DOD to launch Trusted Capital Marketplace of startups, investors

U.S. Under Secretary of Defense for Acquisition and Sustainment Ellen M. Lord is joined by Defense Innovation Board members s Dr. Eric Schmidt, Dr. Michael McQuade, and Richard Murray to speaks to reporters on the Defense Innovation Board's final report of the year-long Software Acquisition and Practices analysis at the Pentagon, Washington, D.C., May 3, 2019. (DoD photo by Army Sgt. Amber I. Smith)

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The Pentagon plans to create a program to connect innovative defense technology startups with trusted sources of capital, the department’s chief of acquisition said.

Called the Trusted Capital Marketplace, it’s “a public-private partnership that will convene trusted sources of private capital with innovative companies critical to defense industrial base and national security,” Ellen Lord, undersecretary for acquisition and sustainment, told reporters Friday. She said the hope is to roll it out in July.

The marketplace is meant to help “small, innovative companies that, frankly, don’t either have the resources or the sophistication in terms of the contacts to reach sources of capital,” Lord explained. “And what we’re trying to do is enable that so that they don’t have to go through a lot of time and expense with legal firms to try to ferret out who is out there.”

The 2018 National Defense Authorization Act required a pilot of such a program “that supports small and medium-sized companies to manufacture ’emerging defense and commercial technologies,'” Lord said. the TCM will help those small companies in the growth stage more readily access capital to scale. The idea is this will promote the growth of the pool of contractors the Pentagon can work with down the line.

Just weeks ago Lord approved the creation of the TCM, and currently, the Pentagon is in the solicitation phase to build out the actual marketplace. DOD will issue an other transaction agreement with a contractor to build out the website, she said.

“[T]he first step is to set up a website infrastructure to bring providers of trusted capital together with businesses looking for capital infusions,” Lord said.

DOD officials like Lord legally can’t make that connection between an investor and a small company in need of funding. “However, what we can do is segment the marketplace and then put in companies that need capital infusions that we think have critical technology for us,” she said.

The Pentagon has identified more than 50 companies it hopes to bring together through the marketplace, Lord said.

On the investor side, though, there are questions the department is addressing, like the range of investments the program will include. Lord said, “right now we are working on what that dollar figure could be and there’s a wide range.” She said the department will vet potential investors.

“[W]e have some incredible patriots who have come to us and said, ‘We’re interested in putting our money somewhere that’ll make a difference in our national defense,'” she said. “So there are two willing sides there. And I think there’s an unmet need that somebody like government can provide the sort of ecosystem to make it work.”

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Department of Defense (DOD), Ellen Lord, National Defense Authorization Act, Pentagon, Trusted Capital Marketplace
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