The Chief Scientist for the Pentagon’s new innovation cell, DIUX, and leaders from the U.S. Small Business Administration spoke Tuesday at the Small Business Innovation Breakfast in Cambridge, Mass., about new opportunities for startups and small businesses to find government funding. Read more
Companies have collected $250 million in funding through the Small Business Innovation Research program on contracts connected to the F-35 Joint Strike Fighter — the most expensive weapons acquisition program in military history. Read more
In October of 2012, Jonathan Aberman, currently Managing Director of TandemNSI, released a White Paper titled Department of Defense Laboratories: Engaging Entrepreneurs in Technology Commercialization. The report looked at many of the labs currently operating within the DOD establishment and identified specific actions to be taken to accelerate successful commercialization of DOD funded research. These recommendations remain as relevant today as two years ago, and through TrandemNSI we are looking to promote greater integration between entrepreneurs and national security funded technology. Therefore, we are releasing this previously unreleased report to further that mission.
Below you will find an excerpt of that White Paper which we are making it available for public download for the first time. DOWNLOAD the White Paper here.
On October 28, 2011, President Obama issued a Presidential Memorandum addressing technology transfer (the “Commercialization Memorandum”).1 The Commercialization Memorandum declares accelerating the transfer and commercialization of federal research to create high growth start up enterprises to be a national priority. It requires “each executive department and agency that conducts R&D to improve the results from its technology transfer and commercialization activities” over the five years from 2013 to 2017.
Agencies with federal laboratories were directed to undertake three interrelated activities: (i) develop metrics for successful commercialization activities, (ii) streamline federal technology transfer processes and procedures and improve the operation of SBIR and SBTT programs, and (iii) facilitate commercialization through local and regional partnerships.
The Department of Defense (“DOD”) operates more than 60 research labs around the United States, and employs over 100,000 scientists and engineers in support of the nation’s war fighting and preparedness missions. The DOD Laboratories establishment (“DOD Labs”) as a collective organization is the largest concentration of research personnel employed by the federal government and is responsible for a number of well-known commercial products and many successful war fighting technologies. As the United States’ national security interests require not just the projection of military power but also the projection and preservation of economic power, generating new innovations and industries has become a national priority. Additionally, the increasing threat posed by asymmetric warfare makes, rapid research, prototyping and entrepreneurial approaches to technology creation the keys to effective response.
In response to the Commercialization Memorandum, the Director DOD Laboratories retained Endeka Consulting (“Endeka”) to examine the DOD Lab’s operations and to identify one or more strategies to help the DOD more rapidly advance the Commercialization Memorandum’s goals. Endeka was not asked to broadly evaluate any existing impediments to successful technology transfer activities, although many impediments previously identified in the Institute for Defense Analyses (“IDA”) report “Technology Transfer and Commercialization Landscape of the Federal Laboratories” (the “IDA Report”) were also identified by Endeka. Therefore, this Report should be considered in conjunction with the IDA Report, as well as with an initiative to identify existing best practices that Endeka understands is currently being undertaken by IDA.
Endeka’s approach was to identify and evaluate ways in which the DOD could accelerate its commercialization activities and to facilitate economic development through technologies it has developed. As discussed below, Endeka interviewed a broad range of personnel from the DOD Lab establishment and concluded that the most likely catalyst for successful commercialization will be the active involvement of experienced entrepreneurs with the DOD Labs researchers and support personnel.
Background: We met recently with Databuoy; a Virginia-based company that received a Small Business Tech Transfer (STTR) grant from the Small Business Innovation and Research (SBIR) program. The company is working to make an impact in the security sensors market. The Databuoy team was prepared with an introductory slide presentation, which included an overview of the company, their team, their technology, and costs for implementation of their technology. TandemNSI Venture Advisors (VA’s) met with Databuoy’s team to brainstorm ideas about how to commercialize their technology, what path to take to market, and what financing options made sense. A series of follow-up sessions were scheduled with the Databuoy team based on agreed-upon needs and priorities.
Questions Brought to TandemNSI Venture Advisors:
- What are the advantages of focusing on the government market vs. the commercial market?
- What are the best strategies for entering the commercial market?
- How to prioritize customer segments and market opportunities?
- Does it make sense to penetrate civilian government markets or look for a very different approach?
- What financing strategies should be considered?
- What haven’t we thought of?
TandemNSI Venture Advisor Imperative:
- Markets: Databuoy thought about several uses for the technology in the government and commercial markets. The next logical step involves a combination of soul-searching, leveraging all the contacts the company has available to it, and conducting strategic customer discovery. Advice was provided around the best point of entry for each market segment, processes to use when doing customer discovery, and programs such as iCorps that might be able to help.
- Product: The TandemNSI Venture Advisors suggested that non-governmental markets would require the same level of precision required by their current clients. A lengthy discussion was held debating the product requirements necessary when selling to institutional buyers for large sums of money vs. commercial venues whose goals and budgets will be different. Advice was provided about what product specifications to consider testing for each type of prospect.
- Investing: Databuoy was coached on how to “boil down” the information they should include in an investor presentation. Sample decks were provided and discussion focused on how investors can also influence prospective market segments and dictate short-term and long-term company priorities.
TandemNSI Venture Advisors are continuing to work with the team to explore potential business models utilizing Databuoy’s technology. We also will help with narrowing Databuoy’s commercial strategic focus further and with communicating more effectively how they see the opportunity and the best path for achieving commercial success.
“TandemNSI advisors absorbed the specifics of our technology and our business experience through dynamic discussions that enabled productive advice that was tailored to our circumstances. As technology developers coming from the Government contracting world, we were less comfortable with trying the commercial markets. The advisors are helping us find a solid approach to getting to the commercial space.” —Kathleen Griggs, President, Databuoy LLC
Disclaimer: TandemNSI’s Venture Advisor program does not disclose any information that the participating company does not want published.