Booz Allen Hamilton launches $100M corporate venture arm focused on early-stage startups – TechCrunch
Booz Allen Hamilton, Virginia-based defense-focused IT consulting firm, today announced The launch of the firm’s venture capital arm, Booz Allen Ventures, will initially invest $100 million in “strategic” offensive and defensive technologies. The move signals Booz Allen’s desire to shape startups in areas the company considers relevant to its core business, primarily AI and machine learning, and defense. and network security.
Brian MacCarthy, vice president of ventures at Booz Allen, said the new fund will invest primarily in early-stage companies (seeds, Series A and Series B) and build on the existing Tech Scout program has by Booz Allen, connects with entrepreneurs for emerging security checks. technologies. Through Tech Scouting, Booz Allen has recently assisted companies including Latent AI, a technology that compresses AI models; Synthetaic, a data generation platform; and Reveal Technology, performing aerial data analysis.
In addition to capital, Booz Allen Ventures-backed companies will have access to Booz Allen’s engineering and operations teams as well as customer groups, McCarthy added. Participants will also be offered “strategic” support in the form of potential contracts with Booz Allen clients.
“Our Tech Scout program gives us insight into where great growth opportunities exist. But predicting opportunity is not enough – we need to deploy capital to move at digital speed,” said Brian MacCarthy, vice president of technology scouting and projects at Booz Allen. “Booz Allen Ventures allows us to actively bridge the gap between opportunity and capability, while accelerating the service-to-solution transition.”
Outside the fund like Shield Capital, which has ties to the Department of Defense, traditional venture firms are generally reluctant to invest in defense-oriented startups due to both the ethical implications and the long road to profitability. (In America, it representative at least 18 months of planning is needed before a government contractor wins the first contract.) Corporate-backed programs provide an alternative – Booz Allen Ventures joins Lockheed Martin of Lockheed Martin Ventures and HorizonX, which was spun off from Boeing in August 2021.
Defense-focused startups looking for government contracts need all the help they can get. Except for tipping points like Anduril and Palantirmost contracts are awarded to incumbents — more than 95% of Booz Allen’s nearly $8 billion in revenue comes from government contracts — and any startup that steps in the door must bridge the gap between the R&D and contract phases.
But even founders willing to stick with the defense industry are sometimes reluctant to accept funding from companies’ weapons. They point to complicated terms and conditions and commercial agreements that attempt to preserve exclusivity or future options to purchase their startup’s technology outright.
Perhaps as a result of those doubts, defense-focused corporate funds have invested relatively little capital over the years. For example, Lockheed Martin Ventures has committed just about $200 million to startups since 2007. As of 2020, HorizonX, founded in 2017, has made just 25 investments — all are under 10 million dollars.
Incumbent Booz Allen Ventures will show that it is not looking to weed out or absorb startups for the benefit of the parent company.