Five years ago, Google retracted of a Pentagon government contract because thousands of Pentagon employees protested that its technology could be used to attack deadly drones. Today, however, Silicon Valley has far fewer qualms about developing technology for the US Department of Defense.
So said four investors: Founders Fund’s Trae Stephens, Lux Capital’s Bilal Zuberi, Shield Capital’s Raj Shah and longtime In-Q-Tel chairman Steve Bowsher, speaking at a kickoff event for military veterans Today in San Francisco. Shah said of the change in attitude that he has personally observed: “The number of companies, founders and entrepreneurs interested in national security in general, I have never seen it at this level.”
Bowsher argued that Silicon Valley’s “reluctance to work with the [Defense Department] and the intelligence community” was always “over the top,” adding that throughout his 16 years with In-Q-Tel, which is the CIA’s venture fund, his team has met with about 1,000 companies each year. and only “five to 10 have turned us down, saying they weren’t interested in working with the clients we represent.”
We’ll have more from the panel at TechCrunch+, but we wanted to share parts of our conversation that focused on things to consider when selling to the US government, as founders with commercial clients may increasingly be thinking about trying to sell their products and applications to the United States Military. (This is particularly true of AI, cybersecurity, and automation startups.)
We talked to investors, for example, about mission scaling—that is, how a startup that starts working with the government can make sure it doesn’t end up spending most of its time servicing the government because of new requests and ignoring previous. , business customers in the process.
Here, Trae Stephens, who was also a co-founder of Anduril, a manufacturer of autonomous weapons systems that has aggressively courted business from government agencies since the beginning, said that this kind of gradual shift in targets is “exactly what makes It’s hard to do both.” [cater to civilian enterprises and the government] at an early stage.”
He said that “many of the programs that [enable founders to] doing business early with the Department of Defense requires something, like, DoD-ization of your product for that use case.”
Although In-Q-Tel backed Anduril from the start, for which Stephens said he is grateful, he said many companies that take money from the government, including through their Small Business Innovation Research (SBIR) program, “end up building all these specific workflow steps that take them away from the commercial business necessary to actually make the business work. (Stephens relatedly noted that very few teams can go after the military exclusively, as Anduril did, because “it takes so long to get into production with the Department of Defense that you have to be able to raise basically an infinite amount of dollars initials, otherwise the company will die.”)
Relatedly, we ask how so-called dual-use companies manage their intellectual property rights once they have started selling to the government. For example, you can imagine a scenario where a technology helps the NSA identify certain types of people making certain types of calls, and while there are commercial applications for this technology, the government doesn’t want you to hand it over to adversaries. . Is there a way to figure that out in advance, we wonder?
Here, there was no easy answer other than: get the right help and do it as quickly as possible.
Zuberi told a cautionary tale centering on one of Lux’s own portfolio companies. Said Zuberi: “I have a company that received $100,000 [National Science Foundation] grant. Two guys started it in my office. I didn’t think much of it; I thought it was nice to have him on your resume. Then they began to make a Series B increase, and one of the [interested] companies does due diligence on what other contracts [the team might] have, and there was a clause in that NSF grant that said, ‘Hey, if the government needs [what you’re building], we can use it. So we had to wait six months while we negotiated with [someone] at the NSF who didn’t care at all to bring that back. I would have paid them double the grant amount just to make it go away, but they said, ‘No, you can’t do this, we can’t go back. You too can get into trouble.
Again, we’ll have more of this discussion soon, including on AI in military applications; We learned a lot; we hope you will too.
