Booz Allen Hamilton) advises startups to diversify their portfolios and not rely on government contracts as their first source of revenue. Initial focus should be on the commercial market to build a stable revenue base before exploring government opportunities.
Larsson Jensen (Harpoon Ventures) suggests that startups first acquire a stable cushion of revenue from commercial clients before venturing into government contracts. Getting proof of concepts is not sufficient; companies need recurrent revenue to sustain operations.

The DoD has a massive budget, but securing contracts can be complex and unpredictable. Many startups find navigating the acquisition process challenging.
Technologies must often be reshaped to meet specific government requirements, adding another layer of complexity for companies entering this space.

Primes like Booz Allen Hamilton play a critical role in helping startups navigate the acquisition ecosystem. They can integrate small businesses within larger contracts and provide immediate prototyping and integration opportunities.
Companies with concerning investors in their cap table might face challenges in securing government contracts due to potential risks associated with their IP's exposure to adverse parties.

The Russia-Ukraine conflict has underscored the utility of low-cost, commercially available technologies on the battlefield.
Examples include Starlink for communication and small FPV drones for reconnaissance and strikes.

The DoD is gradually becoming more open to commercial tech but still faces challenges related to integration and scaling these technologies.
Investors are advised to look for opportunities where commercial products can feasibly transition into government applications and where they see durable market potential.

"The DoD is shifting from pursuing technologies to solving specific challenges."
"One percent of a billion dollars is still a lot of money; by creating teaming partners or teaming with the right kinds of primes, there's still a lot of potential."
"It’s really hard to find product-market fit in the enterprise; it’s doubly so if you add on the challenge of the government market."
"Startups might need to reshape their commercial technologies to meet very specific military requirements, which adds another layer of complexity."
"We need to be thinking hard about how to be a better customer so that we know where those capabilities are."

This summary contains AI-generated information and may have important inaccuracies or omissions.