The Army Launches Energy VC Fund

The Army last week announced the creation of a $25 million Venture Capital Initiative (VCI) to satisfy a critical Army technology requirement — obtaining lighter, more efficient power sources for individual soldier systems.

"Power and energy technologies are an opportune area for Army investment, particularly because the Army's interests parallel those fueling the commercial market," emphasized Dr. A. Michael Andrews, Army Chief Scientist.

The goal of the VCI is to jump-start promising technologies in the area of portable power and energy to lighten soldiers' loads as they operate worldwide, often in extreme environments and under austere conditions. It will focus its investment activities on innovative technology companies, including those that may not normally do business with the Army.

The VCI will be managed by a nonprofit corporation modeled on the Central Intelligence Agency's venture capital initiative and funds will be provided from basic research and applied research accounts. The Army selected OnPoint Technologies, Inc., of Maitland, Fla., to manage the VCI.

According to an article in the Daily Deal from New York City, the Army's $25 million investment will be spread over 4-5 years. The paper quotes OnPoint officials as anticipating 4-6 investments being made each year ranging between $500,000 to $1.5 million. Deals will be done in partnership with other venture capital funds, the paper says.

Other Defense, Intelligence VC Activity

The success of the CIA's own VC fund, In-Q-Tel, has captured the attention of the Navy as well as the Army. Founded in 1999 and receiving an annual $30 million injection of funds from the CIA, In-Q-Tel has reviewed more than 3,200 business plans, selecting more than 40 worthy of investment. The private nonprofit organization has 45 staff and two strategic review teams — technical and venture. More information about In-Q-Tel is available at: http://www.in-q-tel.com

The Navy has added its own twist to increasing equity investments in critical Navy technologies. The Office of Naval Research’s Commercial Technology Transition Officer has completed two “wargames,” exercises that help the Navy and Marine Corps explore opportunities for sharing technology with the commercial marketplace. The latest game was held March 11-13, 2003 in Warrenton, Virginia, with participants from government, industry, and the private venture capital community.

The principal results of the exercise indicated that brokering information and deals among government program managers, intellectual property holders, and venture capitalists offered the most promising approach to faster transition of innovative technologies to sailors and marines.

The games are part of the Commercial Technology Transition Officer’s “venture initiative,” whose goal is to examine various processes modeled after commercial practices and adapt the best ones to serve the Navy and Marine Corps’ technology needs. The lessons from the game will help the Commercial Technology Transition Officer to develop a Naval Venture Initiative that improves the transition of commercially-developed technologies to the Fleet.