DIU’s new office is operational and investing in material innovations

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One of the Defense Department’s newest stores to promote technological advancements in the private sector has just finished investing $ 15 million in hopes of funding the next generation of military hardware.

The National Security Innovation Capital (NSIC) was established by Congress in 2019 to spur research into hardware technologies in the private sector, but the organization did not get its funding until early 2021. The NSIC is part of it. of the Defense Innovation Unit, which finances the products of companies for military use.

Now that it’s up and running, the Mountain View, Calif., Office has nine months of work and millions of spending to show lawmakers for the next budget cycle.

“We approach the work we do with hardware startups the same way a venture capitalist would,” Tex Schenkkan, director of NSIC, told Federal News Network. “We try to identify technologies that we think are promising and that meet the criteria we are looking for. We are working with them to fund the development concept they have in mind. We are not redirecting them to do something specific at that time for the Department of Defense. Then we establish an ongoing relationship where we fund them as they develop those particular products or technologies.

Some of the companies that NSIC has invested its $ 15 million in over the past nine months include:

  • New Frontier Aerospace, which develops a new rocket motor design for hypersonic vehicles
  • FuelX develops a manufacturing process that produces a material for the safe storage and transport of hydrogen
  • Advanced Magnet Lab is a company creating a manufacturing process that will result in a nationwide source of new high performance magnets
  • Soon to be announced company is building nationwide manufacturing facility to produce qualification cells based on next-generation battery chemistry

“We are looking at broad areas of technology that interest us,” said Schenkkan. “Autonomy, not so much electric vehicles, but smaller, autonomous drones and underwater vehicles, and so on. New communication technologies, therefore technologies that are difficult to falsify or scramble. Energy and battery technologies, energy storage, power generation and conversion, mainly small scale, grid scale. And finally sensors of all kinds, which are available in many areas including autonomy, and space technologies.

Schenkkan said less than 30% of private US venture capital is invested in computer hardware companies, and less than 10% of that amount is invested at an early stage.

One of the concerns was that foreign investors would go to these companies first.

“What was happening, and is still happening to some extent, even though it’s much better than before, is that a computer hardware startup is struggling to find funding, looking for sources of funding, could not find money from US venture capital firms. They would be approached by other venture capital firms who are fronts for money from Chinese or Russian investors who genuinely represent government interests, ”Schenkkan said.

NSIC hopes to fill the void left by US investors.

The office originally requested $ 75 million from the president’s budget to start operations. This was reduced to $ 15 million as part of the legislative budgeting process.

Schenkkan said he hopes this year’s results will convince Congress to increase the NSIC’s budget. The House Armed Services Committee defense authorization bill has revenue for the NSIC at $ 26 million for 2022.


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