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home > May/June 2007 issue > article
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| Matthew Borkoski |
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| “As a historical reminder, DOD has consistently been a leader in every area of innovation.” — Robert Pohanka, Defense Venture Catalyst Initiative |
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DOD uses its head
By Sami Lais
Special to Defense Systems
Acting on an idea from former Secretary Rumsfeld, DOD has mobilized an army of venture capitalists to locate and capture the best technology in the nation
It may have invented the Internet and a raft of other cool stuff, but the Defense Department has had an image, especially of late, that more closely resembles Army recruiter Sgt. Star than Disney inventor Gyro Gearloose. But that could change. In the Defense Venture Catalyst Initiative, we give you: Sgt. Gearloose.
DeVenCI, pronounced like da Vinci, has as its objective “to speed DOD adoption of innovative commercial technologies that address DOD challenges related to the global war on terrorism and to encourage broader commercial support of the DOD supply chain.”
Since June 2006, the organization has operated as an independent entity in the Office of the Secretary of Defense. But DeVenCI was created in 2002 as part of the mobilization for the war on terrorism.
The office is not focused on long-term research and development but on the present, on products that can be placed in the hands of warfighters and those who support them now.
“It was an idea of Secretary [of Defense Donald] Rumsfeld’s,” said Robert Pohanka, the program’s director. He wanted “to tap into the innovation in the private sector to draw on their expertise and development work to help DOD agencies carry out their missions.”
The program does not require a lot of overhead. The office makes no cash investments, has an annual budget of less than $3 million and boasts a staff of just four people, including Pohanka, formerly a director in the Office of Naval Research’s Science and Technology Department.
“We’re knowledge brokers,” Pohanka said. “We do not invest, we gain knowledge and plug it into the right place, kind of like an intelligence search engine.”
Or a matchmaker. “That’s a good description of what we do,” he said. “We find where in DOD help is needed, find a product that might be able to help and bring it to the attention of the appropriate person in DOD.”
Shifting gears
Although DOD and the federal government have sought advice from the private sector and created their own venture capital firms, such as the CIA’s In-Q-Tel and the Army’s OnPoint, DeVenCI is a unique and innovative venture and unlike the usual chain-of-command DOD initiatives.
It’s a portrait Pohanka doesn’t completely accept. It is innovative, he said. “It’s one of the reasons I asked to take on this job,” a three-year assignment.
DeVenCI continues to work in conjunction with the CIA and Army investment groups and DOD research groups. It also absorbs best practices from them, Pohanka said. “We are developing processes as we go, but we are doing it in the context of what is legal, ethical, what our bosses are asking us to do and within the context of the DOD chain of command.”
In the private sector, however, the venture is seen as tinged with humility and awash in daring thinking.
“Initially, I was skeptical,” said Robert Novak, a member of DeVenCI’s board of advisers and a partner in Biddle Venture Partners, based in Bethesda, Md. “I figured: big government, lots of red tape, agonizing. But I was wrong. Everyone I’ve dealt with on this [has been] open and willing to explore new ideas, new ways of doing things,” he said.
“Since 9/11, we’ve seen a real sea change in how government views private industry,” said Mark Heesen, president of the National Venture Capital Association. “Before that, especially in the area of IT security, DOD thought they had all the best technology, that no one had a leg up on them,” he said.
“Now there’s a realization that the U.S. private sector has been creating new technologies and that the government needs to know about them, not only for its own use but to understand them and be able to protect Americans here and abroad,” Heesen said.
Much of the most innovative new development is going on in small companies, Pohanka said, “and it can be hard to find them.”
Making the connection can be equally challenging for companies. “If you’re a small company, it can be difficult to figure out how to get in front of the right people at DOD,” Heesen said. “And if you don’t live in the Mid-Atlantic region, you probably don’t even think of government as a place to seek contracts.”
For the cash-poor start-up, the investment of time and expense to get on DOD’s supplier list can be daunting.
“If you’re a start-up, you may not know where to go, and you may be scared off by the long sales cycle associated with working with government,” said Jonathan Aberman, managing director of Amplifier Venture Partners, based in McLean, Va.
“If you can prove your product has a capability that the Defense Department needs, you can shorten that sales cycle,” Aberman said.
“As word of this initiative spreads and we make people realize they don’t always have to go through red tape to get into procurement, it’s going to grow fast,” Novak said.
The nuts and bolts
DeVenCI begins by meeting with acquisition staff from DOD agencies to learn what their technology needs are.
“Then we meet with the board of advisers and say, ‘This is what we need,’” said Michael Dingman, DeVenCI’s communications expert under contract from ITT. “We also put out announcements of the workshop, saying we have a need in a certain technology area and directing companies to our Web site and the application form.”
Although applications come in over the transom and from the Web site, DeVenCI’s board of 11 unpaid volunteer advisers is the most important source of candidate companies, Dingman said.
“They’ve got 11 high-powered venture capitalists to be their consultants,” Heesen said. “These are smart guys; some of the most prestigious firms in the country are represented on their board.”
Collectively, the board considers — and rejects — proposals from a broad spectrum of incipient technology companies. “For every company they fund, they look at 100,” said George Fisher, an ITS contractor and former Navy captain.
“As venture capitalists, we see emerging technologies that are way below the radar of government, the Defense Department, even the private sector at large,” said James Barrett, a general partner of New Enterprise Associates, of Baltimore, and a member of DeVenCI’s board of advisers. “We get insights in the very early stages of a technology’s development. That’s our job.”
For the next six weeks, the board scours the world of tech start-ups for the best technology to meet DOD’s needs. “They’re looking beyond their portfolio,” said Terry Bollinger, DeVenCI technology analyst and a contractor from Mitre. “We ask them to find the best technology, whether that’s from a large company or a two-person company operating out of a garage.”
Typically, the board will recommend about 30 companies, and DeVenCI will add another half dozen. “Then we do a tech scrub of what they offer and get it down to 10 or 11 companies,” Dingman said.
DeVenCI then hosts a workshop, bringing together DOD agencies’ technology acquisition chiefs with representatives from each of the final group of companies. The reps each get 20 minutes to demonstrate their products and answer questions.
“Promoting the interaction between those producing the technology and the agencies that use the technology is the most important aspect of what DeVenCI is,” Barrett said.
The envelope, please
With DeVenCI yet to celebrate its first birthday, it’s a bit early to judge its performance. “Come see me in a year,” Barrett said.
But the initiative has already had its successes.
“We had an early success with Google,” Fisher said. “We paired Google with several agencies and showed them how a good search engine should work.
“And just since Christmas, some of the venture capitalists got together and showed us the darnedest wireless technology, which I can’t tell you about now, but you’ll hear about it soon.”
And Novak couldn’t be further from his initial reluctance to get involved. “We were able to introduce a company that’s doing something that no one in DOD knew about,” he said.
“DeVenCI has the real potential to significantly improve the technological reach of DOD and bring down costs dramatically,” Novak said. “It’s still classified, but there are one or two [match ups] that are coming from this that I think are going to be a big success.”
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