Tech Startups, VCs Connect Via Innovative Dept. of Defense Program

The Defense Advanced Research Projects Agency, overseen by the Department of Defense, is expanding its pilot Embedded Entrepreneurship Initiative to bring together venture capitalists and startups developing emerging technology for the agency. The program’s focus will extend beyond biotech and microelectronics to other emerging technologies, such as AI, and accelerate up to 150-DARPA-backed innovations.

In the two years since its inception, DARPA’s EEI helped 30 pre-seed research teams raise about $110 million and led to the creation of 12 companies. EEI will move from a pilot to a permanent project with the support of IQT Emerge, an arm of the not-for-profit venture capital firm In-Q-Tel and whose mission is to connect the U.S. government innovation channel with entrepreneurship.

The program teams a venture capitalist with DARPA contractors seeking to market new technologies developed with agency funding. They will assist the entrepreneurs with writing business plans and preparing pitches for American venture capital firms. Research teams will have access to DARPA’s Transition Working Group, which comprises over 100 U.S. investors and corporations experienced in supply chain development and scaling. Researchers will receive an average of $250,000 in non-dilutive funding to hire a seasoned entrepreneur or business executive for one to two years with the goal of developing a robust go-to-market strategy for both defense and commercial markets.

The EEI’s growth is illustrative of the Department of Defense view that tech projects in areas such as AI, 5G and 6G telecommunications are essential to the U.S. economic and military over the next century, according to DARPA Commercial Strategy Chief Kacy Gerst. “More and more DARPA is investing in spaces that have a massive commercial market and a small defense market, like for example, microelectronics and biotechnology,” Gerst said in an interview. “If we want the DOD to be able to use these technologies in the future, they need to be sitting within sustainable businesses.”

DARPA has assisted in laying the foundations for some of society’s most transformational technologies, such as miniaturized GPS, the internet, smartphones, commercial space access, RNA vaccines, stealth and autonomous vehicles, to name a few. However, DARPA was reportedly finding some of the universities, firms and labs they worked with to develop emerging technologies were spinning off companies that used foreign capital. The EEI program is similar to the Defense Department’s Trusted Capital Marketplace, which screens potential investors for U.S. defense contractors to confirm they do not have connections to foreign entities.